Stock Option Trading Millionaire Principles

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

I have seen paupers end up being millionaires over night …

And

I have actually seen millionaires become paupers over night …

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

"When, there were two Wall Street stock exchange multi-millionaires. Both were very successful and chose to share their insights with others by selling their stock exchange forecasts in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to know their views that he invested all of his $20,000 cost savings to purchase both their opinions. His buddies were naturally excited about what the two masters needed to say about the stock market`s direction. When they asked their buddy, he was fuming mad. Confused, they asked their 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 viewpoints of future market instructions and still revenue. The distinctions lay in the stock selecting or alternatives technique and in the mental attitude and discipline one uses in carrying out that method.

I share here the fundamental stock and choice trading concepts I follow. By holding these concepts strongly in your mind, they will guide you regularly to success. These principles will help you decrease your danger and allow you to assess both what you are doing right and what you may be doing wrong.

You may have checked out concepts similar to these before. I and others utilize them since they work. And if you remember and review these concepts, your mind can use them to assist you in your stock and alternatives trading.

CONCEPT 1.

SIMPLENESS IS PROFICIENCY.
Wendy Kirkland
I picked this up from Option Trading in Your Spare Time, When you feel that the stock and choices trading approach that you are following is too complicated even for basic understanding, it is probably not the best.

In all aspects of successful stock and alternatives trading, the simplest approaches frequently emerge triumphant. In the heat of a trade, it is simple for our brains to end up being emotionally strained. If we have a complex technique, we can not stay up to date with the action. Simpler is much better.

CONCEPT 2.

NOBODY IS OBJECTIVE ENOUGH.

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

No trader can be definitely objective, specifically when market action is unusual or extremely irregular. Similar to the best storm can still shake the nerves of the most experienced sailors, the perfect stock market storm can still unnerve and sink a trader really rapidly. Therefore, one must endeavor to automate as many important elements of your technique as possible, especially your profit-taking and stop-loss points.

CONCEPT 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most essential principle.

The majority of stock and options traders do the opposite …

They hold on to their losses way too long and view their equity sink and sink and sink, or they leave their gains too soon just to see the rate increase and up and up. Over time, their gains never ever cover their losses.

This concept takes time to master effectively. Reflect upon this principle and evaluate your past stock and choices trades. If you have been undisciplined, you will see its reality.

CONCEPT 4.

HESITATE TO LOSE CASH.

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

On this point, I have actually discovered that most unprincipled traders are more afraid of losing out on "the next big trade" than they hesitate of losing money! The key here is STICK TO YOUR METHOD! Take stock and choices trades when your method signals to do so and prevent 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 afraid to get rid of 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 absolutely believe 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 confident you might be when going into a trade, the stock and choices market has a method of doing the unexpected. For that reason, always stay with your portfolio management system. Do not intensify your anticipated wins since you might end up intensifying your really real losses.

CONCEPT 6.

ASSESS YOUR EMOTIONAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.

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

In the very same way, after you get used to trading genuine cash consistently, you discover it incredibly different when you increase your capital by ten fold, do not you?

What, then, is the distinction? The distinction remains in the psychological burden that comes with the possibility of losing a growing number of genuine cash. This takes place when you cross from paper trading to genuine trading and likewise when you increase your capital after some successes.

After a while, most traders understand their optimal capability in both dollars and emotion. Are you comfortable trading up to a couple of thousand or 10s of thousands or hundreds of thousands? Know your capacity prior to devoting the funds.

CONCEPT 7.

YOU ARE A BEGINNER AT EVERY TRADE.

Ever seemed like a specialist after a couple of wins and then lose a lot on the next stock or choices trade?

Overconfidence and the incorrect sense of invincibility based on previous wins is a recipe for catastrophe. All specialists appreciate their next trade and go through all the correct steps of their stock or options method prior to entry. Treat every trade as the first trade you have actually ever made in your life. Never deviate from your stock or alternatives technique. Never ever.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or choices strategy just to stop working severely?

You are the one who determines whether a technique is successful or fails. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki states, "The investor is the possession or the liability, not the investment."

Comprehending yourself initially will cause ultimate success.

CONCEPT 9.

CONSISTENCY.

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

Stock exchange variations have more variables than can be mathematically formulated. By following a proven technique, we are guaranteed that somebody effective has actually stacked the chances in our favour. When you review both winning and losing trades, identify whether the entry, management, and exit fulfilled every requirements in the technique and whether you have followed it exactly before altering anything.

In conclusion …

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