Stock Option Trading Millionaire Principles
Having actually been trading stocks and options in the capital markets expertly throughout the years,I have actually seen numerous ups and downs.
I have actually seen paupers end up being millionaires overnight …
And
I have seen millionaires become paupers overnight …
One story informed to me by my coach is still etched in my mind:
"When,there were 2 Wall Street stock market multi-millionaires. Both were extremely successful and decided to share their insights with others by selling their stock exchange forecasts 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 opinions. His pals were naturally delighted about what the two masters needed to say about the stock market`s instructions. When they asked their pal,he was fuming mad. Baffled,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 viewpoints of future market instructions and still earnings. The distinctions lay in the stock choosing or options strategy and in the mental attitude and discipline one uses in carrying out that technique.
I share here the standard stock and alternative trading principles I follow. By holding these principles strongly in your mind,they will direct you consistently to success. These concepts will assist you reduce your risk and allow you to assess both what you are doing right and what you might be doing wrong.
You might have read concepts similar to these before. I and others use them due to the fact that they work. And if you memorize and assess these concepts,your mind can use them to direct you in your stock and alternatives trading.
CONCEPT 1.
SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked this up from Click Here,When you feel that the stock and alternatives trading approach that you are following is too intricate even for basic understanding,it is most likely not the best.
In all aspects of effective stock and alternatives trading,the most basic methods typically emerge victorious. In the heat of a trade,it is easy for our brains to become emotionally 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 absolute control over your emotions and can be objective in the heat of a stock or alternatives trade,you are either a harmful types or you are an inexperienced trader.
No trader can be absolutely unbiased,especially when market action is unusual or wildly erratic. Just like the best storm can still shake the nerves of the most experienced sailors,the perfect stock exchange storm can still unnerve and sink a trader really quickly. Therefore,one must venture to automate as lots of critical elements of your strategy as possible,particularly your profit-taking and stop-loss points.
PRINCIPLE 3.
HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most crucial principle.
The majority of stock and alternatives 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 only to see the rate go up and up and up. Gradually,their gains never ever cover their losses.
This concept takes time to master effectively. Reflect upon this concept and examine your past stock and options trades. If you have been undisciplined,you will see its fact.
PRINCIPLE 4.
BE AFRAID TO LOSE CASH.
Are you like many newbies who can`t wait to jump right into the stock and choices market with your cash hoping to trade as soon as possible?
On this point,I have found that many unprincipled traders are more afraid of missing out on "the next huge trade" than they hesitate of losing money! 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 fulfilled. 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 unnecessarily and without following your stock and choices technique.
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 big winner that you break your own money management guidelines and put in everything you have? Do you remember what typically happens after that? It isn`t quite,is it?
No matter how confident you may be when going into a trade,the stock and options market has a method of doing the unexpected. Therefore,always adhere to your portfolio management system. Do not compound your anticipated wins because you may wind up compounding your extremely real losses.
CONCEPT 6.
EVALUATE YOUR EMOTIONAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.
You know by now how different paper trading and real stock and choices trading is,do not you?
In the very same way,after you get used to trading genuine money regularly,you discover it very various when you increase your capital by ten fold,don`t you?
What,then,is the difference? The difference is in the emotional burden that comes with the possibility of losing more and more real money. This occurs when you cross from paper trading to genuine trading and likewise when you increase your capital after some successes.
After a while,the majority of traders realize their optimal capability in both dollars and feeling. Are you comfortable trading approximately a couple of thousand or 10s of thousands or numerous thousands? Know your capability prior to committing the funds.
PRINCIPLE 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever seemed like an expert after a few wins and after that lose a lot on the next stock or alternatives trade?
Overconfidence and the false sense of invincibility based on past wins is a dish for catastrophe. All professionals appreciate their next trade and go through all the appropriate steps of their stock or choices strategy prior to entry. Deal with every trade as the first trade you have ever made in your life. Never differ your stock or alternatives technique. Never ever.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or alternatives strategy only to stop working terribly?
You are the one who identifies whether a strategy succeeds or stops working. Your personality and your discipline make or break the technique that you use not vice versa. Like Robert Kiyosaki says,"The investor is the possession or the liability,not the investment."
Comprehending yourself first will lead to eventual success.
CONCEPT 9.
CONSISTENCY.
Have you ever altered your mind about how to implement a strategy? When you make changes day after day,you wind up catching nothing but the wind.
Stock market fluctuations have more variables than can be mathematically created. By following a tested technique,we are ensured that someone successful has stacked the odds in our favour. When you evaluate both winning and losing trades,identify whether the entry,management,and exit fulfilled every requirements in the strategy and whether you have followed it specifically before changing anything.
In conclusion …
I hope these simple standards that have actually led my ship out of the harshest of seas and into the best harvests of my life will guide you too. Good Luck.
