048: Linda Raschke – Trading a Framework of Your Own, and Using Models to Study Price Behavior w/ a Market Wizard

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chat for more information. Tasty Trade Inc. is a registered broker dealer and member of Finra, NFA and SIPC. The biggest secret of the best traders in the world is that they're just like everyone else. However, they've worked hard to learn the markets and discover what works and what doesn't. But how can you hear about these journeys and get in on the strategy? Here's your host, Aaron Feich.

Thanks for tuning in. The Chat with Traders podcast. I'm thrilled to have you listening. And this week on the show, I interviewed Linda Rashke. Linda has been an active trader since 1981 when she started out on the floor of the Pacific Coast Stock Exchange as an options market maker. In 1992, Jack Schwager interviewed Linda for his second instalment of the Market Wizards series, The New Market Wizards, and since then Linda has traded for several hedge funds and in 2002 she began one of her own.

Which has been ranked 17th out of 4,500 hedge funds for best five year performance by Barclays Hedge. During this interview we covered some great topics, for example, adapting to environment changes using models to study price behaviour and the part I really enjoyed was Linda's advice to young traders towards the end. So please make sure you pay close attention to this part.

I feel like I should probably forewarn you just a little bit, the sound quality is not ideal, but I hope you can push past this because I'm sure you learned something by listening to a woman who has been trading for over 35 years. Alright, guys, I'm your host, Aaron Firefield. This is the Chat with Traders podcast, and here is my guest for episode 48, Linda Rashke.

Hey Linda, welcome to the podcast. How are you? Hi, Erin. Fine, thank you. Awesome. Good to hear. And let me say first of all, it's such a huge honor to be speaking with you. Thank you very much for taking the time to do this. You're welcome. I mean I for sure appreciate it and I've no doubt listeners will gain a lot from hearing about your experiences.

Uh your insights, your views on trading and any other topic we may get onto during our discussion here. But let's start this off with um getting some context and to help us understand where you've come from. So can you share with us How you first got started trading and what were some of your early experiences with markets?

I uh started on the trading floor back in uh nineteen eighty one, eighty two in the equity options. It was a bit random about how I um got down onto the floor. Um, I worked across the street from the exchange and befriended another trader. So uh, you know, I I pushed him to back me and that's how I got into the business. That that vehicle for entree no longer really exists but in in truth

the barriers to entry are so minimal compared to what they were in the beginning. So I hope that would offer a note of encouragement to to any new aspiring trader. The fact that the barriers to entry are just So minuscule compared to what they were many years ago.

Um and you know, uh when you're in this business, um, the longer you're in it, the more you see all the progressions and changes in the industry. So it's um it's not merely a um a journey of adapting from on the trading floor to uh in front of the screen, um but also one of ever changing products and uh methods of execution. And um uh e even uh subtleties in the market behavior uh in terms of efficiency versus noise and um You know, I always used to laugh.

that once you find the key they change the lock and but but that truly is is true. Every five or ten years, you know, it's uh it's a case of Darwinism. You you must learn to adapt and and uh go with the flow in that respect. So yeah, in terms of, you know, the lessons that you learn on the trading floor per se, I guess you have a little bit

better perspective in that you're in a universe of a couple hundred people and you can very quickly see uh who has longevity and uh who is gone six months later. And um you know, with that you've got examples all around you of of what not to do and what to do. Uh but still it's uh an environment where every every man's got to find their own

particular niche and uh style and uh what what uh one person's doing in the pit next to you is probably not going to be best suited for you. So uh I'm not so sure that the floor is relevant anymore. Um, but many of the things that I learned down there really aren't pertinent.

to uh my trading technique today. It's more a matter of work ethic and principle in terms of taking one day at a time And not trying to project a forecast too far out and just doing your best to manage your risk for that day's session.

So what are some of the things that you learned specifically from being on the trading floor early in your career? I mean, I know you suffered an eighty thousand dollar loss just a few months into your career, which was more capital than you even had at the time. What did you take away from this? You know, obviously it's a it's a business with a lot of risks. And um You know, there's there's nothing that you can take away from it other than the fact that uh you respect the market a great deal.

Okay, and I read somewhere that it took roughly five years for you to make that money back by trading. Um feel free to correct me if that's not right. But I'm interested to know how far into your career was it before you felt like you were beginning to make some real headway with your trading? Well when I first started on the floor, it was much easier to uh engage in arbitrage in the equity auctions where you had a much bigger edge

than there was a um you know a decade later. There is no edge to equity options now. So I guess that as that edge disappeared, at the same time I also gained in um

a experience. That means um just general tape rating and learning to follow the market day after day and seeing numerous uh different environments and I think that's one thing that people underestimate is that you may feel that you're knowledgeable about technicals or particular style But it's not until you live that in low volatility, high volatility, bull markets and bear markets

And that's truly where the learning curve takes place. So you really cannot do a whole lot to speed that up. And um I do remember Probably about um seven years after I had uh begun my trading career and we entered into a different type of environment, actually about six years.

And uh it was one of just a creeper uptrending mark with uh very little volatility and uh very few pullbacks, just a steady grinding move higher and so even after trading for full time uh for that many years I realized that I had no idea what was going on or how to categorize that type of price action. So, I think I... you're never fully a uh a a master. I still learn every day. Um there there's new things or subtle changes. Uh maybe after uh ten years I felt like I had uh solidified a better uh

program that that worked for me. Um but uh there's always uh new things that you're uh recognizing and developing along the way.

Yeah, I really like how you highlighted that that you're forever learning and there's always new things that that are coming into play. Uh, during your time on the floor, how much did you learn directly from other traders compared to what you learned on your own, just from being deeply involved in the market as an active trader?

I didn't really learn anything from other traders, quite honestly. I mean, I can just remember one afternoon where uh a trader uh that I was friends with sat me down and showed the way that he uh calculated conversions and reversals in the derivatives uh in terms of um theoretical pricing. And um other than that uh E everybody had their own style and was doing their own thing. I I didn't really learn anything from one particular trader.

Okay, and would you say that was almost by choice because you you strongly believe that everyone must find their own way, or do you was it more a fact that no one really wanted to share information with you? It's it's not that people don't want to share or or have any great secrets, it's just that

you know, e everybody's very much doing their own thing and concentrating uh on their own business. You know, they all have families to feed and and uh so forth and uh different styles, you know, and and um well what one person does, it might be selling a premium and um that's not gonna suit my risk model or profile. I don't feel as comfortable doing that, so maybe I do something else. Um I I I honestly

uh think it's that way upstairs now electronically. You you can't go and copy another trader. You know, uh you have a trader's only somebody that can

really come up with their own thing and then you have confidence with it and you've done your own research and you know when it's working and you know when it's not working. So, um y I I I really ha about the only thing I I learned on the floor was the person who backed me initially was the one that taught me how to keep track of market internals, meaning uh a ten day moving average of the advanced decline and and and the trend and uh there were some

things that are outdated nowadays, uh cucha, specialist shorts, uh put call ratios, those types of things. But even so, it's up to the individual's interpretation of them as as well as putting them in the right context. Nobody else can do that for you. And it's not like a black and white right or wrong. It's it's all uh a little bit of an art, you know, and a little bit of a subjective uh framework and feel. Yeah, great answer, Linda. Now

You were a Fortrader for about six years. When was it that you decided to move on and what was the next step for you? Well, uh, not to prolong this, but I mean I've I've said this several times in many different interviews and and uh and so forth. I I had a bad accident where I had uh broken some ribs and um dislocated my shoulder and I really couldn't stand on the floor for a period there. So at that point I started trading from upstairs.

Right. And I believe it wasn't long after that, maybe a couple of years, that uh you were motivated to change to futures markets after you'd already been trading equities and options for quite some time. I'm curious to know what inspired the shift. Well, it wasn't necessarily by choice. Um after the crash of eighty seven and then after eighty nine the liquidity just dried up in the office.

So there there really wasn't much to trade. And this is a recurring theme that you'll um hear expressed with many traders that have been in the business for, you know, three decades or so is that you know, uh y you have to be flexible to move to different products or where the volatility and the volume is. And it might be uh in one particular product or market for a period of a couple of years.

And and then and then it changes. You know, you've seen that many times some of the products that they came out with in the late eighties uh no longer exist, you know. For a period there I remember I was in the pits in the value line options. They actually had uh equity options on the value line index. Well that disappeared many years ago and the OEX don't trade anymore.

Um some of the uh products that they came out with index futures originally um on the Amex, the uh they called it the fancy or the XMI. That no longer exists. You know, if you've heard about the Souz bandit, that particular uh modus operandi no longer exists. So uh, you know, some of the markets that that I used to trade no longer exist. You know, pork bellies don't ha uh don't trade anymore. So it's just um you know, i you always have to be ready to to go where the action is, if you will.

Yeah, and did you find any challenges and and being almost being forced to jump to a different market? Was there any um challenges or hurdles you had to overcome to to adapt to these new markets that you were now trading? No, I uh uh uh it's it's Darwinism, you know, you you you make the jump or you or you die, you know. Some people can adapt and change and others never do. So I think you just

uh it it's like being an entrepreneur. You always have to keep an open mind and and uh look for opportunities, you know, no matter how they present themselves. Sure, okay. Now Linda, let's say I know nothing about how you trade. How would you describe your style of trading and approach to markets? So share with us like uh the time frames you trade and some of the opportunities that you're actively seeking out.

Well, not to be cliche, but the market's either going up or it's going down, you know, and and it either stops going up and which types it it's probably ready to reverse or else it stops going down and finds support, you know. So I'm pretty much uh real basic with regards to that, you know. Uh

looking it's it's just like the tide's going in and the tide's going out and you wanna, you know, be positioned to uh be riding the tide in either direction. Um And of course it it's not always so clear cut, you know, so sometimes you're sticking the toe in the water and uh

you know, maybe it's just a little tide or a little current, you know, but what you're really doing is is waiting for, you know, that big wave or those big money flows or that big volume day, which might only come two or three times a month. So that's uh you know, it's a lot of the the trading aspect is staying in the game. until you see your opening and not forcing anything. So very much like playing a tennis game, you're just keeping the ball in play.

until you see that one moment where your opponent is caught off guard and then perhaps you can go in and and put away the ball or put away a winner, you know, but you can't force it to happen. You just you have to stay in the game until you see your opening and uh you know, I'm sure there's many other analogies one could make, you know

If you're a poker player, w what do you do? You know, you stay conservative and and and stay in the game until you feel like uh the deck is hot or you've got a really hot hand and then you can press it bigger. So

Uh I I think all those analogies apply to trading. So in terms of style and time frame, that's just simply going to be a matter of how much risk you uh want to assume. Obviously I think that the big money is made uh holding overnight, you know, if not for one day, maybe for a couple of days. But now you also have uh more risk theoretically. in uh a uh overnight risk or a vet risk or a longer holding time.

Uh I I don't see any big money being made with day traders, but you certainly can uh have some fabulous days, day trading. Okay, so you would say that you trade a mix of timeframe, so you also are active intraday as well as those trades that you might hold for, you know, two, three days, um, and so on? You know, it it really depends on the volatility level of the particular market because

As the volatility level is higher, you can certainly trade much more aggressively on a short-term basis. You have uh Bigger swings intraday, bigger moves, and and better liquidity. And what happens is that as the volatility contracts, and range contracts you have much um less frequent opportunities uh but you really need to go out to a longer holding time.

So uh part of it is determined by the overall volatility of the market. Okay, interesting. Now let's take that one step further. Are you able to share some of your favorite chart patterns or set ups that you like to trade? Uh you know, I I think this notion of of sharp patterns and and setups is um You know, it puts things in a very linear framework and of course the markets don't really move in a linear fashion. So uh if you y you know, everything's going to be uh in a trending channeling mode.

or a consolidation mode where it's uh a noisy range and the ranges these days are much noisier than ever before. you know, or or you're you're doing a climax sale and then a retest and and perhaps trying to see if you can shift some supply demand in the opposite direction and I like uh I mean Y Cough probably still has the most appropriate market model out there in terms of uh test or retest and uh you know contraction and And so forth and so forth.

So it it it's you know, it's it's easy to look at a textbook and see these uh contrite examples uh of chart formations, but you know as well as I do that in real life. um you you are going to find those types of chart examples far and few between. So I think it's much more important to recognize Is there strong volume on the day and uh a strong chance of a directional bias for the day? Or even uh if you're on a longer time horizon, uh that swing for the week?

Or are you uh much more prone to a rotational type of mode, in which case You know, you you are probably going to have a uh a shorter holding period of time and you have to be a little bit more careful about your initial trade location. Okay. Okay, this is really interesting. So I mean how do you find how do you identify good trade locations? I guess that might be a better a better qu question. Like what gives you conviction to, you know, put on a position and take a trade?

Well, if the market's consolidating, we're forming a trading range. Let's just look at the yin and the yang. Let's say for example that you've just had a large standard deviation move, for example six or seven standard deviation move over a um a multi week period. Uh and then the market's probably going to consolidate and go through a testing process, could be for one week, could be for six weeks.

You know, and um when it's going through that testing process in terms of trying to find an equilibrium level or a balance you know, and the supply-demand, you really are not going to have favorable uh opportunities unless it's testing the upper or lower end of the boundary. So uh, you know, you see a chart formation and and your best opportunities are going to come on test of the highs or the lows, you know, the little mini whipsaws, if you will call it that.

Uh you know, it's lethal to try making trades in the middle of the range. It's uh just a noise foul. uh when a market is actually breaking out and trending and making its move to a new level. Trade location really is irrelevant. It's much more a matter of uh get the trade on, you know, and participate in that move. So you have two different styles there.

if you will. And nowadays, you know, everybody's smart. Everybody's very knowledgeable. Everybody has uh Extremely fast uh bandwidth and so forth and can digest information uh instantly unlike you know twenty years ago. So once a market tips its hand, the moves are very efficient. meaning if if you want to wait for a a pullback uh to have a graceful entry, you're probably going to be left in the dust and having to enter at a uh after the market's already moved quite a bit.

Um so i uh context really is important in trading.

Alright, cool. Yeah, thanks a lot for sharing that, Linda. That was uh that was really insightful. And I noticed on your charts you use a number of indicators uh and oscillators in particular. A lot of traders have very mixed opinions on these types of tools. I'm keen to hear what are your thoughts on using indicators and to what extent do they influence your trading decisions? Well when I actually modeled Thank you.

you know, model uh the market's price behavior or do any type of quantitative work. I really use price functions such as average true range or things along those lines, it it's not going to model out well if you try using a derivative of price, meaning like an oscillator. Uh I just stick to one oscillator it's a moving average of a three and ten period simple moving average. And and it's just there to support

the charts. I mean you can train your eye and see the same thing without the oscillator. It just makes a little pretty feel if you start to get a loss of momentum in a trading range. Uh so it's just a little bit of a crutch. Um it smooths out the data a tad, uh but you're not necessarily going to make a decision on that per se. It's it's just supporting evidence that uh

You know, price is always going to lead. You know, the price is always going to be one or two bars ahead of a a turn up or down and an off. It just it just helps uh make a pretty picture. Okay. Are you ready to get serious about trading? Then join Tasty Trade, Investopedia's best platform for options trading in twenty twenty six. Stocks, options, futures, and more. Tasty Trade has everything you trade all in one platform. Get low commissions, including zero commission on stocks.

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So you have a focus on um becoming intimately familiar with uh the markets that you trade. So just for an example, let's say you have twenty futures markets that you know intimately. If you were introduced to a brand new market tomorrow, what are some of the first steps you'd take to becoming intimately familiar with this market also? Well, the first thing that you always want to evaluate with any market that you are not as familiar with is the liquidity.

Uh because it's never a problem getting into a market. You know, it's always a problem getting out if you need to get out very quickly. So it's just like if you test drive a new car, the first thing you wanna do is not test the gas pedal, you want to test the brakes, you know. So uh it's the same thing with the market. You want to make sure that you can get out of it, you know? Uh that's what I always look at. Okay, liquidity. So that's that's definitely a big one there.

Uh Linda, you've been trading for over thirty-five years now. Let me ask you, to what degree is intuition and instinct a contributing factor to your trading success? Uh, instinct I would say zero. You know. All these things like intuition, I mean, really what you're talking about is just getting proficient at uh monitoring the tape.

and um what do they say, intuition is just a sum of experience. So I I mean I can think of just as many times where I had a hunch and it was wrong as it was right, which is why I really try to um trade around a model. Even even then at least I know when the model's wrong. So uh I think that you have to have a core methodology or something that's going to add consistency to your approach to the market. You need to have a very consistent approach or framework.

with which you deal with the market. So when you start popping in words like intuition or or uh hunch or these types of things immediately you you are starting to question your consistent framework. Now, with that said, I c I can have my consistent program and model And and and I know when something's not going, you know, if if if I initiate uh on on a buy signal and uh, you know, the market's feeling really sticky and and not really move as much as it could otherwise.

You know, I wouldn't necessarily call that intuition. I would just say it's more noting the reaction of the prize to the framework. you know, that I had and and if it said, Hey, everything's ready, you know, for a green light go to the upside but, you know, they're not they're not taking the ball and running with it then, you know, it's just a dead market or, you know Perhaps uh there's The market's already way too long and it's just not going to go anywhere.

Sure. All right. So you've mentioned models a few times. I'd really like to dig into this and learn a little bit more um about what you're referring to here. So can you help us to understand how you use models to study price behaviour and How do you then take that information and apply it to your actual live trading? Well anytime you start to think about developing a model, it comes from asking a question, asking a question of the market.

So for example, a simplistic uh example would be uh if the market has gone from low to high two days in a row, uh what what happens the following day. You know, what what what percent of the time does it go from low to high the next day or from high to low the next day? So that's that's a basic departure. You know, if we've been up two days in a row, uh what are the odds that it's gonna be up a third day? And uh and then if we say and if it is up a third day

uh then w uh what does that imply? So you can start building on this and you can start saying, God If the market's up seven days in a row, now uh you know, that might indicate that you've got some reason for persistency of trend and perhaps it could go up fourteen days in a row. Um so this this is your basic modeling. It's usually from just asking one question and then trying to uh to quantify that with just one or two variables. So you end up with something that's very durable and robust.

Uh, but it's not going to give you anything that you would use to bet the farm on. It just provides a framework. So let's take that example of Low to high, low to high. Now I've had two updates and I'm in a normal trading environment. Perhaps uh I'm below the 20 day high and I'm above the 20 day low, meaning that I'm in a range. Uh so once I can add a little filter like that, I'm not making new 20 day highs or new 40 day highs, uh, but I'm in a range and I have two days low to highs.

Perhaps my model would tell me then that the next day I should look to to trade from the short side. And um So so it gives you a bias, if you will. And uh then I would know pretty quickly uh if if my bias was correct or not because I I'll come in and and it's sort of like the old uh saying with the art of war, you know, you you prod with a bayonet

And and if you encounter mush, you advance, you know. But if you counter uh steel, uh you back off. In other words, if you're not getting anywhere, you know, you back off. So how do you then take that information and apply it to actually live trading scenario? Are you trading Are you trading specifically what you've discovered from, you know, doing your modelling? Or is it just a guide?

My modeling gives me uh my game plan the night before. So I can come in with uh N number of markets and say, you know, gosh, you know, we've we've got uh uh great cell divergences in this market, you know, it's uh it's it's it's falling into my little framework here. Um, you know, I I I if if it starts to break to the downside and there's an increase in volume, I'm I'm going to add to my position or be all over it.

And so, you know, what my models do is they give me my preparation the day before and then, you know, when I come in and I sit down in the morning, you know, i it's like you know, the dealer is dealing the cards. Let's go. You know? So it could be very analogous to if you're

if you if you look at football or baseball or or a sport, you're going to you know, the night before you're gonna be studying the behavior of your opponents. You're gonna be seeing, okay, does this team have a tendency to pass? Or to run? Who are the strong players? Who are the weak ones? Where am I most likely to get an opening, right? You know, but then uh

Boom, when they blow the whistle and the game starts, the conditions could change. It could be rainy, you know, in a sloppy field, or your best man could be out and you have to make adjustments. Uh but at least you've done your homework so that you are prepared. Uh you know, if you do get an opportunity to capitalize on something Okay. Yeah, so it's kinda like if um your bias is confirmed by the market.

uh your modelling gives you extra conviction on that trade. Is that a Absolutely, absolutely. And what you learn is that it doesn't matter if it's a mechanical system or a discretionary uh approach. probably eighty percent of your profits are going to come from ten percent of your trade. You know, even if you're a day trader you'll find that eighty percent of your profits will come from ten percent of the days. It it just is the way that it plays out.

So you're you're always trying to stay prepared and ready, you know, with the hopes that you get that opening uh and can jump on it. Okay, excellent. Now are you using mechanical trading systems alongside your discretionary trade?

I don't right now. I have in the past. Um they're more for good discipline. They're more for uh you know For example, there's been periods in the past where uh you know, I I feel like I'm starting to spin my wheels or I don't really have any clear cut um uh play and um You know, or perhaps uh I've experienced a a drawdown or a particularly uh uh disorienting loss.

and a good way to get back into the game is a volatility breakout system. So I've I've used that on and off, you know, every five or six years to sort of get the ball going again and and have a mechanical guideline to, you know keep pulling the trigger and keep managing the trades. And with that said, I've I've never really made much money, uh, with a volatility breakout system. It's not something I would recommend for somebody to make a living, but, you know

you're not gonna get hurt either. You know, if you if you traded a volatility breakout system for six months I would say there's still ninety percent odds that you'd have a uh a positive equity. It's just a lot of work, you know, it's a lot of work and it's not real fun. Yeah. Now Linda, how do you prepare for each session or day before the bell rings? Could you shine some light on your your daily routine? Obviously, presuming you've got one, of course.

Yeah, I I I find that it works best for me if I uh do my game plan the day before after the markets close. You know, I don't like to come in in the morning and have to scramble to put something together. So I I really debased if I can go to bed feeling like I'm already prepared for the next day. And it's sort of like taking a test, you know, and using a number two lead pencil. You know, your first guess is probably your best guess, you know.

So I just try to make my best guess the night before, you know, as to what's gonna play out or, you know, where the openings might be. And and and of course we have to adjust everything to how the market's traded overnight. Just part of the game. Excellent. Excellent answer. Yeah. Um that that's a really great point.

Now you said at the end of your Market Wizards interview, I know this was a uh you know, quite some years ago, but you said, I really believe that I can become one of the best traders around and I really like that line and it shows that you're very confident and I feel Many traders probably lack such confidence. So I'd like to ask you, are you successful because you're confident or are you confident because you're successful?

No, you're never confident because you're successful. It it doesn't work in that order. Um, I think that it's more that you're confident in your ability to focus and I would say above all, concentration. And that's what I see uh will affect me, uh, and I'm sure it's that way with ninety percent of the people around, that your success is going to depend on your ability to concentrate particularly uh in the past number of years because it so easy to have pervasive distraction.

you know, the social media, the Twitter, the T V, the the um you know, the tweet decks, the blah blah blah. I don't even know all this stuff. You know, all the blogs, the emails. I I have no idea how somebody can concentrate and and trade well with all this these extra opinions and and you know, energies and and you know, noise going on around you. I I think that you need to figure out for yourself how to totally eliminate the noise and then

concentrate on your own strategy. And for a lot of people, myself included, uh I I feel that if if somebody else is is if I hear somebody else opinion or strategy. I I feel like I'm in a lose lose situation. Damned if I do, damned if I don't, you know. I don't wanna know what anybody else is thinking, you know. I don't wanna know what somebody else's work is. You know, I want to know what my work is and then how the the market is acting according to my plan and then I can do that.

So I think the confidence comes When you're in uh you know, not again, not to sound cliche, but trading is a performance oriented sport, uh, if you will. And so all those books that came out fifteen years ago talking about flow, you know, uh and staying in the moment and and and now it's sort of gravitated towards this uh mindfulness uh terminology.

It it it's all the same thing, you know, it's all your ability to concentrate and focus. And I think that that is what ultimately gives somebody confidence.

Alright, brilliant answer. And just while we're speaking of cliches, um I know this question is kind of along those lines, but I've got to do it. Is there any advice you'd like to pass on to younger traders that would be beneficial to them? And of course feel free to repeat anything that we've already discussed too if if that's what you'd like to really emphasise.

I I um I I don't like sounding cynical uh because I I'm not a cynical person per se, but I would suggest that you take anybody else's opinions that you see expressed on internets and blogs and tweets and so forth, t take them with a grain of Okay, uh perhaps those people are doing well, perhaps they're only uh more vocal when they're having good trades, you know. And a lot of

quote, educators out there honestly couldn't trade their way out of the paper bag. That's why they're they're they're doing other activities, you know, uh And a and I know uh y you can make such a ridiculous amount of money, you know, as a CTA or a fund manager or managing other people's money, it's not even funny. So you know, i if you can trade well you're certainly not gonna be out there trying to teach other people how to trade. You know, you'll

It's a bottom line business and if you can put together a good bottom line consistently, trust me, the money will just float you and and and you can make so much more. So really you know, have your antenna up and oh I I'm not here to diss people in general. There's some good people out there but i it's really important that you find your own style or something that makes sense to you. And the best way to start out is uh Print off charts of

key moments of of where there was a big move. Print off charts of these and and see what the price action looked like leading up to that. You know, so it's sort of a a deductive type of logic, you know, and backtracking back here and and seeing if there's some common elements or common themes and then how can you position yourself i in in in that direction. It's it's really good old fashioned detective work. And it's it's not going to come in my opinion from

looking at artificial constraints on the market. And by that I mean, you know, Fibonacci numbers or or GAN numbers or or you know, all these types of things. And by the way, GAN uh up until like his very last two or three years when he had syphilis. was a basic swing trader. If you read all his early work, it's swing highs, swing lows, you know, cycle anniversary dates and stuff. It wasn't all these little goofy, you know, spirals and all that kind of stuff when he was

uh pretty demented in his head. Uh he was just a good old fashioned swing trader as was Wykoff and and all those early uh uh early work. So um, you know, do your own work and then what you wanna do is you wanna just concentrate on one initial pattern and meaning a one initial play, either a breakout type of thing or a a retracement into the direction of the trend. And

You know, see if you can make a little library of those. See if you can capture twenty examples of those. Uh it you know, uh print them off and make a little notebook. And and then as you see them unfold real time, maybe you just get two a week. and and start to keep statistics on your own ability to replicate uh something in that direction. And don't think about trying to capture a big play. Think about only trying to take a couple tic out in the direction of that movement.

Okay, and and if you do that then just let it go on to the next trade. And what you'll find is that initially perhaps your ability to capture a piece of the swing might be uh capturing just 10% of that. See? But if eventually you can capture one-third of that swing, that's a really good metric by which to measure yourself. So you have to find something where you can make it a game

against yourself. You see? Uh can I have five winning days in a row? Can I make three winning trades in a row? And it's keeping track of your own records and and performance statistics. You see? And and you have to make it into that type of game for yourself and then it will help you free yourself from the Ego driven drive to call a market right. You know, to say, oh, you know, I I

turn, oh it's going up, oh it's going down. And and that's really not what trading is about. You know, uh it's not that we're smart and we can foresee something in advance. It has nothing to do with the markets. It's it's more uh uh you know Imagine you're out on the sea and you're surfing. Nobody can see when that seventh wave is going to be the big wave, right? You just try and

get up on your board and stand up on the board numerous times and then whoa, lo and behold, you you catch that big wave but you can't say, oh that big wave is going to come in eleven minutes from now. It doesn't work that So uh it's it's very much with the markets, you know, you're really at their mercy. and uh let go of all this uh you know e egotistical stuff and and then you'll you'll really be the better trader and uh the you know the better uh breadwinner for being able to

uh extract profits from the market. It's just uh being ready to take what the market gives you and uh I I hope that makes some sense. You know, I I really feel strongly about that. I I I feel incredibly strongly that uh people think that there's an easy way or they think that they can follow a a guru or or somebody else's uh you know, perhaps uh path and and uh uh the only people I see really make it in this business have found one little arbitrage that they can relate to for themselves.

And then they can expand on that and this and once you've reached that point there's no harm in seeing what other people are doing and extracting ideas. Then you take that idea and you Hm, well maybe I'll add my little twist to that. Hmm. Maybe that only happens on Friday.

Hm. Maybe that only happens when the first hour volume is greater than the previous day's first hour volume. Hm, you see? And uh and that's sort of the evolution of constantly uh coming up with ideas and uh Growing with the market

Excellent response there, Linda. That was uh that was really brilliant. Thank you very much for sharing that and um you've definitely given us all a lot to to think about, so I appreciate you going to uh going to lengths to explain that to uh Um, before you go, do you wanna share with listeners where they can go to find out more about you and where can they connect with you?

Oh my goodness, you know, I I I have a little website up that I I've been pretty negligent in in posting to this year. You know, I kinda set up this blog format and I'm a pretty crummy writer. Uh I I should get back to doing something like that. But I think there's a contact form on there. If you had a question and you wanted to uh to uh contact me. Um

You know, uh other than that, I'm I'm sure there's a proliferation of of information on the internet. I know I've done YouTube videos for Big Mic Forum or Money Show or goodness knows, uh so much stuff over the past. So um I I I'm sure nobody would have any problem finding much material for free. Hey, for free. Yeah, well I found a bunch of great resources while I was doing some um doing some homework for this interview. So I'll be sure to uh link to those um

in the in the show notes to this episode. So anyone listening if they want to get uh the show notes and links to find out more about Linda go to chatwithtraders dot com forward slash forty eight. Everything will be there in the show notes. Now Linda Thank you very much for doing this. Um, it was is such an honor to speak with you, like I mentioned earlier. I really appreciate you taking the time to do this. Have a great evening and let's speak again soon. All right, back to you, Aaron.

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