Mark D. Cook is an American trader and investor. but is mostly famous for being interviewed in Jack Schwager’s Stock Market Wizards. He worked from his family’s 1870s farmhouse located in East Sparta, Ohio, where he manages his own account. Mark has more than three decades of experience trading the market. He offered advisory services, giving market timing recommendations on the bond and stock market to help other traders become better.
Mark’s early trading years were difficult, but he worked hard, gained valuable experience in the process, and learned what makes and breaks a trader. He started trading stocks in 1977, with his stock being Columbia Pictures. He bought the stock because the studio released the movie, “Close Encounters of the Third Kind”, which he considered a good fundamental for the stock.
In the early ’80s, he was fascinated with options and started trading them. At the start of his trading career, Mark used a longer timeframe to enter his position. Still, as he progressed, he switched to a shorter timeframe, after which he became a short-term technical trader.
In 1981, he formulated a system for selling options when their premiums seemed too high and found someone to program the rules for him. Every week, the program would give him signals to trade. But since he was selling options that were all out-of-the-money, they almost expired worthless. He ran the program on Friday after the market closes and put on the trades by Monday morning.
Mark D. Cook’s net worth
He had lost all his capital many times while learning how to trade. One example was when he lost more than his entire net worth. In 1992, he sold naked calls on Cities Service that expired deep in his capital. His account dipped from $165k to a negative balance of $350k in a matter of days.
During that period, he made a cumulative loss of $815k in his family’s account. However, Mark never gave up, and after five years, he had recovered all he had lost. Talking about how he recovered from his losses, he left a quick tip for new traders in an interview with Jack Schwager:
Hope should never be in your vocabulary. It is the worst four-letter word I know. As soon as you say,’ Boy, I hope this position comes back’, you should reduce your size.
He was the runner-up in the U.S. Investing Championship in 1989 and gained acclaim by winning the 1992 U.S. Investment Championship with an outstanding 563.8% return.
He developed the Cook Cumulative TickSM indicator. The indicator measures the number of stocks in the NYSE whose last trade was a downtick. When the indicator is above or below the band, the Cumulative tick indicator starts adding or subtracting the ticks from the cumulative total. It works similarly to the RSI, which identifies overbought or oversold levels in the market. When the indicator reaches extreme levels, the market usually reverses.
Mark’s fame has grown to the level that he toured Australia, China, and Singapore. His goal is to see that all his mentoring students become million-dollar profitable in their trading careers. His motto is:
Work hard, and the trading will be profitable. Success is consistency and perseverance.
Mark D. Cook’s trading strategies
Cook won the 1992 U.S. Investment Championship with a 563% return on his money. About his approach and trading strategy he is quoted the following:
Each trading day, I am a creature of habit, going through a daily ritual before the markets open. I outline in detail all three possible scenarios for that day: up, down, or sideways. I assign a probability to that scenario and make a written strategy plan, which has been incorporated into a trading fax service that is devoted to teaching people how to trade. Thus, a disciplined trading plan is imposed on me.
For 12 years, Cook has kept a daily diary of trading patterns he has observed. He said the diary is “priceless” because price patterns occur much more frequently than most realize. Regarding keeping a diary, Cook uses the adage: “If you don’t know history, you’re doomed to repeat it.”
The following are Cook’s seven major rules for day trading:
DO NOT TRADE THE LAST HOUR OF THE DAY IN THE S&P 500 FUTURES MARKET. The probabilities of a successful trade diminish in this timeframe due to the impulsive and reckless buying and selling by institutions just because they didn’t get their trading done earlier, said Cook.
IF YOU DON’T LIKE THE TRADE YOU’RE HOLDING, GET OUT.
AFTER TWO HOURS OF TRADING, ASK YOURSELF: “DO I FEEL GOOD ABOUT MY TRADING TODAY?” Once two hours have passed, Cook says a day trader should have made at least two, or perhaps more, trades, “but enough to revaluate what you have done.” If the trader feels good about the day’s trading, continue. If not, stop trading that day.
ALL CYLINDERS OF THE ENGINE MUST BE RUNNING EFFICIENTLY. “Day-trading is a job, and your paycheck is determined by your ability. You can only maximize your ability if you have all the information you need to make trading decisions. “If a piece of equipment that one uses for trading is not working, stop trading.
HAVE COMPLETE FAITH IN YOUR INDICATORS. “This is a must for success,” said Cook. “Many times your indicators give you a buy or sell signal, and you don’t follow it because you don’t have the confidence the signal is right this time. Successful day traders believe in their indicators, but also are aware that nothing is 100% foolproof.”
TO ANYONE WHO ASPIRES TO BECOME A DAY TRADER, OBSERVE THOSE WHO ARE SUCCESSFUL. “Any information you can procure on the trading philosophies, mechanics and techniques are well worth your while.”
DAY-TRADING IS A LONG-TERM COMMITMENT. “I fervently believe it takes several years to become a true professional,” said Cook.
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What is the Cook Cumulative TickSM indicator?
Mark developed the Cook Cumulative TickSM indicator, focusing on NYSE stocks’ downticks. This indicator aids in identifying potential market reversals when extreme levels are reached, similar to the function of the RSI.
How did Mark D. Cook recover from his trading losses?
Mark’s recovery from losses involved perseverance and a disciplined approach. In an interview with Jack Schwager, he emphasized the importance of eliminating hope from one’s trading vocabulary and recommended reducing position size when facing challenges.
What is Mark D. Cook’s advice for new traders?
Mark’s advice for new traders is to avoid using the word “hope” in their trading approach. He underscores the significance of consistency and perseverance, suggesting that traders should reduce their position size if they find themselves hoping for a position to turn in their favor.