Stock Options Trading Millionaire Principles

Stock Option Trading Millionaire Principles

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

I have seen paupers end up being millionaires over night …

And

I have actually seen millionaires become paupers overnight …

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

"As soon as, there were 2 Wall Street stock exchange multi-millionaires. Both were incredibly successful 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 know their views that he spent all of his $20,000 cost savings to purchase both their viewpoints. His buddies were naturally excited about what the two masters had to state about the stock exchange`s instructions. When they asked their friend, he was fuming mad. Baffled, they asked their good 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 option market, people can have various opinions of future market direction and still earnings. The distinctions lay in the stock picking or alternatives strategy and in the mental attitude and discipline one utilizes in executing that method.

I share here the standard stock and choice trading principles I follow. By holding these concepts firmly in your mind, they will guide you consistently to profitability. These principles will assist you reduce your danger and allow you to evaluate both what you are doing right and what you may be doing wrong.

You might have read concepts similar to these before. I and others utilize them because they work. And if you memorize and assess these principles, your mind can use them to direct you in your stock and choices trading.

CONCEPT 1.

SIMPLENESS IS PROFICIENCY.
Wendy Kirkland
I picked up this trick from Option Trading Spare Time by Wendy Kirkland, When you feel that the stock and choices trading approach that you are following is too intricate even for basic understanding, it is most likely not the best.

In all aspects of successful stock and choices trading, the easiest methods often emerge triumphant. In the heat of a trade, it is easy 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.

NOBODY IS OBJECTIVE ENOUGH.

If you feel that you have outright control over your emotions and can be unbiased 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 definitely unbiased, especially when market action is uncommon or extremely irregular. Just like the ideal storm can still shake the nerves of the most skilled sailors, the best stock market storm can still unnerve and sink a trader very quickly. For that reason, one should strive to automate as numerous important elements of your technique 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.

The majority of stock and choices 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 cost go up and up and up. With time, their gains never cover their losses.

This concept requires time to master correctly. Reflect upon this principle and evaluate your past stock and options trades. If you have been unrestrained, you will see its reality.

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like most newbies who can`t wait to leap right into the stock and choices market with your money intending to trade as soon as possible?

On this point, I have actually found that most unprincipled traders are more afraid of missing out on "the next big trade" than they hesitate of losing cash! The key here is STICK TO YOUR METHOD! Take stock and alternatives trades when your technique signals to do so and avoid taking trades when the conditions are not met. Exit trades when your strategy says to do so and leave them alone when the exit conditions are not in place.

The point here is to be scared to get rid of your cash because you traded needlessly and without following your stock and alternatives strategy.

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 huge winner that you break your own money management guidelines and put in whatever you have? Do you remember what usually happens after that? It isn`t pretty, is it?

No matter how confident you may be when getting in a trade, the stock and options market has a way of doing the unforeseen. For that reason, constantly stay with your portfolio management system. Do not intensify your anticipated wins because you might end up intensifying your extremely real losses.

CONCEPT 6.

ASSESS YOUR PSYCHOLOGICAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same way, after you get utilized 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 distinction? The difference is in the psychological burden that includes the possibility of losing a growing number of genuine cash. This takes place when you cross from paper trading to real trading and also when you increase your capital after some successes.

After a while, the majority of traders realize their maximum capacity in both dollars and feeling. Are you comfy trading approximately a few thousand or 10s of thousands or numerous thousands? Know your capability before dedicating the funds.

CONCEPT 7.

YOU ARE A BEGINNER AT EVERY TRADE.

Ever seemed like an expert after a few wins and then lose a lot on the next stock or options trade?

Overconfidence and the incorrect sense of invincibility based upon past wins is a dish for disaster. All experts respect their next trade and go through all the appropriate steps of their stock or alternatives method before entry. Treat every trade as the very first trade you have actually ever made in your life. Never ever differ your stock or options method. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

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

You are the one who identifies whether a technique succeeds or fails. Your character and your discipline make or break the method that you utilize not vice versa. Like Robert Kiyosaki states, "The financier is the property 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 implement 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 ensured that someone effective has stacked the chances in our favour. When you evaluate both winning and losing trades, figure out whether the entry, management, and exit fulfilled every criteria in the method and whether you have followed it exactly before changing anything.

In conclusion …

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