Stock Option Trading Millionaire Principles
Having been trading stocks and choices in the capital markets expertly over the years, I have seen numerous ups and downs.
I have seen paupers end up being millionaires overnight …
And
I have seen millionaires end up being paupers over night …
One story told to me by my coach is still engraved in my mind:
"As soon as, there were two Wall Street stock exchange multi-millionaires. Both were very successful and decided to share their insights with others by offering their stock market 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 savings to buy both their opinions. His friends were naturally delighted about what the two masters had to state about the stock market`s direction. When they asked their friend, he was fuming mad. Baffled, they asked their friend about his anger. He said, `One said 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 various viewpoints of future market instructions and still earnings. The differences lay in the stock selecting or choices strategy and in the mental attitude and discipline one uses in executing that technique.
I share here the fundamental stock and alternative trading principles I follow. By holding these concepts strongly in your mind, they will guide you consistently to profitability. These principles will help you decrease your danger and permit you to assess both what you are doing right and what you may be doing wrong.
You might have read ideas comparable to these prior to. I and others use them because they work. And if you memorize and assess these concepts, your mind can use them to direct you in your stock and alternatives trading.
PRINCIPLE 1.
SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked this up from Wendy Kirkland Trading Services, When you feel that the stock and alternatives trading technique that you are following is too complicated even for basic understanding, it is most likely not the best.
In all elements of successful stock and alternatives trading, the most basic approaches often emerge victorious. In the heat of a trade, it is simple for our brains to become mentally overloaded. If we have a complex strategy, we can not stay up to date with the action. Easier is better.
PRINCIPLE 2.
NO ONE IS OBJECTIVE ENOUGH.
If you feel that you have outright control over your feelings and can be unbiased in the heat of a stock or options trade, you are either a harmful species or you are an inexperienced trader.
No trader can be absolutely objective, especially when market action is uncommon or extremely unpredictable. Similar to the ideal storm can still shake the nerves of the most skilled sailors, the best stock exchange storm can still unnerve and sink a trader extremely quickly. For that reason, one should venture to automate as lots of vital elements of your method as possible, especially your profit-taking and stop-loss points.
CONCEPT 3.
HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most important concept.
Many stock and choices traders do the opposite …
They hold on to their losses way too long and see their equity sink and sink and sink, or they get out of their gains prematurely only to see the price increase and up and up. Gradually, their gains never cover their losses.
This concept requires time to master effectively. Reflect upon this concept and review your past stock and alternatives trades. If you have been unrestrained, you will see its reality.
PRINCIPLE 4.
HESITATE TO LOSE MONEY.
Are you like the majority of novices who can`t wait to jump right into the stock and choices market with your money wanting to trade as soon as possible?
On this point, I have found that most unprincipled traders are more afraid of losing out on "the next big trade" than they are afraid of losing cash! The key here is ADHERE TO YOUR STRATEGY! Take stock and options trades when your method signals to do so and prevent taking trades when the conditions are not satisfied. Exit trades when your method 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 cash since you traded needlessly and without following your stock and options technique.
CONCEPT 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you absolutely think that your next stock or alternatives trade is going to be such a big winner that you break your own finance rules and put in everything you have? Do you remember what normally happens after that? It isn`t pretty, is it?
No matter how confident you might be when entering a trade, the stock and options market has a way of doing the unexpected. Therefore, constantly stick to your portfolio management system. Do not compound your expected wins because you may wind up intensifying your very real losses.
CONCEPT 6.
EVALUATE YOUR EMOTIONAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.
You understand by now how various paper trading and real stock and choices trading is, do not you?
In the very same way, after you get utilized to trading genuine money regularly, you find it exceptionally various when you increase your capital by 10 fold, do not you?
What, then, is the difference? The difference is in the psychological burden that comes with the possibility of losing more and more real cash. 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 recognize their maximum capability in both dollars and emotion. Are you comfortable trading as much as a couple of thousand or tens of thousands or hundreds of thousands? Know your capability before committing the funds.
PRINCIPLE 7.
YOU ARE A NOVICE AT EVERY TRADE.
Ever felt like a professional after a few wins and then lose a lot on the next stock or options trade?
Overconfidence and the false sense of invincibility based on previous wins is a dish for disaster. All professionals respect their next trade and go through all the correct steps of their stock or options method prior to entry. Deal with every trade as the very first trade you have actually ever made in your life. Never deviate from your stock or options method. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or options strategy just to stop working badly?
You are the one who determines whether a strategy is successful or fails. Your personality and your discipline make or break the technique that you utilize not vice versa. Like Robert Kiyosaki says, "The financier is the possession or the liability, not the investment."
Comprehending yourself initially will cause eventual success.
PRINCIPLE 9.
CONSISTENCY.
Have you ever altered your mind about how to execute a strategy? When you make changes day after day, you wind up catching nothing but the wind.
Stock market fluctuations have more variables than can be mathematically created. By following a proven method, we are assured that somebody successful has actually stacked the odds in our favour. When you review both winning and losing trades, figure out whether the entry, management, and exit satisfied every requirements in the technique and whether you have actually followed it precisely prior to changing anything.
In conclusion …
I hope these easy guidelines that have led my ship out of the harshest of seas and into the very best harvests of my life will assist you too. Best of luck.