The buying and selling guidelines of Linda Raschke’s “Market Wizard” appear easy, however for a number of a long time they continue to be one of the sensible.
🟡 Purchase the primary correction after a brand new excessive. Promote the primary bounce after a brand new low. Momentum normally continues earlier than reversing. See the buying and selling thought based mostly on one candle with impulses.
🟡 Power or weak point within the second half of the day ought to proceed into the subsequent day. The market hardly ever mimics late actions with out exhibiting them once more within the morning.
🟡 The perfect reversals occur within the morning. If you wish to catch clear reversals, concentrate on the early hours.
🟡 The bigger the hole, the upper the prospect of continuation. Gaps are feelings and positioning — they hardly ever shut instantly.
🟡 Watch the worth response to the day before today’s extremes. These are key ranges for testing energy or weak point.
🟡 The excessive and low of yesterday are necessary ranges — worth both bounces off them or breaks via and continues the transfer.
🟡 The final hour tells the reality. Sensible cash reveals its playing cards on the finish of the day. Constant robust closes affirm the development.
🟡 Excessive quantity at closing means continuation within the morning. Quantity is conviction. It usually carries over to the subsequent session.
🟡 The primary hour units the framework for the present day. The majority of the each day vary varieties early.
🟡 4 everlasting rules of worth motion:
• Tendencies extra usually proceed than reverse;
• Momentum precedes worth;
• Tendencies finish in a climax;
• Markets alternate between enlargement and contraction.
🟡 Nobody is aware of the long run. A profitable dealer does not predict however reacts to market motion.
These guidelines are a long time outdated, however they nonetheless match markets completely. As a result of markets change, however human habits doesn’t. Linda Raschke’s guidelines present how necessary it’s to grasp market construction and worth habits. And historical past proves: those that grasp this mindset usually obtain extraordinary outcomes. Just some iconic examples:
- Larry Williams — turned $10,000 into $1.1 million in a single 12 months via strict self-discipline and seasonal timing.
- James Simons — constructed a $25 billion fortune by decoding market patterns mathematically, not predictively.
- George Soros — made $1 billion in a single day by recognizing the climax of market sentiment — precisely the sort of structural break Raschke warns to observe for.
- Takashi Kotehara — grew $13,000 into $153 million by driving tendencies with persistence and precision, by no means combating worth.
Making use of Raschke’s rules manually is time-consuming and subjective — however the core thought stays unchanged: learn worth, respect construction, act with self-discipline. That’s the place actual edge lives.
