Q&A with Linda Bradford Raschke, Independent Futures/Commodities Trader

(This post was first published here: Why we need more (good) female traders)

Hello traders!

You may recall that about two years ago I posted on this thread about Linda Raschke:

I got in touch with her this month and she was happy to be interviewed for this thread.

Here is the text of the interview, followed by the document download at the bottom.

Enjoy!


Ten questions to Linda Raschke, futures/commodities trader

by Francesco Sani, June 2018

linda-raschke

1. What impact has your love of trading had on your personal life?

You come across as a well-rounded person, but you do talk about trading as something that can become more like a ‘hobby’ in the sense that it is more than just a job as it spills over into every waking hour of your mind and can take over your life - a giant game that one constantly seeks to win. Trader/coach Mandi Pour Rafsendjani talked on Desire To Trade podcast about traders who come to her because of their lifestyle taking a toll on their minds and bodies – basically getting burnt out – and it seems clear that without some due care there can be a very real impact to one’s well-being from too much time spent staring at charts.

How can people who are new to financial trading keep a balance between sitting in front of their computer screen for hours on end and achieving a healthy lifestyle, including physical exercise and time for friends/family? Do all traders need to be leading a lonely life in order to be successful at this game?

First, trading is my profession. It is not a matter of love, like or hate. Every profession has aspects that are enjoyable and other aspects that are not.

To excel in any profession, you must prioritize it, eliminate distractions and put in the hours and commitment to do the proper practice/marketing/research/residency…insert appropriate word for the appropriate profession.

I am married, raised a wonderful daughter, have 4 horses I ride and train, and I have always ridden and competed my horses. I love gardening and working out at the gym, so a personal life is very important to keeping some type of balance as well as stress relief.

No trader has to live a lonely life. With that said there are musicians and artists and sports professionals who prefer to be more introverts or less social that extroverts but that has nothing to do with the trading profession. Digital mediums can have addictive properties so perhaps certain personality types might be more susceptible to this than others.

2. Should private individuals seeking to understand and exploit ‘the markets’ approach them as investors or traders?

I know that you have made this distinction very clear when talking about your own three-decade-plus involvement in financial markets, but sometimes the boundary seems blurred: for example, if one entered some USD/TRY long positions five years ago he/she would have done very well for him/herself. Yet currency trading is usually not approached in this way by individuals and it is more like buy-and-hold investing in stocks/shares/indices. Is this distinction just a matter of semantics or is it an important one to make early on in one’s journey?

“Exploit” the markets? That is a dangerous, meaningless word. Approach the markets with that framework and they will exploit your bottom line.

Speculation takes lots of work and research to find an edge and even then, edges can disappear in the noise. “Investment” implies something you do with excess cash reserves you have saved up. Good investments can make an extra return on your money above what a savings account will pay. “The higher the return, the more risk” - is a general guideline for asset classes. And, there will always be periods in history where stocks can outperform and other times where they underperform so refrain from straight line thinking or projecting returns from the past into the future.

Most professional traders that I know treat currencies, stocks, bonds, commodities in the same way – markets where the constant shifting tides of supply and demand creates tradable swings of durations anywhere from a few minutes to a few hours to a few days, and on some occasions a few weeks.

3. In one of your interviews with Andrew Swanscott (Better System Trader podcast) you talked about your extensive experience in working on different system modelling with Steve Moore, for example showing how most of a trading session’s volatility concentrates in the first few minutes (especially during moves on the short side).

How much weight and time do you think individual retail traders should give to systems/ modelling if they had no programming expertise and/or wanted to take a discretionary approach to trading (from planning to execution)?

I don’t know how to program. All my early work I did by hand. A trader could simply keep a notebook that had 20-40 chart examples of each of their favourite patterns. The point is to find a methodology you can do consistently without behavioural biases interfering. A retail trader should start off learning to do one thing in one market well. You can then build from there. It is a long slow process. Research can help pass the time.

4. In Sue Herera’s book Women of the Street – Making it on Wall Street (1997), in which you were interviewed, she talked about the gendered difficulties faced by women in financial institutions.

Do you think that the shift from the more macho outcry trading to the quieter electronic exchanges in the last thirty years has gradually eroded that pit-style culture and given more space to women, and if so, which sector do you think has most benefited them (e.g. wealth management, private trading/investing, etc.)?

I left the trading floor in 1987. The pit culture died out 15 -20 years ago. Nobody knows if you are a male or a female when you are behind a screen. Why should it matter? Trading is a bottom line business, not one where you are trying to gather clients or do marketing.

5. In your interview with Kara Grygotis (VP at Trading Technologies) you mentioned that nobody cares if you are a man or woman when it comes to the bottom line (i.e. can you make money or not), yet when you look at the public visibility of women in the trading space, whether it is at an institutional level (Stacey Cunningham will be the first woman president of the NYSE in all of its 226 years; Lauren Simmons is the only full-time female trader at the NYSE; and so on) or in the trading analysis/courses websites and even on traders’ forums, it is almost entirely drowned out by male voices.

How welcoming then is the financial sector in terms of gender (or ethnicity, etc.) and could more diversity actually help creating a different culture of ‘success’?

You are wrong in your statistics. There have been many full time female traders at the NYSE as well as every other exchange over the years.

One of the richest persons in America the last two decades before the turn of the 20th century was a female trader who made her money trading. Her name was Hetty Green. She had made $94 million in trading profits when she died in 1916.

The financial sector does not care your race, gender, or religion. We are talking TRADING here, remember? I know dozens of talented male traders who are very quiet and reserved. You will never see or hear them and they are probably ten times more successful than the visible males with a voice that you mention. Be very careful about stereotyping.

6. Studies show that men have a higher tolerance for risk-taking than women, which by extension translates into male-dominated financial institutions experiencing boom-and-bust cycles.

Given that a growing body of evidence also shows that women have made great returns as wealth managers and investors and out-performed men by most metrics in recent samples, why do you think that a lot of women still shy away from investing or trading their own money (and try to beat a low-interest-rate environment) and view it as too risky?

You are risking making many false assumptions in your generalizations. Some females might have a higher tolerance for risk taking than some males. Boom Bust cycles are not the result of male dominated financial institutions. Statistics showing women generating better returns might be fraught with survivorship bias. There are many flaws to throwing around generalized observations or just citing one study.

Females traditionally build the nest, meaning raise and nurture the young while the male provides for the household. There is nothing wrong with this – it has been a fact for hundreds of centuries. It does not mean that there aren’t females who choose not to raise a family and instead want to generate money as a professional trader.

I was fortunate in that my husband was Mr. Mom while I was the one who worked. There are about the same percentage of successful female traders as there are neurosurgeons or in the mining or construction business.

7. Babypips is a website dedicated to foreign exchange trading. You mentioned in your interview with Aaron Fifield (Chat With Traders podcast) that if you do not keep up with evolution you will become a dinosaur in the markets, meaning that if one particular product or system is no longer performing you will face extinction if you do not keep an open mind and learn to adapt.

In a hypothetical scenario where you had to drop trading commodities or indices and jump into currency trading because of better opportunities there, would you approach it in exactly the same way as for the instruments that you now trade, and if not, what would you think you would need to learn before trading currencies (either spot fx or futures)?

I am not sure I used those words, dinosaur, etc. in my interview with Fifield. But, most “systems” have a half-life where they decay beyond their usefulness. A good market has liquidity and many market participants on multiple time frames – from short term speculators to long term commercials and institutions, etc.

The SP futures, currency futures, gold, crude oil, bond futures, etc. They are all the same to me. The Currency futures and Forex spot market trade identical. I treat them all exactly the same.

If I showed you a 3 minute bar chart of EUR /USD and a 10 minute chart of the Nasdaq futures and you did not know the time frames or the markets, I doubt you would be able to tell them apart. They both trend, form consolidation periods, have reactions and retests, and noisy periods where there is not so much volume.

8. As a musician with an interest in financial markets, I am keen to hear more about people like Adam Grimes (CIO at Waverly Advisors) and Jess Greenberg (Analyst at Winton Group) who have a strong musical background yet are also in financial careers.

With your own daughter now working as a wealth manager at UBS after training as an opera singer, do you think that it is becoming more acceptable or even desirable to have hybrid skills/careers spanning these seemingly antithetic fields (e.g. creative arts and corporate finance)?

People who have been professional athletes or musicians have experienced following a consistent process or staying in the moment which is important for consistent trading. They probably have practised many hours as well. I think having hybrid careers is irrelevant.

9. You have been consistent in stressing that you do not sell any courses or systems, and that people in the public domain should carefully distinguish between actual traders and those who sell courses but have no verified/audited trading record showing profitability.

How can someone starting as a self-taught, aspiring trader in the financial markets find a genuine mentor?

There is no better mentor than the market itself. Keep a journal every day. Write down your observations. Print off charts. Draw trend lines and mark them up. Write down what you think is going to happen each day as well as important levels. Then see how it plays out the next day. Nobody knows what is going to happen.

A mentor doesn’t know any better than you. Only you can learn what it feels like when a trade is working in your favour or when it is starting to go against you. What is a mentor going to tell you that you can’t find on the internet regarding technical analysis? Wyckoff provided a great framework for price action. Great traders can make a lot of much money trading but there are very few great traders.

I don’t believe there are “mentors” out there who can make a great living trading. That is why they are selling stuff. Everyone is selling something because they can’t support themselves trading.

The best traders go on to manage money and make well into the 7 digits. People need to wake up and quit thinking that someone else knows all the secrets. If they did, they certainly would not be selling them to you. And I don’t buy the BS that they are doing it out of the goodness of their heart or as payback for someone helping them out. They are doing it because they are selling you something and they get money in return. There can be value in having a trading coach who does not pretend to be a trader.

A good coach can be gentle reminder for when you are losing self-control and going on “tilt”. Or deviating from your proven methodology because you are not paying attention to other things going on in your life such as too much stress. A good coach can be a good listener, or give you feedback on developing a consistent process or routine. But then again, you can order a good book called The Checklist Manifesto on the internet and might find this helpful instead.

10. You were one of Jack Schwager’s New Market Wizards (1992) and were interviewed in James Allen Smith’s documentary Floored (2009). Is there anything more of this kind in the pipeline. e.g. a forthcoming book/documentary about you and/or your trading?

I have had 6 books outlined for 15 years but never found the time to write anything!

It really is a matter of choosing between trading and writing. But I retired from managing money 3 years ago and have a small book that I have been working on at night – it is nothing technical, but fun stories about how I have been on the wrong side of every major outlier and gotten my ass handed to me. Like shorting 1200 SP futures the Friday afternoon that the Fed announced they were going to step in and take over FNM. Then having them gap up against me 40 handles Sunday night. Or being long 600 live hog future when they announced swine flu one weekend. Fun stories like that!

How do you manage THOSE times! “Ya know, here are all my worst case scenarios that happened to me but hey- I am still around!” And still smiling……

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My best quote taken from the interview.

Very illuminating to also hear her thoughts on mentorship. It seems in her opinion that they could primarily help with the psychological aspects of trading than anything else.

And her book would be an interesting read!

Thanks for putting this together!

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awesome interview, and great advice!

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A great reminder that those so called gurus selling systems or courses are not making money in the markets.

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Great interview! Thanks for sharing this @PipMeHappy!

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Hello traders,

a new interview (by Anthony Crudele) with

Linda Raschke just came out today:

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