Stock Option Trading Millionaire Principles

Having actually been trading stocks and alternatives in the capital markets expertly over the years, I have actually seen lots of ups and downs.

I have seen paupers become millionaires overnight …

And

I have actually seen millionaires become paupers overnight …

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

"As soon as, there were 2 Wall Street stock exchange multi-millionaires. Both were very effective and chose to share their insights with others by offering their stock exchange forecasts in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to understand their views that he invested all of his $20,000 cost savings to purchase both their opinions. His buddies were naturally delighted about what the two masters had to state about the stock market`s instructions. When they asked their good friend, he was fuming mad. Baffled, they asked their good friend about his anger. He stated, `One said 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 option market, people can have different opinions of future market direction and still earnings. The distinctions lay in the stock selecting or choices technique and in the mental attitude and discipline one utilizes in carrying out that strategy.

I share here the basic stock and option trading concepts I follow. By holding these concepts firmly in your mind, they will direct you consistently to success. These concepts will help you reduce your threat and permit you to evaluate both what you are doing right and what you may be doing wrong.

You may have read concepts comparable to these prior to. I and others use them due to the fact that they work. And if you remember and review these principles, your mind can use them to guide you in your stock and options trading.

CONCEPT 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked up this trick from Wendy Kirkland Trading, When you feel that the stock and options trading technique that you are following is too intricate even for simple understanding, it is most likely not the best.

In all aspects of successful stock and choices trading, the most basic methods often emerge victorious. In the heat of a trade, it is simple for our brains to end up being mentally overloaded. If we have a complex method, 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 outright control over your emotions and can be unbiased in the heat of a stock or alternatives trade, you are either a harmful species or you are an unskilled trader.

No trader can be definitely objective, especially when market action is uncommon or extremely erratic. Much like the perfect storm can still shake the nerves of the most experienced sailors, the perfect stock market storm can still unnerve and sink a trader really quickly. For that reason, one must strive to automate as lots of critical elements of your technique as possible, especially your profit-taking and stop-loss points.

PRINCIPLE 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial concept.

A lot of stock and choices traders do the opposite …

They hang on to their losses way too long and watch their equity sink and sink and sink, or they get out of their gains prematurely just to see the cost go up and up and up. Gradually, their gains never cover their losses.

This concept requires time to master correctly. Reflect upon this principle and examine your past stock and choices trades. If you have actually been unrestrained, you will see its reality.

CONCEPT 4.

HESITATE TO LOSE MONEY.

Are you like most newbies who can`t wait to jump right into the stock and options market with your cash intending to trade as soon as possible?

On this point, I have actually found that many unprincipled traders are more scared of missing out on "the next huge trade" than they hesitate of losing money! The secret here is STICK TO YOUR METHOD! Take stock and alternatives trades when your strategy signals to do so and avoid taking trades when the conditions are not satisfied. Exit trades when your technique 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 since you traded unnecessarily and without following your stock and alternatives strategy.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely think that your next stock or options trade is going to be such a big winner that you break your own money management guidelines and put in everything you have? Do you remember what usually happens after that? It isn`t pretty, is it?

No matter how positive you may be when going into a trade, the stock and alternatives market has a method of doing the unexpected. Therefore, always stick to your portfolio management system. Do not compound your awaited wins due to the fact that you may wind up compounding your extremely real losses.

CONCEPT 6.

ASSESS YOUR EMOTIONAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.

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

In the very same method, after you get used to trading genuine cash regularly, you find it exceptionally different when you increase your capital by 10 fold, don`t you?

What, then, is the distinction? The distinction remains in the psychological problem that includes the possibility of losing increasingly more real cash. This happens when you cross from paper trading to genuine trading and also when you increase your capital after some successes.

After a while, a lot of traders understand their optimal capability in both dollars and feeling. Are you comfy trading up to a couple of thousand or tens of thousands or numerous thousands? Know your capability before committing the funds.

PRINCIPLE 7.

YOU ARE A BEGINNER AT EVERY TRADE.

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

Overconfidence and the incorrect sense of invincibility based upon past wins is a dish for disaster. All experts respect their next trade and go through all the appropriate actions of their stock or options technique before entry. Deal with every trade as the very first trade you have actually ever made in your life. Never ever differ your stock or options method. Never ever.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or alternatives method only to fail terribly?

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

Understanding yourself first will lead to eventual success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock exchange fluctuations have more variables than can be mathematically created. By following a proven strategy, we are assured that somebody effective has actually stacked the odds in our favour. When you review both winning and losing trades, figure out whether the entry, management, and exit fulfilled every requirements in the technique and whether you have actually followed it exactly prior to changing anything.

In conclusion …

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