Stock Options Trading Millionaire Principles

Having been trading stocks and alternatives in the capital markets professionally over the years, I have seen lots of ups and downs.

I have seen paupers become millionaires over night …

And

I have seen millionaires become paupers over night …

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

"When, there were two Wall Street stock exchange multi-millionaires. Both were incredibly effective and decided 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 understand their views that he spent all of his $20,000 cost savings to buy both their viewpoints. His pals were naturally excited about what the two masters needed to say about the stock exchange's instructions. When they asked their good friend, he was fuming mad. Baffled, they asked their friend about his anger. He stated, 'One said 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 alternative market, individuals can have various viewpoints of future market direction and still earnings. The differences lay in the stock picking or options strategy and in the mental attitude and discipline one uses in executing that technique.

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

You might have checked out ideas similar to these before. I and others utilize them since they work. And if you memorize and review these concepts, your mind can utilize them to assist you in your stock and choices trading.

CONCEPT 1.

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

In all aspects of effective stock and options trading, the simplest approaches frequently emerge triumphant. In the heat of a trade, it is simple for our brains to end up being emotionally overwhelmed. If we have a complex technique, 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 feelings and can be objective in the heat of a stock or options trade, you are either an unsafe types or you are an unskilled trader.

No trader can be definitely unbiased, particularly when market action is unusual or extremely erratic. Just like the best storm can still shake the nerves of the most seasoned sailors, the ideal stock market storm can still unnerve and sink a trader really rapidly. Therefore, one need to endeavor to automate as numerous crucial aspects of your strategy 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 crucial principle.

Most stock and options traders do the opposite …

They hold 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. In time, their gains never ever cover their losses.

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

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like a lot of novices who can't wait to leap right into the stock and alternatives market with your cash wishing to trade as soon as possible?

On this point, I have found that the majority of unprincipled traders are more afraid of missing out on "the next huge trade" than they hesitate of losing cash! The key here is ADHERE TO YOUR METHOD! Take stock and alternatives trades when your strategy signals to do so and prevent taking trades when the conditions are not met. Exit trades when your method 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 because 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 money management rules and put in whatever 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 choices market has a method of doing the unforeseen. For that reason, always stick to your portfolio management system. Do not intensify your anticipated wins because you may wind up compounding your extremely real losses.

CONCEPT 6.

DETERMINE YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same way, after you get used to trading real money consistently, you find it exceptionally different when you increase your capital by ten fold, don't you?

What, then, is the distinction? The difference is in the psychological concern that features the possibility of losing more and more real money. This takes place when you cross from paper trading to genuine trading and also when you increase your capital after some successes.

After a while, many traders understand their maximum capability in both dollars and emotion. Are you comfortable trading as much as a few thousand or tens of thousands or numerous thousands? Know your capacity before devoting the funds.

CONCEPT 7.

YOU ARE A NOVICE AT EVERY TRADE.

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

Overconfidence and the false sense of invincibility based upon past wins is a dish for catastrophe. All professionals appreciate their next trade and go through all the correct actions of their stock or choices method prior to entry. Deal with every trade as the first trade you have ever made in your life. Never ever deviate from your stock or alternatives strategy. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or choices technique just to fail badly?

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

Understanding yourself first will result in ultimate success.

CONCEPT 9.

CONSISTENCY.

Have you ever altered your mind about how to carry out a strategy? When you make changes day after day, you wind up catching nothing but the wind.

Stock exchange changes have more variables than can be mathematically created. By following a tested strategy, we are assured that somebody successful has stacked the odds in our favour. When you review both winning and losing trades, determine whether the entry, management, and exit met every criteria in the strategy and whether you have actually followed it specifically prior to changing anything.

In conclusion …

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