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 actually seen paupers end up being millionaires over night …
And
I have actually seen millionaires become paupers overnight …
One story informed to me by my mentor is still etched in my mind:
"Once, there were two Wall Street stock exchange multi-millionaires. Both were incredibly successful and decided to share their insights with others by selling their stock market projections 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 savings to purchase both their opinions. His pals were naturally thrilled about what the two masters had to say about the stock market`s instructions. When they asked their pal, he was fuming mad. Confused, they asked their buddy about his anger. He said, `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 alternative market, people can have various viewpoints 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 implementing that technique.
I share here the fundamental stock and alternative trading concepts I follow. By holding these principles strongly in your mind, they will assist you regularly to profitability. These concepts 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 might have read ideas comparable to these before. I and others utilize them since they work. And if you remember and reflect on these principles, your mind can use them to direct you in your stock and alternatives trading.
PRINCIPLE 1.
SIMPLENESS IS PROFICIENCY.
Wendy Kirkland
I picked up this trick from Wendy Kirkland Trading, When you feel that the stock and choices trading method that you are following is too intricate even for basic 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 easy for our brains to end up being mentally overloaded. If we have a complex strategy, we can not keep up with the action. Simpler is better.
CONCEPT 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 options trade, you are either a harmful types or you are an inexperienced trader.
No trader can be absolutely unbiased, especially when market action is unusual or hugely irregular. Similar to the perfect storm can still shake the nerves of the most seasoned sailors, the best stock exchange storm can still unnerve and sink a trader really rapidly. For that reason, one should venture to automate as many critical elements 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 important principle.
Many stock and options traders do the opposite …
They hang on to their losses way too long and view their equity sink and sink and sink, or they leave their gains prematurely only to see the cost go up and up and up. With time, their gains never ever cover their losses.
This concept takes time to master effectively. Contemplate this concept and evaluate your previous stock and alternatives trades. If you have been unrestrained, you will see its reality.
CONCEPT 4.
HESITATE TO LOSE CASH.
Are you like a lot of newbies who can`t wait to jump right into the stock and alternatives market with your money wishing to trade as soon as possible?
On this point, I have discovered that most unprincipled traders are more afraid of losing out on "the next huge trade" than they hesitate of losing cash! The key here is STICK TO YOUR STRATEGY! Take stock and options trades when your method signals to do so and prevent taking trades when the conditions are not met. Exit trades when your strategy states to do so and leave them alone when the exit conditions are not in place.
The point here is to be afraid to discard your money because you traded unnecessarily and without following your stock and options technique.
CONCEPT 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you absolutely believe that your next stock or choices 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 normally takes place after that? It isn`t pretty, is it?
No matter how positive you might be when going into a trade, the stock and alternatives market has a method of doing the unexpected. Therefore, constantly stay with your portfolio management system. Do not compound your expected wins because you may wind up compounding your really real losses.
CONCEPT 6.
ASSESS YOUR PSYCHOLOGICAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.
You understand by now how different paper trading and genuine stock and options trading is, don`t you?
In the very same way, after you get used to trading real money regularly, you find it incredibly different when you increase your capital by 10 fold, don`t you?
What, then, is the difference? The distinction is in the emotional problem that features the possibility of losing more and more genuine 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, a lot of traders realize their maximum capability in both dollars and emotion. Are you comfortable trading as much as a couple of thousand or 10s of thousands or numerous thousands? Know your capability before committing the funds.
PRINCIPLE 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever seemed like an expert after a few wins and after that lose a lot on the next stock or options trade?
Overconfidence and the false sense of invincibility based upon previous wins is a dish for disaster. All specialists appreciate their next trade and go through all the appropriate actions of their stock or alternatives strategy prior to entry. Treat every trade as the first trade you have ever made in your life. Never differ your stock or options technique. Never ever.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or alternatives method just to fail severely?
You are the one who figures out whether a technique succeeds or stops working. Your character and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki states, "The investor is the property or the liability, not the financial investment."
Understanding yourself initially will result in ultimate success.
CONCEPT 9.
CONSISTENCY.
Have you ever changed your mind about how to carry out a method? When you make changes day after day, you end up capturing nothing but the wind.
Stock exchange fluctuations have more variables than can be mathematically formulated. By following a proven method, we are guaranteed that someone successful has stacked the odds in our favour. When you evaluate both winning and losing trades, determine whether the entry, management, and exit met every requirements in the technique and whether you have followed it exactly before changing anything.
In conclusion …
I hope these easy standards that have led my ship out of the harshest of seas and into the best harvests of my life will assist you too. Good Luck.