Stock Option Trading Millionaire Principles

Having actually been trading stocks and alternatives in the capital markets professionally throughout the years,I have seen numerous ups and downs.

I have actually seen paupers end up being millionaires overnight …

And

I have seen millionaires become paupers over night …

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

“As soon as,there were two Wall Street stock market multi-millionaires. Both were extremely successful and chose to share their insights with others by offering their stock market forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to understand their views that he spent all of his $20,000 savings to purchase both their viewpoints. His friends were naturally thrilled about what the two masters needed to say about the stock market`s direction. When they asked their buddy,he was fuming mad. Confused,they asked their buddy about his anger. He said,`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 different opinions of future market direction and still earnings. The distinctions lay in the stock selecting or options strategy and in the mental attitude and discipline one utilizes in executing that strategy.

I share here the fundamental stock and choice trading concepts I follow. By holding these concepts securely in your mind,they will guide you regularly to profitability. These principles will assist you decrease your danger and enable you to examine 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 utilize them because they work. And if you memorize and review these concepts,your mind can use them to assist you in your stock and alternatives trading.

CONCEPT 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland

I picked this up from -,When you feel that the stock and options trading approach that you are following is too complicated even for easy understanding,it is most likely not the very best.

In all elements of effective stock and choices trading,the easiest methods frequently emerge triumphant. In the heat of a trade,it is easy for our brains to end up being mentally strained. If we have a complex strategy,we can not keep up with the action. Easier is better.

PRINCIPLE 2.

NOBODY IS GOAL ENOUGH.

If you feel that you have outright control over your emotions and can be objective in the heat of a stock or choices trade,you are either a harmful types or you are an inexperienced trader.

No trader can be absolutely objective,particularly when market action is unusual or wildly erratic. Just like the perfect storm can still shake the nerves of the most skilled sailors,the perfect stock market storm can still unnerve and sink a trader extremely rapidly. Therefore,one must strive to automate as many crucial elements of your technique 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 important concept.

A lot of stock and options traders do the opposite …

They hang on to their losses way too long and view their equity sink and sink and sink,or they get out of their gains prematurely just to see the price go up and up and up. Over time,their gains never cover their losses.

This principle takes time to master effectively. Reflect upon this principle and examine your previous stock and choices trades. If you have been unrestrained,you will see its reality.

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like most novices who can`t wait to jump right into the stock and choices market with your cash hoping to trade as soon as possible?

On this point,I have found that the majority of unprincipled traders are more afraid of losing out on “the next huge trade” than they are afraid of losing cash! The secret here is ADHERE TO YOUR METHOD! Take stock and choices trades when your strategy signals to do so and avoid taking trades when the conditions are not fulfilled. Exit trades when your strategy states 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 needlessly and without following your stock and alternatives technique.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely believe that your next stock or choices trade is going to be such a huge winner that you break your own money management guidelines and put in whatever you have? Do you remember what typically occurs after that? It isn`t quite,is it?

No matter how positive you might be when going into a trade,the stock and choices market has a method of doing the unanticipated. Therefore,always stick to your portfolio management system. Do not intensify your expected wins because you may end up intensifying your really genuine losses.

PRINCIPLE 6.

ASSESS YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

You know by now how different paper trading and real stock and choices trading is,don`t you?

In the very same method,after you get used to trading genuine cash consistently,you discover it very various when you increase your capital by 10 fold,don`t you?

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

After a while,most traders recognize their maximum capability in both dollars and feeling. Are you comfy trading approximately a few thousand or tens of thousands or hundreds of thousands? Know your capability before committing the funds.

CONCEPT 7.

YOU ARE A NEWBIE AT EVERY TRADE.

Ever felt like a professional after a couple of wins and after that 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 professionals respect their next trade and go through all the proper steps of their stock or alternatives technique before entry. Treat every trade as the very first trade you have ever made in your life. Never ever differ your stock or alternatives method. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or choices strategy just to stop working badly?

You are the one who determines whether a method succeeds or fails. Your character and your discipline make or break the technique that you utilize not vice versa. Like Robert Kiyosaki states,”The investor is the possession or the liability,not the financial investment.”

Comprehending yourself first will result in eventual success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock market variations have more variables than can be mathematically developed. By following a tested strategy,we are assured that someone effective has actually stacked the chances in our favour. When you examine both winning and losing trades,figure out whether the entry,management,and exit satisfied every criteria in the method and whether you have followed it precisely before changing anything.

In conclusion …

I hope these simple guidelines that have actually led my ship of the harshest of seas and into the best harvests of my life will assist you too. Good Luck.