Stock Option Trading Millionaire Principles

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

I have seen paupers become millionaires overnight …

And

I have actually seen millionaires become paupers overnight …

One story informed to me by my coach is still etched in my mind:

"As soon as, there were two Wall Street stock exchange multi-millionaires. Both were incredibly successful and decided to share their insights with others by selling their stock market projections in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to know their views that he invested all of his $20,000 savings to buy both their viewpoints. His pals were naturally delighted about what the two masters needed to state about the stock market`s direction. When they asked their good friend, he was fuming mad. Confused, they asked their buddy about his anger. He said, `One stated 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 choice market, individuals can have various viewpoints of future market direction and still earnings. The distinctions lay in the stock selecting or choices strategy and in the mental attitude and discipline one uses in implementing that method.

I share here the standard stock and option trading principles I follow. By holding these concepts strongly in your mind, they will guide you regularly to success. These concepts will assist you reduce your risk and permit 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 prior to. I and others use them due to the fact that they work. And if you memorize and reflect on these concepts, your mind can utilize them to assist you in your stock and options trading.

PRINCIPLE 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked this up from Option Trading in Your Spare Time, When you feel that the stock and options trading method that you are following is too complicated even for easy understanding, it is probably not the best.

In all elements of successful stock and alternatives trading, the most basic techniques typically emerge victorious. In the heat of a trade, it is simple for our brains to end up being mentally overloaded. If we have a complex method, we can not keep up with the action. Simpler is much better.

PRINCIPLE 2.

NOBODY IS GOAL ENOUGH.

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

No trader can be definitely objective, specifically when market action is unusual or hugely unpredictable. Much like the ideal storm can still shake the nerves of the most experienced sailors, the best stock market storm can still unnerve and sink a trader extremely rapidly. For that reason, one must venture to automate as many crucial elements of your technique as possible, especially your profit-taking and stop-loss points.

CONCEPT 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most essential concept.

The majority of stock and options traders do the opposite …

They hold on to their losses way too long and view their equity sink and sink and sink, or they get out of their gains too soon just to see the rate increase and up and up. Over time, their gains never cover their losses.

This concept takes some time to master correctly. Reflect upon this concept and examine your past stock and choices trades. If you have actually been undisciplined, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE CASH.

Are you like most beginners who can`t wait to leap right into the stock and alternatives market with your cash hoping to trade as soon as possible?

On this point, I have discovered that a lot of unprincipled traders are more afraid of missing out on "the next huge trade" than they hesitate of losing money! The key here is ADHERE TO YOUR TECHNIQUE! Take stock and options trades when your technique signals to do so and avoid taking trades when the conditions are not met. Exit trades when your strategy states to do so and leave them alone when the exit conditions are not in place.

The point here is to be scared to throw away your cash since you traded unnecessarily and without following your stock and alternatives technique.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely think that your next stock or choices trade is going to be such a huge winner that you break your own finance guidelines and put in everything you have? Do you remember what normally takes place after that? It isn`t pretty, is it?

No matter how positive you might be when going into a trade, the stock and alternatives market has a method of doing the unforeseen. For that reason, constantly stay with your portfolio management system. Do not intensify your anticipated wins since you might end up intensifying your extremely genuine losses.

CONCEPT 6.

GAUGE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same method, after you get used to trading real cash consistently, you find it incredibly different when you increase your capital by 10 fold, don`t you?

What, then, is the distinction? The difference remains in the psychological burden that includes the possibility of losing more and 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, a lot of traders realize their maximum capability in both dollars and emotion. Are you comfortable trading as much as a few thousand or 10s of thousands or numerous thousands? Know your capability prior to dedicating the funds.

PRINCIPLE 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever seemed like an expert 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 previous wins is a dish for catastrophe. All specialists respect their next trade and go through all the appropriate steps of their stock or choices method before entry. Deal with every trade as the very first trade you have ever made in your life. Never ever deviate from your stock or choices technique. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or alternatives technique only to stop working terribly?

You are the one who figures out whether a technique is successful or stops working. Your personality and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki states, "The investor is the possession or the liability, not the financial investment."

Understanding yourself initially will lead to ultimate 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 market changes have more variables than can be mathematically formulated. By following a proven technique, we are assured that somebody effective has stacked the chances in our favour. When you review both winning and losing trades, figure out whether the entry, management, and exit fulfilled every requirements in the method and whether you have actually followed it precisely prior to altering 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 assist you too. All the best.