Stock Option Trading Millionaire Principles

Stock Options Trading Millionaire Principles

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

I have seen paupers become millionaires over night …

And

I have seen millionaires become paupers over night …

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

"When, there were 2 Wall Street stock exchange multi-millionaires. Both were very effective and chose 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 understand their views that he spent all of his $20,000 savings to buy both their opinions. His good friends were naturally excited about what the two masters had to say about the stock exchange`s instructions. When they asked their buddy, he was fuming mad. Confused, they asked their good friend about his anger. He said, `One stated 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 different opinions of future market direction and still profit. The distinctions lay in the stock choosing or options strategy and in the mental attitude and discipline one utilizes in executing that strategy.

I share here the standard stock and alternative trading concepts I follow. By holding these concepts strongly in your mind, they will guide you consistently to success. These principles will assist you decrease your risk and enable you to assess both what you are doing right and what you might be doing wrong.

You might have read concepts similar to these prior to. I and others utilize them due to the fact that they work. And if you remember and reflect on these principles, your mind can use them to guide you in your stock and alternatives trading.

CONCEPT 1.

SIMPLENESS IS PROFICIENCY.
Wendy Kirkland
I picked up this trick from -, When you feel that the stock and choices trading method that you are following is too complicated even for easy understanding, it is most likely not the best.

In all aspects of effective stock and choices trading, the easiest methods typically emerge victorious. In the heat of a trade, it is easy for our brains to end up being mentally strained. If we have a complex method, we can not stay up to date with the action. Easier is much better.

CONCEPT 2.

NO ONE IS GOAL 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 harmful types or you are an unskilled trader.

No trader can be absolutely unbiased, particularly when market action is uncommon or wildly irregular. Similar to 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 venture to automate as lots of crucial elements of your method as possible, specifically your profit-taking and stop-loss points.

PRINCIPLE 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial principle.

The majority of stock and alternatives traders do the opposite …

They hang on to their losses way too long and enjoy their equity sink and sink and sink, or they get out of their gains too soon only to see the rate increase and up and up. With time, their gains never cover their losses.

This principle takes some time to master properly. Contemplate this principle and evaluate your past stock and options trades. If you have actually been undisciplined, you will see its reality.

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like the majority of newbies who can`t wait to jump right into the stock and options market with your money wanting to trade as soon as possible?

On this point, I have found that many unprincipled traders are more afraid of missing out on "the next big trade" than they hesitate of losing money! The key here is STICK TO YOUR STRATEGY! Take stock and options trades when your technique signals to do so and avoid taking trades when the conditions are not fulfilled. 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.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

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

No matter how confident you might be when getting in a trade, the stock and options market has a method of doing the unanticipated. For that reason, always adhere to your portfolio management system. Do not intensify your expected wins due to the fact that you may end up intensifying your very real losses.

PRINCIPLE 6.

DETERMINE YOUR PSYCHOLOGICAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.

You understand by now how various paper trading and genuine stock and alternatives trading is, don`t you?

In the very same method, after you get utilized to trading genuine money regularly, you find it exceptionally various when you increase your capital by ten fold, do not you?

What, then, is the distinction? The difference remains in the emotional concern that includes the possibility of losing increasingly more real money. This happens when you cross from paper trading to real trading and likewise when you increase your capital after some successes.

After a while, many traders realize their optimal capability in both dollars and feeling. Are you comfy trading up to a few thousand or 10s of thousands or numerous thousands? Know your capacity before committing the funds.

CONCEPT 7.

YOU ARE A BEGINNER AT EVERY TRADE.

Ever felt like a professional after a few wins and after that 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 respect their next trade and go through all the appropriate actions of their stock or alternatives method before entry. Deal with every trade as the very first trade you have actually ever made in your life. Never ever deviate from your stock or alternatives 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 determines whether a technique is successful or stops working. Your character and your discipline make or break the strategy that you utilize not vice versa. Like Robert Kiyosaki states, "The financier is the asset or the liability, not the investment."

Understanding yourself first will result in ultimate success.

CONCEPT 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 market variations have more variables than can be mathematically created. By following a tested technique, we are assured that someone successful has stacked the chances in our favour. When you examine both winning and losing trades, identify whether the entry, management, and exit met every requirements in the technique and whether you have followed it specifically before altering anything.

In conclusion …

I hope these simple standards that have led my ship of the harshest of seas and into the best harvests of my life will direct you too. All the best.