Mark D. Cook
- Never give up (Cook blew up his account several times)
- His Risk:Reward ratio is only 2:1
- Consider the probability of winning, not just the potential gain to risk
- If you are experiencing physical or emotional distress, either stop trading altogether, or reduce your trading activity to a level at which you can’t do much damage.
- Once I make a profit, I consider it my money, and I’m not about to let the market take it out of my pocket. So once I’m ahead on the day, I try to make sure I don’t give back much of it.
- I try to teach people not to have any preconceived notion about the market direction—to react to the market, not to anticipate it.
- As long as I have volatility, I’m fine. A true trader can make money in any environment as long as he reacts and doesn’t anticipate. He must feel the markets flow and never fight. He may often be wrong, but never inflexible.
Q: What would a business plan for traders include?
- What markets are you going to trade? You need to select a market that fits your personality because a market is a reflection of the people who trade it. People who trade Internet stocks are definitely different from people who trade utility stocks.
- What is your trading capitalization? On the one hand, you should honestly be able to say, “If I lose all this money, it won’t change my lifestyle.” On the other hand, you need a large enough account so that making at least as much as you do from your current job is a feasible goal. Otherwise, you will think that you are a failure because you will work harder as a trader than you do at the job you are in now.
- How will orders be entered? Will you scale into positions or put them on all at once? How will you exit losing trades? How will you exit winning trades?
- What type of drawdown will cause you to stop trading and reevaluate your approach?
- What type of drawdown will cause you to shut down trading?
- What are your profit goals, measured on as short a time frame as is feasible for your trading approach?
- What procedure will you use for analyzing your trades?
- What will you do if personal problems arise that could adversely impact your trading?
- How will you set up your working environment so that it is conducive to trading and maximizes your chances for success?
- How will you reward yourself for successful trading? Will you take a special vacation, buy yourself a new car, etcetera?
- How will you continue to improve yourself as a trader?
- What books will you read?
- What new research projects will you do?
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