From: Jeff Danoff
Sent: Thursday, October 13, 2005 8:09
To: Earl Spencer
Cc: Jim Goulding
12 years, Cook has kept a daily diary of trading patterns
Trader Mark Cook Reveals His Rules for Day-Trading Markets
(Note: I wrote this story a few years back, when I was a
A day trader is a cross between an extrovert and an introvert,
with both characteristics in balance, according to Mark Cook,
a veteran trader from East Sparta, Ohio.
“The introvert aspect is depicted by the disciplined
workaholic with a reclusive concentration. The extrovert
aspect is depicted by an aggressive, competitive,
self-motivated individual striving to be the best in a
selective profession,” said Cook.
Cook won the 1992 U.S. Investment Championship with a 563%
return on his money. He is a featured speaker at the Telerate
Seminars Technical Analysis Group (TAG 20) conference held
here this weekend.
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.”
Every day trader must be “flexible, alert and feisty,” said
Cook. The flexibility must be used to shift from being long to
being short “literally within seconds.” The alertness is used
for observing price movements that are an aberration from the
norm, he said. “Feistiness is the savvy aggressiveness to
fight back with a vengeance to regain money you lost. I don’t
know how many times I’ve seen people lose money in the morning
and quit. My most profitable days are when I lose money in the
morning and stay in because I want to get it back.”
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 reviewuate 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 is well worth
DAY-TRADING IS A LONG-TERM COMMITMENT. “I fervently believe
it takes several years to become a true professional,” said