Women Of Market Wizardry: How Linda Raschke Leveled The Prop Trading Playing Field

Who are the most successful investors you've read about? Names like Peter Lynch, Michael Burry, Jesse Livermore and Warren Buffett often top this list, and for good reason. Large-scale investing is frequently considered a boy's club, and women investors often don't get the publicity of their counterparts. But women can also be Wall Street wizards, and LBR Asset Management's Linda Bradford Raschke has a prop trading track record that stacks up against anyone.

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The First Woman In Market Wizards

In his Market Wizards book series, finance author Jack Schwager chronicles the life and career of several famous traders, such as Paul Tudor Jones, Ed Seykota and Richard Dennis. In 1992's "New Market Wizards," Schwager interviewed his first female subject, chronicling Raschke's journey from childhood chart watcher to president of LBR Asset Management.

Raschke grew up in a trading household and was often by her father's side as he reviewed charts. Her natural curiosity led to a career in financial markets, and Raschke excelled at studying pattern recognition. She got her start on the Pacific Stock Exchange as a commodities trader, later becoming a registered commodities adviser.

A strong proponent of technical analysis in asset prices, Raschke credits a love of music from a young age for helping her in pattern recognition. She doesn't believe a sophisticated background in market systems is particularly necessary to become a career trader because systems and rules are often thrown out the window when big sums of money are at play. Recognizing short-term patterns is her key to success, and she's written books, blogs and recorded YouTube videos describing her specific rules.

Successful Rules For Trading According To Linda Raschke

Preparation is the most important emphasis for Raschke. All her ideas, trades and positions are planned and rules are rarely (if ever) deviated from. By sticking to her gut, she was able to build not just a successful fund in LBR but one of the most successful commodities trading careers of any woman on Wall Street.

Some of her most prominent pieces of trading advice include:

1. Plan your trade and trade your plan. Planning helps keep emotions in check, although most people cannot truly trade emotion-free.

2. Use stop-loss orders. Apply the stop loss when the trade is entered, and don't cancel it once it’s placed.

3. The first and last hours of the day are the most important. Reversals usually occur in the morning, and the first hour dictates the day. The last hour is when sharp investors come in and can be evidence of trend strength.

4. Don't be afraid to buy high and sell low. Buy pullbacks after new highs and sell upswings after new lows.

5. Trade what happens, not what you think should happen. Too many traders insert their point of view into a position instead of just reacting to how a piece of news moves the market.

Raschke retired from asset management in 2015 and now only manages her own portfolio. But her trading lessons can inspire a new generation of prop traders who want to test their own rules and systems in a virtual setting.

For example, Apex Trader has a program for prop traders looking to put themselves on the map. Its funded trader programs set top traders against each other with the best performers getting increased incentives. Plus, traders can choose from two different types of funded accounts and keep up to 100% of profits on their first $25,000.

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