Raschke 12 Rules

Core Philosophy

Momentum Precedes Price

The foundational principle behind Linda Raschke's 12 Rules — and the engine that drives this implementation.

Linda Raschke — Trading Sardine

"The first pullback after a new high or low offers the highest-conviction entry point. Momentum precedes price — and the market always tells you where it wants to go before it gets there."

— Linda Raschke · Street Smarts

What This Strategy Does

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Automates Raschke's rules: Converts the 12 Rules from discretionary principles into coded, visual signals on the chart — removing ambiguity from execution.

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Pullback identification: Detects the first touch of the 20 EMA following a fresh 20-period high or low — the highest-probability entry per Raschke's Rule 1.

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Exhaustion detection: Identifies momentum climax bars based on ATR volatility and volume spikes, providing automated exit signals before mean reversion (Rule 12).

SireMammat Additions

Integrated dashboard: Real-time table tracking technical health — Last Hour Truth, Trend Status, Morning Reversal alerts — all in one view.

9-point positioning: Users can customize the dashboard anchor from 9 positions on the chart, ensuring it never obstructs price action.

Session awareness: Built-in RTH filtering and session-specific logic for futures markets (ES, NQ, MES, MNQ).

The 12 Rules

Complete Rule Breakdown

All 12 rules from Linda Raschke's methodology — with implementation status for the SireMammat edition.

Rule 1

The Pullback

Identifies the first touch of the 20 EMA following a fresh 20-period high or low. This is the highest-conviction entry point — momentum has already established direction, and the pullback offers a low-risk entry.

● CODED

Rule 2

Trend Identification

Trade in the direction of the prevailing trend. The 20 EMA slope and price position relative to it determine trend state. Avoid counter-trend entries unless exhaustion signals confirm.

● CODED

Rule 3

Morning Reversal

Alerts when early-session volatility suggests a reversal of the opening gap. The first 30 minutes often trap early movers — the reversal signal catches the real move.

● CODED

Rule 4

Volume Confirmation

Validates signals with volume analysis. A pullback to the 20 EMA on declining volume is higher quality than one on rising volume — it shows the pullback is a pause, not a reversal.

● CODED

Rule 5

Previous Day High

Tracks price relative to the Previous Day's High. Sustained trading above PDH confirms bullish bias. Rejection at PDH is a short signal.

● CODED

Rule 6

Previous Day Low

Tracks price relative to the Previous Day's Low. Sustained trading below PDL confirms bearish bias. Bounce off PDL is a long signal.

● CODED

Rule 7

The Last Hour

Analyzes price action in the final hour of the session to determine if "Smart Money" is marking positions for the next day's follow-through. Direction in the last 60 minutes often carries into the next session.

● CODED

Rule 8

Range Expansion

Detects when the current bar's range exceeds 1.5× the average bar range. Range expansion after a pullback signals trend resumption. Range expansion at exhaustion signals reversal.

● CODED

Rule 9

Consecutive Bars

Counts consecutive bullish or bearish closes. 3+ consecutive bars in one direction signals strong momentum — but 5+ bars warns of exhaustion and potential reversal.

● CODED

Rule 10

Inside Bar Breakout

Identifies inside bars and tracks breakout direction. An inside bar after a trend move is a coiling pattern — the breakout direction typically continues the prevailing trend.

● CODED

Rule 11

Time-Based Exits

Implements time-based exit logic. Trades that haven't reached their target within a defined number of bars are closed to avoid dead money and capital drag.

● CODED

Rule 12

Momentum Climax

Detects exhaustion bars based on ATR volatility and volume spikes. When momentum reaches extreme levels, the strategy provides an automated exit signal before mean reversion.

● CODED

Features

Integrated Dashboard

The SireMammat Edition includes a real-time table tracking technical health across three key dimensions.

Last Hour Truth

Closing Session Sentiment

Real-time analysis of the final hour's price action. Tracks whether "Smart Money" is accumulating or distributing into the close. Direction in the last 60 minutes often carries into the next session — this metric tells you which side is winning the closing battle.

Trend Status

PDH/PDL Tracker

Tracks price relative to the Previous Day's High and Low (Rules 5 & 6). Displays whether price is sustained above PDH (bullish), below PDL (bearish), or within the range (neutral). A clean read on trend context at a glance.

Morning Reversal

Gap Reversal Alert

Alerts when early-session volatility suggests a reversal of the opening gap (Rule 3). The first 30 minutes often trap early movers — this signal catches the real move when the gap fill fails or succeeds.

Concepts

Key Concepts

The four foundational ideas behind the Raschke 12 Rules implementation.

Entry Logic

First Pullback to 20 EMA

The core entry signal. After a fresh 20-period high or low, the first pullback to the 20 EMA offers the highest-conviction entry. Momentum has already established direction, and the pullback provides a low-risk, high-reward entry with a defined stop below the EMA.

Exit Logic

Momentum Climax Detection

When ATR-based volatility spikes and volume surges simultaneously, the move is likely exhausting. Rule 12 detects these climax bars and signals an automated exit — capturing profits before mean reversion takes hold.

Session Logic

Last Hour Smart Money

The final hour of the session reveals institutional intent. If Smart Money is buying into the close, expect follow-through the next day. If they're selling, expect weakness. Rule 7 tracks this behavior in real time.

Risk Logic

Time-Based Exit Discipline

Trades that haven't reached their target within a defined number of bars are closed automatically. This prevents dead money, reduces capital drag, and enforces the discipline of cutting trades that aren't working — regardless of P&L.

Takeaways

Key Lessons

Five principles from the Raschke methodology that apply to every trade.

Trade the first pullback

The first touch of the 20 EMA after a new high or low is the highest-probability entry. Don't wait for the second or third — the first has the most fuel.

Watch the last hour

Smart Money reveals intent in the final 60 minutes. Direction into the close often carries into the next session. Trust what the close tells you.

Respect exhaustion

Momentum climax bars are exit signals, not entry signals. When ATR spikes and volume surges, take profits — don't chase.

Use time-based exits

If a trade hasn't worked within the expected timeframe, close it. Dead money is a cost — cut trades that aren't performing.

Confirm with volume

A pullback on declining volume is higher quality than one on rising volume. Volume confirms that the pullback is a pause, not a reversal.

Momentum Precedes Price

Complete Rule Breakdown

Integrated Dashboard

Key Concepts

Implementation Rating

Key Lessons