Linda Raschke—market maker, New Market Wizard, and co-author of Street Smarts—built her reputation on rules-based execution and composure under pressure, epitomized by her decisive trading through Black Monday’s chaos
Breaking The Mold on The Trading Floor
On October 19, 1987—Black Monday—Linda Raschke stood amid the frenzy at the Pacific Coast Stock Exchange’s equity-options pit. As markets plunged, many froze; Raschke, however, methodically scaled into put options on the S&P 100 (OEX) contract, trusting her time-tested signals over hysteria. Within minutes, price swings that paralyzed others yielded her and her firm substantial profits, validating a career built on rules, not impulse. In an industry then overwhelmingly male, Raschke’s composed execution under extreme stress caught the eye of Jack Schwager, earning her a featured profile in The New Market Wizards (1992). That defining moment—calm amid chaos—captures the essence of a trader whose blend of quantitative rigor and floor-honed instincts reshaped perceptions of what a woman could achieve on the trading floor.
Background and Early Life
Born in 1959 in Los Angeles, Linda Raschke grew up the daughter of a schoolteacher and an aerospace engineer—parents who nurtured her analytical bent. At Palos Verdes High, she excelled in mathematics, but charts and patterns held a special allure. She pursued economics at the University of California, Santa Barbara, graduating in 1981. Instead of following peers into corporate finance, Raschke gravitated toward the bustle of the trading pit.
That same year, she joined the Pacific Coast Stock Exchange (PCX) as a market maker in equity options—one of few women on the floor. With no formal apprenticeship programs for her role, she learned by watching, listening, and experimenting. Nights were spent poring over tick charts and back-testing moving-average crossovers on personal computers that filled her studio apartment. Those formative hours, balancing rigorous quantitative work with the visceral feedback of open outcry, forged her conviction that trading success required both systematic rules and acute attention to market nuance.
Key Career Moments
Black Monday Mastery (1987). On October 19, 1987, global equity markets suffered one of history’s most abrupt sell-offs. At PCX, the OEX index option erupted in volatility. Raschke had spent months refining a four-bar reversal pattern: when a rapid four-minute sell sequence closed below its opening price, it signaled a high-probability overshoot. As bid-ask spreads widened and liquidity thinned, she initiated layered put purchases. “The floor was a maelstrom of panic,” recalls Paul Juric, a fellow market maker. “Linda never hesitated—her orders sliced through the chaos.” By day’s end, her profits—estimated in the high six figures—underscored her belief that discipline under pressure was the trader’s greatest asset.
Transition to the Philadelphia Stock Exchange (1990). Seeking new challenges, Raschke moved to the Philadelphia Stock Exchange (PSE) in 1990, where she embraced both index and single-stock options. There, she pioneered intermarket spreads—simultaneous positions in related options across PCX and PSE—to exploit temporary price dislocations. In February 1991, when currency devaluations in Europe triggered correlated stress in equity and currency derivatives, she executed a short-covered call spread across OEX and Euro-dollar options, netting over $400,000. “Linda saw the correlation before most of us,” says Michael Hayes, her trading partner. “She wasn’t just fast; she thought laterally about markets.”
Moving Forward
Founding LBR Asset Management (1992). In 1992, Raschke registered as a Commodity Trading Advisor (CTA) and launched LBR Asset Management, focusing on short-term, high-probability strategies in commodities and equity derivatives. As electronic trading gained traction, she leveraged automated alerts for her signature setups—momentum breakouts and morning-range fades—while maintaining live oversight. By 1995, LBR’s flagship commodity program delivered annualized returns near 12% with drawdowns under 7%, attracting interest from institutional allocators. She distilled her methods in Street Smarts: High Probability Short-Term Trading Strategies, first published in January 1996 with Laurence A. Connors. The book demystified her approach and became a staple for aspiring traders.
Mentorship and Industry Influence. Beyond her own P&L, Raschke committed to education. In the late 1990s, she began hosting annual workshops in Chicago and New York, sharing live-pit insights with institutional and retail audiences alike. Her frank discussions on emotional resilience—how to pivot from a loss and maintain composure—resonated widely. In 2001, she launched an online mentorship forum, one of the first of its kind, fostering a community of traders dedicated to systematic rigor. “Linda’s generosity with her time and ideas changed how I viewed risk,” says veteran prop-trader Angela Chen. “She proved that excellence isn’t exclusive to any gender or background.”
Trading Philosophy
At the heart of Raschke’s success lies rules-based flexibility: a predefined playbook filtered through real-time market context. “Trade what you see, not what you think,” she advises—a mantra that underscores her faith in price action over conjecture. Her setups require multiple confirmations—such as volume surges aligned with price thresholds—before execution.
Risk management is inseparable from strategy. Raschke enforces strict stop-losses, capping losses at no more than 1.5% of capital per trade, and adjusts position size dynamically based on intraday volatility. She pairs classic technical patterns—range contractions, break-and-retreat—with modern tools like statistical dispersion filters. Yet she warns against over-automation: “Algorithms can miss the vibes of a floor; human judgment is the final safeguard.” Her blend of quantitative precision and qualitative intuition has inspired countless systematic traders to preserve capital first and chase probabilities second.
Conclusion
Linda Raschke’s rise—from a PCX market maker to celebrated author and mentor—embodies the transformative power of disciplined innovation. In a male-dominated era, she demonstrated that systematic strategies, grounded in meticulous observation and emotional resilience, are key. Her profiles in The New Market Wizards and Street Smarts immortalized techniques that remain industry mainstays today.
As markets evolve—with machine learning and AI promising new frontiers—Raschke’s story reminds aspiring traders that clarity of process and calm under fire endure as timeless edges. For the next generation, her career offers both a roadmap and a challenge. Build robust systems, respect risk, and never underestimate the human element at the heart of every trade.
