Street Smarts: High Probability Short-Term Trading Strategies
Linda Bradford Raschke and Laurence A. Connors · 1996 · 239 pages
A working trader's pattern book: named setups with exact entry ticks, stop placement, and exit rules, built around three swing-trading ideas (tests, retracements, climax reversals). The proof for most of it lives in an appendix that isn't in this copy.
The one idea
Raschke and Connors argue that swing trading (not long-term investing, not mechanical trend-following) is the realistic edge for an individual trader, because support and resistance levels form in three recurring ways: a test of a prior high or low, a retracement to a moving average or oscillator level, and a climax exhaustion move. Every pattern in the book is a specific, named way to trade one of those three situations with a tight, predefined stop.
The recurring structure is: define a level from recent price action, wait for the market to either fail at it or confirm through it, enter with a resting stop order (not at-the-market), and get out fast, usually within two to four bars or one to two days. The authors are explicit that you only need one pattern to make a living and that trading multiple patterns badly is worse than trading one pattern well.
The second half of the book's actual thesis, laid out plainly in Chapter 3 and again in the closing chapter (a summary of Professor Fernando Diz's study of 925 CTA programs from 1974 to 1995), is that money management, not the entry pattern, is what separates traders who survive from traders who don't. The patterns are the hook; the real argument is that any of them works if you cut losses immediately and never add to a losing position.
What it actually teaches
Turtle Soup, the book's flagship pattern and the one every later chapter reuses the shape of, runs as a real numbered sequence.
MARK THE LEVEL
Find a 20-day high or low. The prior 20-day extreme it is testing against must have been set at least four trading sessions earlier; a fresher level does not qualify.
WAIT FOR THE FALSE BREAKOUT
Let price trade beyond that 20-day extreme. The whole trade is a bet that this breakout fails, the way most breakouts from a 20-day channel do.
ENTER ON THE FADE
Place a resting entry stop 5 to 10 ticks above (for a short) or below (for a long) the prior 20-day level, on the session after price has broken through it. This is a stop order back through the level, not a market order at the breakout.
SET THE PROTECTIVE STOP
The moment you're filled, put a good-till-cancelled stop one tick beyond that day's high or low. The authors call this a very tight, predefined risk point, and it is the entire reason the pattern is tradeable.
TRAIL AND TAKE THE MONEY
As the trade moves in your favor, trail the stop instead of adding to the position. Trades are expected to resolve in two to three hours to a few days; if you're stopped out on day one or two you may re-enter once at the original level, but only within that window.
What it looks like Monday morning
A reader who takes this seriously stops watching the market live and starts doing the prep the book insists on: the night before, scan for markets sitting at or near a 20-day high or low, a strong ADX reading above 30 with price pulled back to a 20-period moving average, or an LBR/RSI (their name for a 3-period RSI of the 1-day rate of change) below 30 or above 70. Those become the next day's resting orders, entered as stops rather than chased at the open.
The bigger change is procedural: pick one pattern, paper trade it until it is boring, write down every trade in a log the way both authors describe doing by hand, and never let a stop-loss order become optional. The book's actual claim is that the entry pattern barely matters next to that discipline, so the honest Monday-morning move is to test whichever one pattern fits the reader's own market and time frame, not to try to run all fifteen at once.
| Pattern | Chapter | Trigger |
|---|---|---|
| Turtle Soup | 4 | 20-day high/low (set 4+ sessions earlier) breaks, then entry stop 5-10 ticks back through that level |
| Turtle Soup Plus One | 5 | Same setup, one day later: enter on day two at the earlier 20-day extreme, cancel if not filled |
| 80-20's | 6 | Bar opens in top 20% of its range and closes in the bottom 20% (or reverse), signaling exhaustion |
| Momentum Pinball | 7 | 3-period RSI of the 1-day rate of change (LBR/RSI) below 30 or above 70, entry on a break of the next day's first-hour range |
| The Holy Grail | 10 | 14-period ADX above 30 and rising, price pulls back to the 20-period EMA, entry on a break of the prior bar's high/low |
All entries are resting stop orders through a defined level, never market orders; every pattern pairs with an initial stop placed one to two ticks beyond the level that triggered the trade.
Every trading strategy in this manual is absolutely 100 percent useless without proper money management.Raschke and Connors, Street Smarts
Where it fails
- The evidence lives in an appendix this copy doesn't have. The book's own table of contents lists an appendix running from page 203 to 239: independent back-testing by the Moore Research Center in Eugene, Oregon, with exhibits for every named pattern (historical upper/lower percentage statistics, ADX statistics, ROC/RSI buy and sell reports). This scanned PDF stops at page 140, right after the Advance/Decline Market Buster special report. Every quantitative claim in the readable chapters ('about 15-20 trades across 30 futures markets will occur per month' for Turtle Soup, '8 out of 11 trades' profitable for the 2-period ROC) is the authors' own summary; the underlying test data referenced throughout the text is not present to check.
- Every worked example is from 1993 to early 1996. Bonds, S&P futures, soybeans, cotton, wheat, IBM, Motorola: every chart in the book is dated between 1993 and February 1996, mostly clustered in 1995. That was before electronic execution, algorithmic scanning of round-number levels, and 24-hour futures trading made a resting stop just beyond a well-known 20-day high or low a target rather than an edge. The book never revisits this because, in this printing, it couldn't have.
- No copyright page in this copy, so the edition can't be confirmed. The scan has no title page, no copyright notice, and no ISBN anywhere in the extracted text. Internal dating (all chart examples end by February 1996, the text refers to 'the last 15 years' of the authors' careers) points to the original 1996 printing, but that is inferred, not read off a printed page. Later editions add material; a reader should not assume this write-up covers whatever is currently sold under this title.
- Only winning trades get walked through. Every exhibit in the chapters read for this page is a setup that worked. Chapter 4 (Turtle Soup) admits in dialogue that 'you will have periods where you can get a large number of 20-day highs/lows that do not reverse. This is time consuming and frustrating,' but no losing trade is ever charted or walked through step by step the way the winners are. A reader has no worked example of what the failure case actually looks like on a chart, only a warning that it happens.
- The money management chapter is mostly anecdote, not a formula. Chapter 3 promises the real secret to the whole book and delivers five narrative rules (enter the whole position at once, tighten stops on parabolic moves, take full profits on range-expansion bars) plus a personal story about losing money on OEX calls after following a newsletter guru. There is no position-sizing formula, no percent-of-equity risk rule, and no number tying stop distance to account size. 'Keep losses small' is repeated more often than it is quantified.
Who it is for
Buy it if
Buy this for the named, rule-based setups themselves: Turtle Soup, the ADX-based Holy Grail, and Momentum Pinball are specific enough to code and backtest yourself, and the entry/stop mechanics (resting stops, one tick beyond the extreme, trail rather than add) are worth studying regardless of whether the original edge survives. It suits a trader who already has data and wants raw pattern ideas to verify independently, not to trade on the book's word.
Skip it if
Skip it if you're looking for a single system to trade as written, or for evidence that any of these patterns still works in current markets; this copy doesn't even contain the backtest appendix the authors point to, let alone anything post-1996. Also skip it if you want formal position-sizing math instead of money-management advice delivered as war stories.
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