Stock Option Trading Millionaire Concepts

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

I have actually seen paupers end up being millionaires over night …

And

I have actually seen millionaires end up being paupers over night …

One story informed 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 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 cost savings to purchase both their opinions. His pals were naturally delighted about what the two masters had to state about the stock market`s direction. When they asked their buddy, he was fuming mad. Baffled, 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 option market, people can have various opinions of future market instructions and still profit. The differences lay in the stock selecting or alternatives technique and in the mental attitude and discipline one utilizes in implementing that technique.

I share here the fundamental stock and choice trading principles I follow. By holding these concepts firmly in your mind, they will assist you regularly to success. These principles will help you reduce your danger and enable you to evaluate both what you are doing right and what you may be doing wrong.

You might have checked out ideas similar to these before. I and others use them because they work. And if you remember and review these principles, your mind can use them to guide you in your stock and options trading.

PRINCIPLE 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked this up from Wendy Kirkland, When you feel that the stock and alternatives trading approach that you are following is too complicated even for simple understanding, it is probably not the very best.

In all elements of successful stock and choices trading, the simplest approaches frequently emerge victorious. In the heat of a trade, it is easy for our brains to become emotionally overwhelmed. If we have a complex technique, we can not stay up to date with the action. Easier 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 options trade, you are either a dangerous species or you are an unskilled trader.

No trader can be absolutely unbiased, specifically when market action is uncommon or extremely erratic. Much like the best storm can still shake the nerves of the most experienced sailors, the best stock exchange storm can still unnerve and sink a trader very rapidly. For that reason, one need to strive to automate as many important aspects of your technique as possible, specifically your profit-taking and stop-loss points.

CONCEPT 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial concept.

Most 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 get out of their gains prematurely just to see the price increase and up and up. Gradually, their gains never ever cover their losses.

This principle takes time to master effectively. Reflect upon this concept and review your past stock and choices trades. If you have been undisciplined, you will see its reality.

CONCEPT 4.

HESITATE TO LOSE CASH.

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

On this point, I have actually found that a lot of unprincipled traders are more afraid of missing out on "the next big trade" than they hesitate of losing money! The key here is ADHERE TO YOUR STRATEGY! Take stock and choices trades when your strategy 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 scared to get rid of your money due to the fact that you traded unnecessarily and without following your stock and options technique.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely believe 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 everything you have? Do you remember what usually takes place after that? It isn`t pretty, is it?

No matter how positive you may be when getting in a trade, the stock and choices market has a way of doing the unanticipated. For that reason, always adhere to your portfolio management system. Do not compound your awaited wins since you may wind up intensifying your very real losses.

PRINCIPLE 6.

GAUGE YOUR EMOTIONAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same way, after you get used to trading genuine money regularly, you discover it incredibly different when you increase your capital by ten fold, do not you?

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

After a while, a lot of traders recognize their maximum capability in both dollars and feeling. Are you comfortable trading approximately a couple of thousand or tens of thousands or hundreds of thousands? Know your capability prior to dedicating the funds.

PRINCIPLE 7.

YOU ARE A NOVICE 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 past wins is a recipe for disaster. All specialists respect their next trade and go through all the proper steps of their stock or alternatives strategy prior to entry. Deal with every trade as the very first trade you have ever made in your life. Never differ your stock or choices technique. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or choices technique only to stop working severely?

You are the one who determines whether a strategy prospers or stops working. Your personality and your discipline make or break the method that you utilize not vice versa. Like Robert Kiyosaki states, "The financier is the possession or the liability, not the investment."

Comprehending yourself first will cause eventual success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock exchange variations have more variables than can be mathematically developed. By following a tested strategy, 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 satisfied every requirements in the technique and whether you have followed it precisely before changing anything.

In conclusion …

I hope these basic guidelines that have led my ship out of the harshest of seas and into the best harvests of my life will assist you too. All the best.