Stock Options Trading Millionaire Principles

Having actually been trading stocks and options in the capital markets expertly throughout the years, I have actually seen lots of ups and downs.

I have actually seen paupers become millionaires overnight …

And

I have actually seen millionaires become paupers over night …

One story told to me by my mentor is still etched in my mind:

"Once, there were two Wall Street stock exchange multi-millionaires. Both were incredibly 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 know their views that he invested all of his $20,000 savings to buy both their viewpoints. His buddies were naturally excited about what the two masters had to state about the stock market`s instructions. When they asked their friend, he was fuming mad. Confused, they asked their buddy 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 alternative market, people can have various opinions of future market direction and still earnings. The differences lay in the stock choosing or alternatives technique and in the mental attitude and discipline one uses in executing that technique.

I share here the fundamental stock and choice trading principles I follow. By holding these concepts securely in your mind, they will assist you regularly to profitability. These principles will assist you decrease your risk and allow you to examine both what you are doing right and what you may be doing wrong.

You may have checked out ideas similar to these before. I and others utilize them since they work. And if you memorize and review these concepts, your mind can use them to assist you in your stock and options trading.

PRINCIPLE 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked this up from Wendy Kirkland, When you feel that the stock and choices trading approach that you are following is too complex even for basic understanding, it is probably not the best.

In all aspects of effective stock and choices trading, the simplest approaches frequently emerge victorious. In the heat of a trade, it is simple for our brains to end up being emotionally overloaded. If we have a complex method, we can not keep up with the action. Simpler is better.

CONCEPT 2.

NO ONE IS GOAL ENOUGH.

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

No trader can be definitely unbiased, specifically when market action is uncommon or wildly irregular. Similar to the ideal storm can still shake the nerves of the most skilled sailors, the perfect stock market storm can still unnerve and sink a trader very quickly. For that reason, one must venture to automate as many important elements of your strategy 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 crucial concept.

A lot 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 prematurely only to see the rate increase and up and up. Over time, their gains never ever cover their losses.

This principle takes some time to master properly. Reflect upon this concept and examine your previous stock and options trades. If you have actually been unrestrained, you will see its fact.

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like a lot of 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 discovered that many unprincipled traders are more scared of losing out on "the next big trade" than they are afraid of losing money! The key here is STICK TO YOUR STRATEGY! Take stock and options trades when your strategy signals to do so and prevent 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 afraid to throw away 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 options trade is going to be such a big winner that you break your own finance guidelines and put in everything you have? Do you remember what usually happens after that? It isn`t pretty, is it?

No matter how confident you might be when going into a trade, the stock and alternatives market has a method of doing the unanticipated. For that reason, always adhere to your portfolio management system. Do not compound your anticipated wins due to the fact that you may wind up compounding your extremely real losses.

CONCEPT 6.

ASSESS YOUR PSYCHOLOGICAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.

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

In the very same way, after you get used to trading genuine cash regularly, you discover it very different when you increase your capital by ten fold, don`t you?

What, then, is the distinction? The difference is in the emotional problem that comes with the possibility of losing increasingly more real 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, many traders understand their maximum capability in both dollars and emotion. Are you comfortable trading up to a few thousand or 10s of thousands or hundreds of thousands? Know your capacity prior to devoting the funds.

PRINCIPLE 7.

YOU ARE A NOVICE AT EVERY TRADE.

Ever felt like a professional after a couple of wins and then lose a lot on the next stock or alternatives trade?

Overconfidence and the incorrect sense of invincibility based on previous wins is a dish for disaster. All professionals appreciate their next trade and go through all the appropriate steps of their stock or choices method prior to entry. Treat every trade as the first trade you have actually ever made in your life. Never ever differ your stock or options strategy. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or choices method only 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 strategy that you use not vice versa. Like Robert Kiyosaki states, "The investor is the asset or the liability, not the investment."

Understanding yourself initially will cause eventual success.

CONCEPT 9.

CONSISTENCY.

Have you ever altered your mind about how to implement a technique? When you make changes day after day, you wind up catching nothing but the wind.

Stock market changes have more variables than can be mathematically developed. By following a tested method, we are ensured that somebody successful has actually stacked the odds in our favour. When you evaluate both winning and losing trades, identify whether the entry, management, and exit satisfied every criteria in the method and whether you have followed it exactly prior to altering anything.

In conclusion …

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