The following is a post I did for another board. I was asked specifically about Linda Raschke. She was doing a seminar for Tradestation and folks wanted to know if I knew her and what I though of her. I explained to them that she is a great gal and very friendly and responsive. I have talked with her a handful of times and sincerely like her. With that said, I stated that I would not go to her seminar ---nor would I recommend it. Of course this solicited several responses and folks asked me to elaborate. I guess they considered that provocative or something. So I wrote the following for them:
"In the early 90’s, I came across Linda Raschke’s telerate seminar on the 5 trading patterns. She had done this seminar for Dow Jones telerate. I have been hooked on the 3/10/16 simple Macd ever since. These 5 trading patterns served me well. In fact, to this day, it is (in my opinion) her most simple, elegant and useful seminar. I pretty much bought everything she put out for telerate seminars. I also became a subscriber to Smr charts (
www.smr.com). Smr charts utilize this same indicator. You can go to the website and see and download for free their charts via pdf. You can also go and download the indicator on this website (I believe).
Now if anyone has heard the terms anti’s, first cross (also called short skirts), sling ---well these are terms Linda uses for the oscillator patterns. In the mid 90’s, it came to my attention from the owners of Smr that a very successful trader out west (Chick Goslin) was going to be a publishing a book on how to use their indicators. I had always made it a point to contact anyone who was successful in using the tools I had employed. Chick’s book came out and I read it. I did not fully understand what he was trying to say. Partially because the man had never written a book before. Also, the way he used the indicators was slightly different (in fact I considered it heresy). Since I was successful at that time. I put the book aside.
A couple years later, I happened to have a conversation with an acquaintance that really started to make me think. It was about one of the positions Chick was in. If I remember correctly, he was on the right side of a move that I was on the wrong side of! I made it a point to call him. He was then doing a teaching newsletter. After talking about the pattern at hand and telling him that I was short off this particular pattern in the same commodity. He immediately replied. “It is in a bullish status it will not be lower for a at least 10 trading days --it is fully concurrent to the upside”. Well since I was loosing money on the trade and he was making money. I decided maybe there was something missing. And there was.
The patterns that Mama Raschke teaches are effective. However, I now view them as incomplete. Intraday, it will not hurt you (esp. during big bull markets). Because, she is giving you other indicators to use to qualify trades. But for position trading it is incomplete. Good-- but incomplete. Just using the 16 period moving average of the 3/10 as qualifier does not go far enough. There is much, much --more to it than that. Linda performed zillions of tests and said for years it does not matter where the 16 is located ---it just matters if it is above or below 0. You know --16 below 0 look to sell the first rally in the 3/10 (hence, first cross) and if you do this well you have a 60% chance of the price reaching the previous swing low. Well that is true and false. It depends on whether the market is in an up trend or downtrend ( as quantified by the 49 period moving average). Once that is established, testing produces completely different results and it makes a big difference to as where and how the 16 is positioned. This revolutionized my trading. It allowed me to take a quantum step forward by taking a step back. It did not take long to figure out by looking at past trades as to why the patterns were making me money in some places and loosing me money in others. It was like getting hit on the head with a hammer.
I cannot write anymore this evening. So feel free to leave comments or questions. Chick has written a new book. It goes into much more detail and is much better than his first book. You can go to
www.tradingdaybyday.com and check it out. His concepts have been simplified over decades of using the same indicators. His teaching newsletter is very inexpensive (50.00 dollars a month). For the record, I have no financial connections to him at all. But if you are using the 3/10/16 or any other momentum oscillators like the CCI or Stochastic or Macd. I would check it out. It is not presented as a book for day traders. The concepts are just as valid whether trading on daily charts or 15 minute charts."
That is all I have to say on the issue. I normally do not spend time on trading boards. But will come back from time to time to answer your questions as best I can. However, if you read all the previous posts from people---you should get most of questions answered.
Cheers and happy trading
TGM