Trading strategy tips: Linda Raschke on the importance of deliberation

When I started trading on the Pacific Coast Exchange in the late 80s we didn’t have electronic platforms that processed our will at the click of a button. To place each order I’d have to dial up a broker on the exchange floor, wait for them to answer, give them my identification and say: ‘Hey Tom, I want you to buy me 200 coffee futures, and to do it over a 10-minute period, charged at an average price, work half on the bid, half of the offer’.

Imagine the thinking it took when you’re managing multiple funds, with multiple strategies.

While these years were also marked by bad behaviour you just don’t see nowadays –  greenmail, blackmail; total manipulation in every way – traders were forced to think about their trading strategy decisions in a very strategic and deliberate manner.

“Traders were forced to think about their trading strategy decisions in a very strategic and deliberate manner" - Linda Raschke

This is worlds apart from today, whereby traders can sit there with a mouse and click, click, click, trading across 20 markets in the space of two minutes. That convenience has also created a problem: trading can become like a very seductive video game. Because of this, a more spontaneous trading staretgy ensues, and a lot of needless marginal trades are made.

My advice for your trading strategy is to slow down. Take a pen to paper and write out your plan, note down your trades and what you’re seeing – particularly in your first five years as a trader. To this day after the markets close, I write down my numbers, I plot the net change, I make note if there’s a particular condition setting up that can be taken advantage of the next day.

“Convenience has created a problem: trading can become like a very seductive video game” - Linda Raschke

 

Writing things down goes to a different part of your brain, it helps you feel in control of your trading strategy, and it rains in the thoughts that can run through your mind.

 

Linda Bradford Raschke is a trader, author and former head fund manager. Her latest book, Trading Sardines: Lessons in the Markets by a Lifelong Trader is available now.

Read Linda Bradford Raschke’s Tricks of the Trade in our free eBook available here.