Stock Options Trading Millionaire Principles

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

I have actually seen paupers become millionaires overnight …

And

I have seen millionaires end up being paupers overnight …

One story told to me by my coach is still etched in my mind:

"Once, there were 2 Wall Street stock market multi-millionaires. Both were incredibly 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 know their views that he invested all of his $20,000 savings to purchase both their opinions. His good friends were naturally excited about what the two masters had to state about the stock exchange`s instructions. When they asked their friend, he was fuming mad. Baffled, they asked their good friend about his anger. He said, `One stated BULLISH and the other said BEARISH!`."

The point of this illustration is that it was the trader who was wrong. In today`s stock and option market, individuals can have various opinions of future market direction and still revenue. The distinctions lay in the stock picking or choices technique and in the mental attitude and discipline one utilizes in implementing that technique.

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

You may have read ideas similar to these prior to. I and others use them due to the fact that they work. And if you memorize and reflect on these concepts, your mind can use them to direct you in your stock and alternatives trading.

CONCEPT 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked this up from Wendy Kirkland, When you feel that the stock and choices trading approach that you are following is too complicated even for easy understanding, it is probably not the best.

In all aspects of effective stock and choices trading, the simplest approaches often emerge triumphant. In the heat of a trade, it is easy for our brains to end up being mentally overwhelmed. If we have a complex method, we can not keep up with the action. Simpler is better.

PRINCIPLE 2.

NO ONE IS OBJECTIVE ENOUGH.

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

No trader can be absolutely unbiased, specifically when market action is unusual or hugely erratic. Much like the perfect storm can still shake the nerves of the most seasoned sailors, the ideal stock market storm can still unnerve and sink a trader extremely rapidly. Therefore, one must strive to automate as lots of important aspects 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 principle.

Most stock and choices traders do the opposite …

They hang on to their losses way too long and see their equity sink and sink and sink, or they leave their gains too soon only to see the price increase and up and up. With time, their gains never cover their losses.

This principle takes time to master appropriately. Contemplate this principle and evaluate your past stock and alternatives trades. If you have actually been undisciplined, you will see its fact.

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 options market with your cash wanting to trade as soon as possible?

On this point, I have discovered that many unprincipled traders are more afraid of missing out on "the next huge trade" than they hesitate of losing cash! The secret here is STICK TO YOUR TECHNIQUE! Take stock and choices trades when your technique signals to do so and prevent taking trades when the conditions are not satisfied. Exit trades when your technique says to do so and leave them alone when the exit conditions are not in place.

The point here is to be scared to discard your money since you traded unnecessarily and without following your stock and options technique.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely think that your next stock or options trade is going to be such a big winner that you break your own finance 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 getting in a trade, the stock and options market has a way of doing the unexpected. Therefore, always stay with your portfolio management system. Do not compound your expected wins because you may end up compounding your extremely real losses.

CONCEPT 6.

EVALUATE YOUR EMOTIONAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same method, after you get used to trading genuine cash consistently, you find it extremely different when you increase your capital by 10 fold, do not you?

What, then, is the difference? The difference remains in the emotional burden that comes with the possibility of losing a growing number of real 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, a lot of traders realize their maximum capability 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 capacity prior to committing the funds.

CONCEPT 7.

YOU ARE An AMATEUR AT EVERY TRADE.

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

Overconfidence and the false sense of invincibility based on past wins is a dish for catastrophe. All experts appreciate their next trade and go through all the proper steps of their stock or options technique before entry. Deal with every trade as the very first trade you have ever made in your life. Never ever differ your stock or alternatives method. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or alternatives method only to stop working severely?

You are the one who figures out whether a strategy is successful or stops working. Your character and your discipline make or break the technique that you use not vice versa. Like Robert Kiyosaki says, "The financier 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 strategy? When you make changes day after day, you end up capturing nothing but the wind.

Stock exchange changes have more variables than can be mathematically created. By following a proven strategy, we are guaranteed that somebody successful has stacked the odds in our favour. When you examine both winning and losing trades, determine whether the entry, management, and exit met every requirements in the strategy and whether you have actually followed it specifically before altering anything.

In conclusion …

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