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When discussing her online trading room, Raschke mentions one of her goals is to communicate the importance of the trading process, and the reality of dealing with things such as errors and unexpectunexpected market developments. She talks about missing a trade setup she has been watching develop.

"To me, it's a bigger crime to miss a trade I've been monitoring — I have to put on at least a small position at the market just on principle," she says. "I'd rather try and be wrong than not put the trade on at all. So if I feel like I'm not doing it at an advantageous trade location, I'll reduce the leverage to a minimum, but I'll still make the trade.

"It hurts my confidence if I don't at least try," she continues. "If you don't follow through, you'll start holding back — like a golfer who won't really swing freely because he's afraid he'll hook or slice. In any performance endeavor, if you start holding back a little bit, it blocks you and messes up your game.

You've still got to go for it even if you know the odds of a winner aren't going to be quite as high, but it's something you've been watching and monitoring."

In this case, Raschke is referring to a long trade in the December 2003 Eurocurrency (ECZ03) futures that set up in the aftermath of two successful short trades the previous week (see Figure 3, below).

LBR: Now, I've already caught this market moving to the downside two days in row. So this morning I'm thinking, "OK, I like playing the downside because it's rewarding me, but we've already had two down days in a row. Let's see if there's upside potential."

Let's look at what happened here. The market rallied up to the retest — I think it hit 92 or 93 on this little pop - so it could easily turn back down. At the very least, then, I want to pull a stop up to breakeven.

What I'll do is stick an offer out there — always try to make the market take your offer out first, because there's always that edge in selling on the offer and buying on the bid. If it isn't hit within the next two or three minutes, I'll get out at the market.

AT: How do you gauge how much time a trade like that needs? LBR: The time frame I'm trading on and my objective. Think in terms of how long it takes for an average swing, up or down, to form on a certain time frame. Let's say you're working on a 10-minute time frame. What's the average up swing or down swing going to be — 30 minutes or so? It might be longer, but this gives you an approximate window to work within.

In this case, I wasn't playing for a big target because overall, the market is in a trading range — it's not like I have trends on multiple time frames behind me — and I do know the shortterm momentum has been to the downside because the downswings have been larger than the upswings. That's really what I try to do, by the way — I just want to trade in the direction of the most recent greatest swing on my time frame.

And there's some common sense. If you're on a one-minute time frame, you're not going to hold the trade for an hour.