Understanding this makes a big difference he says, like when a life insurance policy is written the risk profile of an 80 year old is very different from that of a 20 year old. After that 20% has been realized the odds of further advances are diminished significantly. For example he noticed that an intermediate swing on the Dow during a bull market is typically 20%. After an extensive two year study he identified ‘life expectancy’ profiles for market moves. He described his style as only taking risks when the odds are in his favor. His first loss was in 1990 with a 35% drawdown. And even if you do everything right, you should still expect to, lose money during the first five years… These are cold, hard facts that many would-be traders prefer not to hear or believe, but ignoring them doesn't change the reality."Īn options trader and technical analyst who had a string of 18 profitable years clocking an average return of 72%. "To succeed as a trader, one needs complete commitment… Those seeking shortcuts are doomed to failure. Now he trades options holding them 3-30 days and day trades S&P 500 and NASDAQ futures. In 1989 Cook finished second in the US Investing Championship trading stocks and in 1992 after shifting to options he won the championship with a return of 563%. When it reaches extremes of bullish or bearish readings the market tends to reverse direction. This works as an over brought and over sold indicator. When the ‘tick’ indicator is above or below a neutral band the ‘cumulative tick indicator’ starts to add or subtract the ticks from a cumulative total. There is a widely used indicator called the ‘Tick’ that measures the number of NYSE stocks whose last trade was an uptick minus the number whose last trade was a downtick. He attributes his turn around in success to the development of what he calls the ‘Cumulative Tick Indicator’. Not one to give up, after five years Mark had totally recovered from the losses but vowed never to sell another naked option. His account dropped from $165,000 to a deficit of $350,000 in a matter of days a total loss of $815,000 when taking into account for the money that he lost in his family’s accounts. In 1982 he sold naked calls on Cities Service that expired deep in the money. Lost all his capital several times while learning to trade including one occasion when he lost more than his entire net worth.
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