Stock Options Trading Millionaire PrinciplesStock Options Trading Millionaire Principles

Stock Option Trading Millionaire Concepts

Having been trading stocks and options in the capital markets professionally over the 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 informed to me by my coach is still etched in my mind: ” Once, there were two Wall Street stock exchange multi-millionaires. Both were exceptionally effective and decided to share their insights with others by selling their stock exchange projections in newsletters. Each charged US$ 10,000 for their viewpoints. [-|- ]One trader was so curious to understand their views that he invested all of his $20,000 cost savings to buy both their viewpoints. His buddies were naturally excited about what the two masters needed to state about the stock exchange’s direction. When they asked their friend, he was fuming mad. Baffled, they asked their friend about his anger. He stated, ‘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 alternative market, individuals can have different viewpoints of future market direction and still revenue. The distinctions lay in the stock selecting or options method and in the mental attitude and discipline one uses in implementing that method. I share here the standard stock and alternative trading principles I follow. By holding these principles firmly in your mind, they will guide you regularly 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 read concepts similar to these prior to. I and others use them because they work. And if you memorize and assess these principles, your mind can use them to guide you in your stock and options trading. PRINCIPLE 1. SIMPLENESS IS MASTERY. Wendy Kirkland I learned this from}, When you feel that the stock and options trading technique that you are following is too complex even for simple understanding, it is probably not the best. In all aspects of effective stock and options trading, the simplest techniques typically emerge triumphant. In the heat of a trade, it is easy for our brains to become mentally overloaded. 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 emotions and can be objective in the heat of a stock or options trade, you are either a harmful species or you are an unskilled trader. No trader can be absolutely objective, especially when market action is unusual or wildly unpredictable. Similar to the best storm can still shake the nerves of the most experienced sailors, the best stock exchange storm can still unnerve and sink a trader extremely rapidly. For that reason, one need to strive to automate as many vital aspects of your method as possible, especially your profit-taking and stop-loss points. PRINCIPLE 3. HANG ON TO YOUR GAINS AND CUT YOUR LOSSES. This is the most important principle. Most stock and options traders do the opposite … They hold on to their losses way too long and enjoy their equity sink and sink and sink, or they leave their gains too soon just to see the cost go up and up and up. In time, their gains never ever cover their losses. This principle takes time to master appropriately. Reflect upon this principle and review your previous stock and options trades. If you have been undisciplined, you will see its truth. PRINCIPLE 4. BE AFRAID TO LOSE CASH. Are you like many beginners who can’t wait to jump right into the stock and options market with your money intending to trade as soon as possible? On this point, I have discovered that many unprincipled traders are more scared of losing out on “the next big trade” than they hesitate of losing money! The secret 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 fulfilled. 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 throw away your money because you traded needlessly and without following your stock and options method. PRINCIPLE 5. YOUR NEXT TRADE COULD BE A LOSING TRADE. Do you absolutely believe that your next stock or options trade is going to be such a huge winner that you break your own finance guidelines and put in everything you have? Do you remember what typically takes place after that? It isn’t quite, is it? No matter how positive you may be when getting in a trade, the stock and options market has a method of doing the unanticipated. For that reason, always stick to your portfolio management system. Do not compound your awaited wins because you may end up intensifying your extremely real losses. PRINCIPLE 6. ASSESS YOUR EMOTIONAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY. You understand by now how different paper trading and real stock and options trading is, do not you? In the very same way, after you get used to trading real money regularly, you discover it exceptionally different when you increase your capital by 10 fold, do not you? What, then, is the distinction? The distinction remains in the emotional problem that includes the possibility of losing increasingly more real money. This takes place when you cross from paper trading to real trading and likewise 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 capability prior to devoting the funds. PRINCIPLE 7. YOU ARE A NOVICE AT EVERY TRADE. Ever seemed like a professional after a few wins and then lose a lot on the next stock or options trade? Overconfidence and the incorrect sense of invincibility based on previous wins is a dish for catastrophe. All specialists respect their next trade and go through all the appropriate steps of their stock or options method prior to entry. Treat every trade as the very first trade you have ever made in your life. Never ever deviate from your stock or options method. Never ever. PRINCIPLE 8. YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE. Ever followed a successful stock or options method just to stop working badly? You are the one who figures out whether a method is successful or fails. Your character and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki says, “The investor is the asset or the liability, not the financial investment.”. Comprehending yourself initially will result in ultimate success. PRINCIPLE 9. CONSISTENCY. Have you ever altered your mind about how to execute a method? When you make changes day after day, you end up capturing nothing but the wind. Stock market changes have more variables than can be mathematically developed. By following a proven method, we are assured that somebody effective has stacked the chances in our favour. When you review both winning and losing trades, determine whether the entry, management, and exit fulfilled every criteria in the method and whether you have followed it specifically prior to changing anything. In conclusion … I hope these simple guidelines that have led my ship of the harshest of seas and into the best harvests of my life will guide you too. Good Luck.