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Linda Raschke and Turtle Soup: trading the failed breakout

The Turtle Traders made breakouts famous: buy when price hits a new 20-day high. Linda Raschke asked a different question. What happens when that breakout fails? Her answer got a cheeky name: Turtle Soup.

Story · 7-minute read · Updated 2026-10-21

Who they were

Linda Bradford Raschke started trading in 1981. Her first job was on the trading floor of the Pacific Coast Stock Exchange, as a market maker in stock options. A market maker stands ready to buy and sell all day, earning small amounts on the gap between prices.

She later moved to the floor of the Philadelphia Stock Exchange. Floor trading in those years was fast, physical and loud. You had to read the crowd and act in seconds.

In the early 1990s she left the floor and began trading from her own office. She registered as a commodity trading advisor in 1992 and started her firm, LBRGroup.

What happened

Market Wizards

In 1992, Jack Schwager featured her in The New Market Wizards, his second book of interviews with standout traders. She became one of the best-known short-term traders in the US.

Street Smarts

In 1996 she co-wrote Street Smarts with Laurence Connors. It's a book of short-term trading setups, each with written rules. It's known among traders for being practical: here's the setup, here's the entry, here's where the stop goes.

Two of its setups have names that stuck.

Turtle Soup. The Turtles bought when price broke above a 20-day high, and sold short when it broke below a 20-day low. Raschke noticed that many of those breakouts failed. Price poked to a new low, trapped the sellers, then snapped back. Turtle Soup traded that snap-back. The name is a joke at the Turtles' expense.

The Holy Grail. A setup for buying a pullback in a strong trend. The name is tongue-in-cheek. Like every setup, it fails often, which is why it comes with a stop.

Later years

She ran funds for many years. She retired as a fund manager in 2015 but has kept trading her own account.

In 2019 she published a memoir, Trading Sardines. The title nods to an old Wall Street joke about sardines bought for trading, not for eating. It's a story about how prices can drift far from real value.

The moment everyone remembers

The idea people remember is the flip. One famous rule says "buy the breakout." Raschke looked at the same chart and asked: where do the breakout traders get trapped?

That's a big shift in thinking. Every popular rule creates a crowd that acts on it. When that crowd is wrong, the move back can be sharp.

It's also a reminder that no setup is "right." Breakout traders and Turtle Soup traders can look at the same candle and take opposite sides. What separates them is the rules: where they get in, where they get out, and how much they risk.

What it teaches

1. Breakouts fail, so test before you trust

Turtle Soup exists because many breakouts don't follow through. That's why we use the body-close test: a wick poking past a level is often a trap; a candle body closing past it is a real break. See breakout vs fakeout.

The quick poke past a level that snaps back is also what people call a liquidity sweep.

2. Every setup needs written rules

Street Smarts is a book of written rules: entry, stop, exit. That's the standard for any setup you trade. If you can't write it down, you can't test it. Our trading plan guide walks through it.

3. Short-term trading needs a tight stop and small size

Short-term setups fail quickly. That's fine if the loss is small and planned. Put the stop loss where the setup is wrong, then size it so the loss is about 1% of the account. The position size calculator does the math.

4. Practice the setup on past charts first

Before trading any named setup, find 20 or more examples on past charts, using replay so you can't see the future. Log each one. See TradingView bar replay.

What it doesn't mean

It doesn't mean fading breakouts beats trading them. Some breakouts fail; some run a long way. Either approach loses when the market does the opposite.

It doesn't mean short-term trading is easier. Raschke spent years on the floor building her feel for fast markets. Short-term trading is demanding, and costs add up fast when you trade often.

And it doesn't mean you can copy a famous trader by copying a setup. A setup is just the entry. The rules around it, and following them on bad days, are what matter.

Timeline

Questions