Linda Bradford Raschke Trading Manual
Product Description Published in 1996 and written by Larry Connors and 'New Market Wizard'. This 245 page manual is considered by many to be one of the best books written on trading futures. Twenty-five years of combined trading experience is divulged as you will learn 20 of their best strategies. Among the methods you will be taught are:. Swing Trading - The backbone of Linda's success. Not only will you learn exactly how to swing trade, you will also learn specific advanced techniques never before made public!. News - Among the strategies revealed is an intra-day news strategy they use to exploit the herd when the 8:30am economic reports are released.
Linda Bradford Raschke on Day Type, Taylor Trading, Trade Location, More. LINDA BRADFORD RASCHKE FOCUSES ON. Stop trading is that you get out. After plotting charts by hand for years and doing manual calculations for.
This strategy will be especially appreciated by bond traders and currency traders. Pattern Recognition - You will learn some of the best short-term set-up patterns available. Larry and Linda will also teach you how they combine these patterns with other strategies to identify explosive moves.
Linda Raschke. Market Wizard Linda Raschke’s Technical Trading Rules. Buy the first pullback after a new high. Sell the first rally after a new low.
Resources
ADX - In our opinion, ADX (Average Directional Indicator) is one of the most powerful and misunderstood indicators available to traders. Now, for the first time, they reveal a handful of short-term trading strategies they use in conjunction with this terrific indicator.
Volatility - You will learn how to identify markets that are about to explode and how to trade these exciting situations. Also, included are chapters on trading volatility, trading Crabel, trading the smart money index, trading gap reversals, a special chapter on professional money management, and many other trading strategies!
About the Author Linda Bradford Raschke Linda Bradford Raschke is President of, Inc., a registered CTA and money management firm and president of LBR Asset Management, a CPO. She began her professional trading career in 1981 as a market maker in equity options. In addition to running LBRGroup's CTA program, she is the principal trader for the Granat Fund. Raschke was recognized in Jack Schwager's critically acclaimed book, The New Market Wizards, and is known for her own top selling book, Street Smarts - High Probability Short-Term Trading Strategies.
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She has been featured in dozens of financial publications, radio and financial television programs, and has served on the Board of Directors for the Market Technician's Association and is currently Vice President of the American Association of Professional Technical Analysts. Raschke has presented her research and lectured on trading for the Managed Futures Association, American Association of Professioanl Technical Analysists, Bloomberg, Market Technician's Association, International Federation of Technical Analysis, Canadian Society of Technical Analysts, TAG, Omega World, International Online Trading Expo, AIQ, Futures Conference, Carlin Equities and has lectured in over 16 different countries for Dow Jones/Telerate. Product Details Hardcover: 238 pages Publisher: M. Gordon Publishing Group; 1 edition (January 1, 1996) Language: English ISBN-10: ISBN-13: 9107 Product Dimensions: 11.2 x 8.6 x 0.8 inches.
Email (required) Delphic 3/10 Oscillator Strategy Guide The 3/10 Oscillator was developed by floor trader turned Market Wizard Linda Bradford Raschke. This indicator has been created from the description given by the trader Linda Bradford-Raschke of an oscillator that she uses to assist in many of her trading decisions. Raschke is famous not only for having being one of just a handful of women who traded on the floor of the Chicago Mercantile Exchange, but also for successfully making the transition to screen trading. In 1992 she was featured in Jack Schwager’s bestselling ‘New Market Wizards’. In an interview with Active Trader Magazine, Raschke described the indicator thus: “It’s the difference between a three-period simple moving average and a ten-period simple moving average.
Plus, there’s a second line which is a 16 period simple moving average of the 3/10 line”. The Delphic 3/10 Oscillator is programmed according to this description, but has been visually formatted for maximum ease of use.
In the rest of this manual we explore various strategies and setups used by Raschke and her associates which incorporate the 3/10 Oscillator, as well as a few new applications for the indicator. The 3/10 Oscillator line (Green) – the difference between a 3 and a 10 period simple moving average. The Signal line (Grey) – a 16 period simple moving average of the 3/10 Oscillator line. The Zero line (Grey Axis) – corresponds to the crossover of the 3 and 10 period averages used to calculate the 3/10 Oscillator line. When the 3SMA crosses above the 10SMA then the Oscillator line will cross above the Zero line. The Histogram (Green/Red) – the normalised differential between the 3/10 Oscillator line and the Signal line. “ It’s something I’ve been using since 1981.
” Linda Bradford-Raschke “ Ultimately, most indicators show similar patterns, but I prefer the 3/10 Oscillator because I’ve become accustomed to its nuances and feel that it can be used as a ‘three-in-one’ oscillator: momentum indicator, swing indicator, and trend indicator. ” Corey Rosenbloom, CMT (afraidtotrade.com) “ Any market that shows accelerating price gains (starting to go parabolic), is best traded using a momentum style ” Christopher Terry (LBR Capital) The LBR ‘Grail’ Setup This strategy is designed to take advantage of minor corrections in markets that have demonstrated accelerating momentum and strong directional movement. As well as the Delphic 3/10 Oscillator, it incorporates a 14-period ADX indicator (provided as standard in the TradeStation charting package), and a 20-period exponential moving average.
The reverse of these rules (although with an ADX reading still above +30) applies equally well for short trades. Rules for Long Entries A At point A, a strong uptrend in the Nasdaq index future is forming, and the 14-period ADX has crossed above the +30 level.
B The Delphic 3/10 Oscillator signals new momentum highs at point B, as the market continues to push higher. C As price pulls back to the 20-period Exponential Moving Average, a buying opportunity develops, and a long position is established. One easy way to do this is to enter a ‘Buy Limit’ order at the level of the Moving Average. D At point D the market re-tests its prior highs, and the trade can be exited for a profit. You may also wish to experiment with other exit criteria. It would be unwise to try and hold on to a position, however, if there were divergences between the 3/10 Oscillator and price at a retest of the highs.
An important part of the appeal of this type of setup is that it is effective in many timeframes. Where a market continues to demonstrate sustained momentum to the upside, Raschke talks about moving from the timeframe where the first signal is generated (such as a 15 minute chart), and looking for the setup to repeat itself in successively higher timeframes.
These could be treated either as separate trades, with their own entry and exit criteria, or as a means of pyramiding into a longer term swing trade. See the diagram on the right. Buying New Momentum Highs with the 3/10 Oscillator In fast moving markets such as the momentum environments that follow breakouts, often the first correction will not occur before the market has already moved significantly in the direction of a breakout, meaning that a strategy such as the ‘Grail’ setup described above cannot be implemented straight away. Volatility and Channel breakout strategies can be effective here, but these often require substantial capitalisation against false signals.
The following application for the 3/10 Oscillator was suggested by Raschke in an article at TradersLog.com. A On a higher timeframe chart, look for a contraction of volatility within a classical chart consolidation pattern such as a triangle or flag. This can be seen at point A on the daily chart of the EUR/USD above. B Once a breakout formation has been identified, move to a lower timeframe chart such as the 30 minute one below right. A position can be entered (in the direction of the potential breakout on the longer timeframe chart) when both price and momentum make higher highs / lower lows.
This occurs at point B below. C Be prepared to be stopped out within the timeframe you are trading. Remember, you are assuming a relatively small amount of risk in this lower timeframe rather than a higher risk in a higher timeframe.
Yet your profit target remains the same. So be prepared to make several attempts at entry to net a gain that is many multiples of your initial risk. D Raschke recommends placing a stop-loss at the price that coincided with the last swing high/low of the 3-10 Oscillator. Alternatively, a volatility-based or optimised stop and profit target could be used. The Delphic Intelligent Stop could also be effectively deployed here.
Most importantly though, be prepared to cut your losses short. While ever momentum is increasing, there will be many opportunities to take Delphic of new momentum highs. The following quote from Raschke is taken from the article in which this approach is given. “Trading is a matter of style and everything we do is a matter of trade-offs. A trader sacrifices initial trade location in exchange for higher confidence that the trade is working.
A trader who tries to buy at the lower end of a trading range may have superior trade location. However, the odds of capturing an immediate quick gain might be a lot less than the trader who buys at a higher price but has the added benefit of the market momentum in his favour.” Pro-Trader Tips PRO TIP:When using a momentum retracement strategy such as the ‘Grail’ setup, futures trader Tom Bierovic applies a Fibonacci filter criteria, entering “only when the countertrend decline is at least a 38.2 percent retracement but not more than a 61.8 percent retracement of the previous trend wave”.
PRO TIP: Be careful when buying new momentum highs in the currencies. Even the most liquid of the forex markets have a tendency to produce price ‘spikes’ – sudden, strong directional movements that often have no follow-through trend. It is often much better to trade a currency future contract than the cash markets, as the spread is typically negligible. “In the long run it will be the management of the trade after the entry that counts more than the initial entry point” Linda Bradford-Raschke Testing the ‘Grail’ Setup The ‘Grail’ setup can be a surprisingly effective way to trade the indices during the Globex hours outside the regular cash session. Unless there are significant news events, it’s fairly uncommon for major trend reversals to occur in the middle of the night, so once you’ve figured out the prevailing trend, you can use the setup to trade back into it. As Globex volatility is low, you might want to relax the ADX requirements for entries – in the following studies we specified an ADX reading of +20. Programming the ‘Grail’ strategy, which is really a discretionary setup, is quite difficult.
For our back-testing we made the following specifications for long entries (reversed for shorts):. The time must be before 08:00 or after 16:00 exchange time.
The 14-period ADX must have been greater than +20 within the last 5 bars. The Delphic 3/10 Oscillator must have been higher in the last 10 bars than at any other time in the last 30 bars. A buy-limit order was placed at the 20-period exponential average.
A stop-loss and profit target of $400 was used The TradeStation EasyLanguage Strategy code used in the back-testing has been given at the end of article. No element of this strategy has been optimised apart from the ADX threshold (which does not use the most profitable optimised parameter). The back-test reports the results trading a single contract. $5 per roundtrip commission has been deducted. No slippage has been deducted as limit orders are used (there is no guarantee that limit orders would have been filled). No trend filter has been applied unless stated. Reporting excludes the regular cash session.