Stock Options Trading Millionaire Principles

Having been trading stocks and options in the capital markets professionally over the years, I have actually seen many ups and downs.

I have seen paupers become millionaires over night …

And

I have actually seen millionaires end up being paupers overnight …

One story informed to me by my coach is still engraved in my mind:

"Once, there were two Wall Street stock market multi-millionaires. Both were extremely effective and chose to share their insights with others by offering their stock market projections in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to know their views that he spent all of his $20,000 savings to purchase both their viewpoints. His good friends were naturally excited about what the two masters had to say about the stock exchange`s instructions. When they asked their good friend, he was fuming mad. Confused, they asked their buddy about his anger. He said, `One stated BULLISH and the other stated BEARISH!`."

The point of this illustration is that it was the trader who was wrong. In today`s stock and alternative market, people can have various opinions of future market instructions and still earnings. The distinctions lay in the stock picking or choices method and in the mental attitude and discipline one uses in executing that technique.

I share here the basic stock and option trading concepts I follow. By holding these concepts securely in your mind, they will assist you regularly to profitability. These principles will assist you reduce your danger and allow you to examine both what you are doing right and what you may be doing wrong.

You may have read ideas similar to these before. I and others utilize them due to the fact that they work. And if you remember and assess these concepts, your mind can utilize them to direct you in your stock and choices trading.

CONCEPT 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I learned this from -, When you feel that the stock and choices trading method that you are following is too complex even for easy understanding, it is most likely not the best.

In all elements of effective stock and choices trading, the easiest approaches frequently emerge victorious. In the heat of a trade, it is simple for our brains to become mentally overloaded. If we have a complex strategy, we can not stay up to date with the action. Simpler is better.

PRINCIPLE 2.

NOBODY IS OBJECTIVE ENOUGH.

If you feel that you have absolute control over your feelings and can be objective in the heat of a stock or alternatives trade, you are either a hazardous types or you are an unskilled trader.

No trader can be absolutely unbiased, particularly when market action is uncommon or extremely erratic. Much like the perfect storm can still shake the nerves of the most skilled sailors, the ideal stock market storm can still unnerve and sink a trader really quickly. Therefore, one need to strive to automate as lots of important aspects of your technique as possible, particularly your profit-taking and stop-loss points.

CONCEPT 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial concept.

Most stock and alternatives traders do the opposite …

They hold on to their losses way too long and see their equity sink and sink and sink, or they get out of their gains too soon just to see the price go up and up and up. Gradually, their gains never ever cover their losses.

This principle requires time to master correctly. Contemplate this principle and examine your past stock and alternatives trades. If you have been undisciplined, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE MONEY.

Are you like most newbies who can`t wait to leap right into the stock and alternatives market with your money hoping to trade as soon as possible?

On this point, I have found that most unprincipled traders are more afraid of missing out on "the next huge trade" than they are afraid of losing cash! The secret here is STAY WITH YOUR METHOD! Take stock and choices trades when your method signals to do so and avoid taking trades when the conditions are not met. Exit trades when your method states to do so and leave them alone when the exit conditions are not in place.

The point here is to be scared to throw away your money because you traded needlessly and without following your stock and choices strategy.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely believe that your next stock or options trade is going to be such a huge winner that you break your own finance guidelines and put in whatever you have? Do you remember what generally takes place after that? It isn`t pretty, is it?

No matter how positive you may be when going into a trade, the stock and choices market has a method of doing the unexpected. Therefore, constantly stick to your portfolio management system. Do not intensify your awaited wins because you may end up compounding your extremely real losses.

PRINCIPLE 6.

ASSESS YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.

You know by now how various paper trading and real stock and choices trading is, do not you?

In the very same method, after you get used to trading genuine cash consistently, you discover it incredibly various when you increase your capital by ten fold, don`t you?

What, then, is the difference? The difference remains in the psychological problem that comes with the possibility of losing more and more real money. This occurs when you cross from paper trading to real trading and also when you increase your capital after some successes.

After a while, most traders realize their maximum capability in both dollars and feeling. Are you comfy trading up to a couple of thousand or 10s of thousands or numerous thousands? Know your capability prior to devoting the funds.

CONCEPT 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever felt like a specialist after a few wins and after that lose a lot on the next stock or alternatives trade?

Overconfidence and the false sense of invincibility based upon past wins is a dish for catastrophe. All specialists appreciate their next trade and go through all the appropriate actions of their stock or options technique before entry. Deal with every trade as the first trade you have ever made in your life. Never differ your stock or choices strategy. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or alternatives strategy only to fail terribly?

You are the one who determines whether a strategy succeeds or fails. Your character and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki says, "The financier is the property or the liability, not the investment."

Understanding yourself first will lead to ultimate success.

CONCEPT 9.

CONSISTENCY.

Have you ever changed your mind about how to implement a strategy? When you make changes day after day, you wind up catching nothing but the wind.

Stock market changes have more variables than can be mathematically formulated. By following a proven strategy, we are ensured that someone effective has actually stacked the chances in our favour. When you examine both winning and losing trades, identify whether the entry, management, and exit satisfied every requirements in the technique and whether you have actually followed it specifically prior to altering anything.

In conclusion …

I hope these easy guidelines that have led my ship of the harshest of seas and into the very best harvests of my life will direct you too. Good Luck.