Stock Options Trading Millionaire Principles
Having been trading stocks and alternatives in the capital markets professionally for many years, I have seen lots of ups and downs.
I have seen paupers become millionaires over night …
And
I have seen millionaires end up being paupers over night …
One story told to me by my coach is still etched in my mind:
"Once, there were two Wall Street stock exchange multi-millionaires. Both were incredibly successful and chose 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 know their views that he spent all of his $20,000 cost savings to buy both their viewpoints. His friends were naturally thrilled about what the two masters had to say about the stock market`s direction. When they asked their friend, he was fuming mad. Confused, they asked their good friend about his anger. He said, `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 choice market, people can have various viewpoints of future market direction and still revenue. The distinctions lay in the stock picking or choices method and in the mental attitude and discipline one utilizes in carrying out that technique.
I share here the fundamental stock and alternative trading concepts I follow. By holding these principles securely in your mind, they will guide you regularly to profitability. These principles will help you reduce your danger and enable you to assess both what you are doing right and what you might be doing wrong.
You might have read ideas comparable to these before. I and others use them because they work. And if you memorize and review these concepts, your mind can utilize them to guide you in your stock and choices trading.
CONCEPT 1.
SIMPLICITY IS MASTERY.
Wendy Kirkland
I learned this from -, When you feel that the stock and alternatives trading approach that you are following is too complex even for easy understanding, it is most likely not the very best.
In all aspects of effective stock and options trading, the easiest approaches typically emerge victorious. In the heat of a trade, it is easy for our brains to end up being mentally overloaded. If we have a complex technique, we can not keep up with the action. Simpler is better.
CONCEPT 2.
NOBODY IS GOAL ENOUGH.
If you feel that you have outright control over your emotions and can be unbiased in the heat of a stock or alternatives trade, you are either a dangerous types or you are an unskilled trader.
No trader can be absolutely objective, specifically when market action is unusual or extremely irregular. Much like the best storm can still shake the nerves of the most experienced sailors, the ideal stock market storm can still unnerve and sink a trader extremely rapidly. For that reason, one need to venture to automate as numerous critical elements of your strategy as possible, specifically your profit-taking and stop-loss points.
PRINCIPLE 3.
HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most crucial principle.
The majority of stock and options traders do the opposite …
They hang on to their losses way too long and enjoy their equity sink and sink and sink, or they leave their gains too soon only to see the rate increase and up and up. Gradually, their gains never ever cover their losses.
This principle takes some time to master effectively. Contemplate this concept and review your past stock and options trades. If you have been unrestrained, you will see its reality.
CONCEPT 4.
HESITATE TO LOSE MONEY.
Are you like most newbies who can`t wait to leap right into the stock and options market with your money hoping to trade as soon as possible?
On this point, I have discovered that the majority of unprincipled traders are more afraid of losing out on "the next big trade" than they hesitate of losing money! The key here is STAY WITH YOUR STRATEGY! Take stock and choices trades when your method signals to do so and avoid taking trades when the conditions are not satisfied. 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 afraid to get rid of your money due to the fact that you traded needlessly and without following your stock and options method.
CONCEPT 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you definitely think 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 whatever you have? Do you remember what typically occurs after that? It isn`t pretty, is it?
No matter how positive you may be when entering a trade, the stock and choices market has a method of doing the unanticipated. For that reason, always stay with your portfolio management system. Do not intensify your awaited wins because you may end up intensifying your really genuine losses.
CONCEPT 6.
GAUGE YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.
You know by now how various paper trading and genuine stock and alternatives trading is, don`t you?
In the very same method, after you get used to trading real money consistently, you find it exceptionally various when you increase your capital by ten fold, do not you?
What, then, is the difference? The distinction remains in the emotional concern that includes the possibility of losing a growing number of genuine cash. 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, a lot of traders understand their maximum capacity in both dollars and feeling. Are you comfy trading up to a few thousand or tens of thousands or hundreds of thousands? Know your capacity prior to devoting the funds.
CONCEPT 7.
YOU ARE An AMATEUR 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 upon past wins is a dish for disaster. All professionals respect their next trade and go through all the appropriate actions of their stock or options technique before entry. Treat every trade as the first trade you have ever made in your life. Never ever differ your stock or options method. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or choices strategy just to stop working terribly?
You are the one who identifies whether a technique succeeds or fails. Your personality and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki states, "The financier is the property or the liability, not the financial investment."
Understanding yourself first will lead to 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 end up catching nothing but the wind.
Stock market fluctuations have more variables than can be mathematically developed. By following a tested technique, we are assured that someone successful has stacked the chances in our favour. When you review both winning and losing trades, figure out whether the entry, management, and exit met every criteria in the strategy and whether you have followed it precisely before altering anything.
In conclusion …
I hope these simple guidelines that have actually led my ship of the harshest of seas and into the very best harvests of my life will direct you too. Best of luck.