Linda Bradford Raschke doesn’t consider herself a buyside trader. Although she runs her own fund after trading for several hedge funds back in 2002, the futures trader thinks of a buyside trader as someone dealing in equities. As founder and CEO of LBR Group, her fund is roughly 95 percent invested in futures with the remainder in options.
She just loves the strategy and the trading of futures better than equities.
And she has her reasons. “Well, a) the futures just offer such better terrific leverage; b) there’s such better liquidity. With the S&Ps, I can buy and sell 600 on an output with no slippage; c) you have much more diversification if you want non-correlated products. You’ve got the grains, the energy, the crude, the metals, currencies, the bonds,” Raschke told Traders from her Chicago office.
“There are always opportunities, as opposed to where sometimes the equities can hit a low and the volatility pretty much affects 90 percent of the stocks out there,” she said.
She summed up her futures preference thusly: “I just find it a much better vehicle for making money.”
And making money she does. She has an office in Chicago and a home where she has a stable with two horses. At its height, LBR Group had a stable of high-net-worth clients and an estimated $145 million in assets under management. Now she is the primary investor for herself and two other clients, and she trades every day with two colleagues. “I like being small and lean,” she said. “I’ve found that if a firm gets too big, I spend more time managing people and running the business than I do trading. And my main job is a trader.”
The 55-year-old trader and mother of a daughter in her mid-20s doesn’t bother with high-frequency trading or elaborate algorithms either.
“I don’t want to play that kind of game. I like the supply, demand and balances that form technical patterns, and you are always going to have something in crude, gold and the soybeans,” she said. “The euro currency and the index futures are my main vehicles.”
According to Raschke, trading equities has changed since she began making markets as an options trader for the Philadelphia Stock Exchange in 1981 and a Commodity Trading Advisor in 1992. She called it a “frustrating game, with so much of it dependent upon your execution skills.” Although she still follows equities, she said that they are more of a position trade.
“I watch it to see where leadership is, especially the oil, the semis or the financials,” she explained. “That’s really important because it helps set the tone for the day when I’m trading S&Ps. But I just find I can get better leverage and efficiency on the execution of my trading just taking straight directional bets that way.”
As for using algorithms, she usually takes a pass. “It’s like a ridiculous game, and I don’t want to be playing games like that. I want to own it or I want to get out, and I don’t want to be battling algorithms,” she said.
Although there are futures-based algorithms, she said that they “become a catch-all that covers 50 different types of things.”
Raschke said that there are all kinds of ways that you can use algorithms to execute in the futures, but added, “I just find that the basic idea is to get the trade on with as minimal impact on the market as you can unless you’re in a dynamic type of environment that demands more urgency.”
Despite her love/hate relationship with the stresses of trading, Raschke clearly loves her job and relishes her success. And she doesn’t mind staring at multiple screens all day either. “I grew up being a pianist and playing for six hours every day, so I’m not a real extroverted person,” she said. “I’m nice, but if I sat in my house and never saw anybody for a week, it wouldn’t bother me.”
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