Stock Option Trading Millionaire Concepts

Having been trading stocks and choices in the capital markets professionally for many years, I have seen numerous ups and downs.

I have actually seen paupers end up being millionaires overnight …

And

I have actually seen millionaires end up being paupers over night …

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

"When, there were 2 Wall Street stock exchange multi-millionaires. Both were exceptionally successful and chose to share their insights with others by offering their stock market projections in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to understand their views that he spent all of his $20,000 cost savings to buy both their opinions. His good friends were naturally delighted about what the two masters had to state about the stock market`s direction. When they asked their good friend, he was fuming mad. Baffled, they asked their pal 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 choice market, people can have various viewpoints of future market direction and still revenue. The distinctions lay in the stock choosing or choices method and in the mental attitude and discipline one uses in implementing that method.

I share here the basic stock and option trading concepts I follow. By holding these concepts securely in your mind, they will direct you consistently to profitability. These principles will assist you reduce your risk and permit you to evaluate 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 because they work. And if you remember and review these principles, your mind can utilize them to guide you in your stock and choices trading.

CONCEPT 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked this up from Books by Wendy Kirkland, When you feel that the stock and alternatives trading technique that you are following is too complex even for simple understanding, it is most likely not the very best.

In all aspects of successful stock and options trading, the easiest methods typically emerge triumphant. In the heat of a trade, it is simple for our brains to end up being mentally strained. If we have a complex technique, we can not keep up with the action. Easier is better.

CONCEPT 2.

NOBODY IS GOAL ENOUGH.

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

No trader can be absolutely unbiased, especially when market action is unusual or extremely irregular. Just like the perfect storm can still shake the nerves of the most experienced sailors, the perfect stock exchange storm can still unnerve and sink a trader very rapidly. Therefore, one should venture to automate as numerous critical elements of your method 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 principle.

Most stock and options traders do the opposite …

They hang on to their losses way too long and watch their equity sink and sink and sink, or they leave their gains too soon just to see the rate go up and up and up. In time, their gains never ever cover their losses.

This concept takes some time to master correctly. Reflect upon this principle and evaluate your past stock and options trades. If you have been undisciplined, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE MONEY.

Are you like the majority of novices who can`t wait to jump right into the stock and alternatives market with your cash intending to trade as soon as possible?

On this point, I have discovered that most unprincipled traders are more afraid of missing out on "the next huge trade" than they hesitate of losing money! The secret here is ADHERE TO YOUR TECHNIQUE! Take stock and options 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 because you traded unnecessarily and without following your stock and options technique.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely think 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 whatever you have? Do you remember what typically takes place after that? It isn`t pretty, is it?

No matter how positive you may be when getting in a trade, the stock and choices market has a method of doing the unexpected. For that reason, constantly stick to your portfolio management system. Do not compound your anticipated wins since you might wind up intensifying your very real losses.

PRINCIPLE 6.

DETERMINE YOUR PSYCHOLOGICAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.

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

In the very same way, after you get utilized to trading real money regularly, you discover it incredibly different when you increase your capital by 10 fold, do not you?

What, then, is the distinction? The distinction is in the emotional problem that features the possibility of losing increasingly more genuine money. This takes place 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 capacity in both dollars and feeling. Are you comfy trading as much as a few thousand or 10s of thousands or hundreds of thousands? Know your capability before committing the funds.

PRINCIPLE 7.

YOU ARE A BEGINNER AT EVERY TRADE.

Ever seemed like an expert after a few wins and after that lose a lot on the next stock or choices trade?

Overconfidence and the incorrect sense of invincibility based on past wins is a dish for catastrophe. All professionals respect their next trade and go through all the correct steps of their stock or choices technique before entry. Treat every trade as the very first trade you have ever made in your life. Never deviate from your stock or alternatives technique. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or choices method just to fail severely?

You are the one who determines whether a technique prospers or stops working. Your personality and your discipline make or break the technique that you utilize not vice versa. Like Robert Kiyosaki says, "The investor is the asset or the liability, not the investment."

Comprehending yourself first will lead to eventual success.

CONCEPT 9.

CONSISTENCY.

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

Stock exchange fluctuations have more variables than can be mathematically created. By following a proven technique, we are guaranteed that someone effective has stacked the odds in our favour. When you evaluate both winning and losing trades, determine whether the entry, management, and exit satisfied every criteria in the strategy 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 best harvests of my life will guide you too. Good Luck.