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Linda Raschke sits down with the Words of Wisdom podcast in Florida—an icon with 40+ years in the trenches, author of Trading Sardines, Market Wizards alum, and the mind behind the famed “Turtle Soup” reversal. She talks focus, durability, and why pure technicals still cut through the noise, sharing hard-won perspective from managing hundreds of millions and surviving the industry’s toughest cycles.
In this piece, you’ll learn the core of Raschke’s approach: simplify to price, build routines, and ride fat-tail moves instead of nickel-and-diming targets. We’ll unpack how to filter out “info dopamine,” spot when mean-reversion gives way to true expansion, and use a small daily playbook to act fast without second-guessing. You’ll walk away with beginner-friendly rules of thumb for process over P&L, recognizing continuation windows, and developing real “intuition” the way Linda defines it—stacked experience, not vibes.
Linda Raschke Playbook & Strategy: How He Actually Trades
Core Philosophy: Price First, Process Always
Linda keeps it simple: price action leads, routine drives consistency, and risk sits front row. She’s built a short-term playbook that treats markets like a series of repeatable patterns, not mysteries. The goal is crisp execution on high-probability windows, then get out and reset.
- Trade what prints: prioritize current highs/lows, ranges, and breakouts that actually triggered—ignore narratives.
- Only take setups you can define in one sentence; if it needs a paragraph, pass.
- Favor liquid index futures, liquid stocks, or FX majors with tight spreads and clean intraday structure.
- Keep risk per trade small (e.g., 0.25%–0.50% of equity) so you can fire multiple shots without tilt.
- Treat each session as a fresh distribution: yesterday’s P&L doesn’t change today’s process.
Instruments & Timeframes That Fit Her Edge
She excels in short-term futures and liquid names, where patterns like failed breakouts and first pullbacks repeat daily. Timeframes are practical: entries on intraday bars, structure from daily/weekly, and management keyed to session rhythm.
- Use daily for bias (trend, expansion vs. range), 30–5 minutes for execution.
- If ADR/ATR is compressed, expect mean-revert plays; if range is expanding, favor continuation.
- Avoid thin names and midday chop; focus on open, first two hours, and the close for cleaner flows.
- Track session ranges and VWAP/AVWAP from key catalysts to gauge where positioning is trapped.
Daily Prep: Build a Small, Repeatable Playbook
Prep is about eliminating hesitation before the bell. Linda’s routine trims the watchlist, sets alerts at the right levels, and pre-writes triggers so execution is almost mechanical.
- Pre-mark prior day’s high/low, overnight high/low, and weekly pivots; set alerts ±0.1R.
- Classify symbols: “trend candidates” (strong ADX) vs. “fade candidates” (range bound).
- Define exact trigger bars (inside bar break, reversal bar, ORB) for each symbol before open.
- Pre-decide position size and stop method per setup (tick stop, bar stop, structural stop).
- Write the first exit plan (scale at +1R or at opposing structure) before you place the trade.
Entry Play 1: Turtle Soup (Failed 20-Day Breakouts)
This is her classic reversal that fades failed 20-bar breakouts. You’re exploiting a fast stop-run that snaps back into the prior range—quick, tactical, and rules-driven.
- Condition: Today prints a new 20-day low (for longs); the prior 20-day low occurred ≥3–4 bars ago.
- Setup: Price trades below the prior 20-day low intraday, then reclaims it.
- Trigger: Place a buy stop 5–10 ticks above the prior 20-day low; if filled, you’re long.
- Initial stop: 1 tick below today’s session low (or below the false-break wick on your entry bar).
- Profit targets: First scale near the prior day’s close or the nearest swing; trail rest to session VWAP or last higher low.
- Filters: Skip if a strong trend day is already in motion (rising range/impulse candles), or if news is imminent.
Entry Play 2: Holy Grail (Trend Pullback to 20 EMA with ADX)
When trend strength is proven, buy the first clean pullback. The Holy Grail uses ADX to confirm momentum and the 20-EMA as your value line for entry.
- Condition: 14-period ADX > 30 and rising on your execution timeframe.
- Setup: First retrace to the 20-EMA after momentum push (no second/third touch).
- Trigger: Enter above the high of the first bar that tags the 20-EMA (for longs).
- Initial stop: Below the setup bar’s low or the most recent swing low (whichever is tighter but logical).
- Profit targets: Scale at +1R and/or prior impulse high; trail under higher lows or a 20-EMA close.
- Invalidation: ADX rolling over hard or wide-range counter bars into your entry—skip.
Entry Play 3: The “Anti” Momentum Shift
The “Anti” is a momentum-shift pullback: trend impulse, counter-move into value, then re-ignite with a reversal bar. Use it when the market flips from overextended to ready.
- Condition: Fresh impulse swing with clear momentum, then a controlled pullback (no waterfall).
- Setup: Pullback holds near prior breakout area/MA band; oscillator shift or reversal bar forms.
- Trigger: Enter on the break of the reversal bar in trend direction; avoid entries into immediate resistance.
- Initial stop: Beyond the pullback’s extreme or below the reversal bar.
- Management: If price hesitates at prior swing within 3–5 bars, take partials; strong follow-through—trail under higher lows.
Breakout Continuations: When Not to Fade
Linda distinguishes between fakeouts and real expansions. When the range is genuinely broadening with sponsorship, you ride with tight risk and clear invalidation.
- Condition: Opening drive + expanding 5-/15-min ranges + breadth/volume confirmation.
- Setup: Consolidation (flag/coil) above the breakout level; no heavy rejection wicks.
- Trigger: Buy the consolidation break with a single-bar stop back inside the base.
- Add-on: Only once, on the first orderly flag; never chase third extensions.
- Invalidation: Full body close back inside the base; flatten and reassess.
Risk, Stops, and Sizing That Survive
Her edge lives because risk is defined before entry and respected after. Every trade gets a location-based stop and a pre-planned way to cut, scale, or trail.
- Position size from risk first: shares/contracts = (account × risk%) ÷ stop size.
- Use structure stops (beyond wick/swing) over arbitrary round numbers.
- If slippage > 0.3R on entry, halve size or skip—bad fills ruin expectancy.
- Hard rule: Max 3 losers/day or –1.5R, whichever comes first—then stop.
- News guardrail: Flatten 2–3 minutes before tier-1 releases unless it’s a deliberate catalyst trade.
Trade Management: Let Winners Breathe, Pay Yourself Early
Management is systematic: pay yourself at the first logical level, then give the rest a chance to run. This balances confidence and expectancy.
- Default: Scale 1/3 at +1R, move stop to entry; hold 2/3 for structure targets.
- Use VWAP/AVWAP and the prior day’s extremes as dynamic targets.
- Time stop: If price goes nowhere in 6–10 bars after entry, cut to free up capital.
- Parabolic rule: Two wide-range bars in your favor? Trail tight—don’t donate the thrust back.
- Into close: Close intraday positions 5–10 minutes before the bell unless it’s a higher-timeframe swing.
Context Filters: When to Sit on Your Hands
Knowing when not to trade keeps your distribution clean. Linda avoids low-quality windows that statistically tax the edge.
- Skip first-touch fades on confirmed trend days (rising ADX + broad impulse).
- Avoid midday chop (≈ 11:15–1:30 local) unless a clear catalyst/structure appears.
- No “Turtle Soup” against strong news-driven expansions; wait for full reclaim and pause.
- If VIX/vol crushes ADR, prefer mean-reversion scalps over breakouts.
- Three misses in the same idea cluster (e.g., all fades) → switch playbook or stand down.
Post-Trade Review: Build the Muscle Memory
Her “intuition” is cataloged experience—metrics, screenshots, and pattern libraries. The review loop makes the next trade faster and cleaner.
- Journal every setup: market state, entry bar, stop rationale, exit path, and emotions in one line each.
- Track by setup: win rate, avg R, hold time, and best/worst conditions.
- Screenshot before/after; annotate why it worked or failed.
- Weekly cull: Cut one underperforming pattern or add one micro-filter based on data.
- Rehearse five A+ examples each morning to prime execution.
Size Positions by Volatility, Not Gut—Risk Per Trade Predefined
Linda Raschke hammers this home: your size lives and dies by realized volatility, not your mood. Decide the dollar risk per trade first, then let ATR or the average true range of recent bars translate that into contracts or shares. When markets stretch, you scale down; when they compress, you can responsibly scale up. That single rule keeps you from loading the boat right before a volatility spike turns a small mistake into a portfolio problem.
She also insists on location-based stops and a fixed R multiple before entry. If the stop needs to be wider because volatility is high, the position gets smaller to keep risk constant. If slippage or spread bloats beyond a fraction of R, pass—execution quality is part of sizing. Measure, don’t guess: standardize risk (e.g., 0.25–0.50% of equity per trade), size from the stop distance, and let the math—not the ego—decide when you’re big or small.
Build Diversification Across Underlyings, Strategy Types, And Holding Durations
Linda Raschke doesn’t diversify for the sake of owning “a little of everything”; she diversifies edge expression. That means spreading risk across instruments that move differently, strategies that win in different regimes, and time horizons that don’t peak and trough together. If S&P momentum and crude mean reversion both fire on the same day, great—but she sizes so one can misbehave without sinking the boat. Think baskets of liquid index futures, a couple of commodities, and one or two highly liquid stocks, each tied to a distinct playbook.
She also mixes trade mechanics and timing so correlations don’t blow up her week. A trend pullback with ADX support lives in a different world than a failed-break reversal or an open-range breakout, and she treats them that way. Rotation across holding periods matters too: a same-day scalp shouldn’t share the same stop logic or target framework as a 2–5 day swing. The result is steadier equity curves, fewer emotional tailspins, and more chances to let the math grind in her favor while everyone else is overexposed to one idea.
Trade The Mechanics: Triggers, Entries, Exits—Skip Predictions And Narratives
Linda Raschke keeps the crystal ball in a drawer and focuses on rules she can execute at speed. She sets clear triggers—inside-bar breaks, prior day high/low reclaims, first pullback to a moving average—then acts when they fire without layering on macro stories. The entry is a location, not a feeling: if price is at the level with the structure she defined pre-market, she’s in; if not, she waits. By stripping out predictions, she reduces hesitation and slippage, which is where most retail traders quietly bleed.
Her exits are equally mechanical: first scale at a logical structure level or +1R, then trail behind higher lows or VWAP so winners can breathe. Linda Raschke logs each trade with the setup name, stop logic, and exit path so the process tightens over time rather than drifting. If a setup stalls after several bars, she time-stops and recycles capital instead of arguing with the tape. The net effect is a playbook that survives regime shifts—because mechanics are portable, while narratives age fast.
Prefer Defined Risk Setups; Avoid Unlimited Downside And Hidden Tail Exposure
Linda Raschke is blunt about it: if a trade can nuke your account on a bad print or a gap, it isn’t a professional setup. Defined risk means you know the max damage before entry—hard stop, structural stop, or a construction that caps loss (e.g., debit or vertical spreads, never naked short options into catalysts). She treats gap and news risk as part of the setup, not an afterthought, so if the only way to participate is with an undefined downside, she waits for a different expression. No martingale, no “it can’t go there,” and no averaging into losers to invent an edge.
She also anchors risk to location, not hope: stops live beyond obvious swing points or failed-break extremes, and size shrinks automatically when those stops must be wider. When trading options, she prefers structures that bound outcomes and avoid short-vol tail explosions; when trading futures or stocks, she refuses trades that require heroic stops. Position caps prevent one idea from exceeding a pre-set percentage of equity, and event guardrails keep her flat or hedged into tier-1 releases unless it’s a deliberate catalyst play. The result is a playbook that survives outlier days because the downside was boxed in before the trigger ever fired.
Process Over P&L: Routine, Checklists, And Post-Trade Reviews Drive Consistency
Linda Raschke treats routine like a trading edge: the same prep windows, the same levels, the same decision tree. She builds simple checklists—market state, bias, A/B setups, risk per trade—so entries are confirmations, not debates. The P&L comes after the process; if the setup fires and the risk is right, she takes it, full stop. By removing improvisation at the open, she reduces hesitation, revenge trades, and the quiet drift into randomness.
Her post-trade reviews are equally tight: screenshot before/after, tag the setup, and write one line on stop logic and exit quality. Patterns with weak stats get benched; strong ones get refined with small filters like time-of-day or volatility bands. Linda Raschke also runs time stops and “three strike” rules to prevent stubborn holds from poisoning the day. The outcome is a feedback loop where discipline compounds—fewer decisions, faster execution, and a playbook that stays sharp even when markets change.
In the end, Linda Raschke’s message is refreshingly simple: win by respecting the tape, not your opinions. She builds every decision on price action and volatility—predefining risk, sizing from the stop, and letting structure (not stories) decide entries and exits. Her signature patterns like Turtle Soup and trend pullbacks aren’t magic tricks; they’re repeatable mechanics that work because they’re executed the same way, session after session.
The real “edge” is discipline. Raschke keeps a tight routine, trades liquid markets during the cleanest windows, and manages winners with partials, time stops, and logical targets like prior extremes or VWAP. She diversifies how her edge shows up—across instruments, setups, and holding periods—so one idea never owns the day. And she turns intuition into something tangible through rigorous journaling and review, benching weak patterns and sharpening strong ones. If you copy anything, copy that: price-first rules, defined downside, and a process that gets a little better every week.
