Stock Options Trading Millionaire Principles
Having actually been trading stocks and options in the capital markets expertly 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 seen millionaires become paupers overnight …
One story told to me by my mentor is still etched in my mind:
"As soon as, there were two Wall Street stock exchange multi-millionaires. Both were extremely successful and chose to share their insights with others by offering their stock exchange projections in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to understand their views that he spent all of his $20,000 cost savings to purchase both their viewpoints. His good friends were naturally delighted about what the two masters needed to say about the stock exchange`s direction. When they asked their buddy, he was fuming mad. Baffled, they asked their pal about his anger. He stated, `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 alternative market, people can have different 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 strategy.
I share here the standard stock and option trading principles I follow. By holding these principles securely in your mind, they will guide you consistently to profitability. These principles will help you decrease your danger and permit 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 since they work. And if you memorize and assess these concepts, your mind can utilize them to assist you in your stock and choices trading.
CONCEPT 1.
SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked this up from Financial Guru Wendy Kirkland Reveals Smart Paycheck, When you feel that the stock and choices trading approach that you are following is too complicated even for basic understanding, it is most likely not the very best.
In all elements of successful stock and options trading, the easiest approaches often emerge victorious. In the heat of a trade, it is easy for our brains to become mentally overwhelmed. 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 absolute control over your emotions and can be objective in the heat of a stock or alternatives trade, you are either an unsafe types or you are an inexperienced trader.
No trader can be absolutely objective, specifically when market action is unusual or hugely irregular. Much like the ideal storm can still shake the nerves of the most skilled sailors, the best stock market storm can still unnerve and sink a trader very rapidly. Therefore, one should strive to automate as many vital elements of your strategy as possible, particularly your profit-taking and stop-loss points.
CONCEPT 3.
HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most essential principle.
Many stock and options traders do the opposite …
They hang on to their losses way too long and see their equity sink and sink and sink, or they leave their gains prematurely just to see the rate increase and up and up. Gradually, their gains never cover their losses.
This concept takes some time to master correctly. Reflect upon this concept and evaluate your past stock and choices trades. If you have been undisciplined, you will see its truth.
CONCEPT 4.
BE AFRAID TO LOSE CASH.
Are you like a lot of beginners who can`t wait to jump right into the stock and options market with your cash wanting to trade as soon as possible?
On this point, I have actually found that most unprincipled traders are more scared of losing out on "the next huge trade" than they are afraid of losing cash! The key here is STAY WITH YOUR TECHNIQUE! Take stock and alternatives trades when your method signals to do so and avoid taking trades when the conditions are not satisfied. Exit trades when your technique states to do so and leave them alone when the exit conditions are not in place.
The point here is to be scared to discard your cash 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 choices trade is going to be such a big winner that you break your own money management rules and put in everything you have? Do you remember what usually occurs after that? It isn`t quite, is it?
No matter how confident you might be when getting in a trade, the stock and options market has a method of doing the unexpected. For that reason, always adhere to your portfolio management system. Do not compound your awaited wins since you may wind up compounding your extremely genuine losses.
CONCEPT 6.
DETERMINE YOUR EMOTIONAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.
You understand by now how various paper trading and real stock and choices trading is, don`t you?
In the very same way, after you get utilized to trading genuine cash regularly, you find it exceptionally various when you increase your capital by 10 fold, don`t you?
What, then, is the distinction? The difference is in the psychological burden that includes the possibility of losing a growing number of real cash. This takes place 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 realize their maximum capability in both dollars and feeling. Are you comfortable trading as much as a few thousand or tens of thousands or numerous thousands? Know your capability prior to devoting the funds.
CONCEPT 7.
YOU ARE A NEWBIE AT EVERY TRADE.
Ever felt like an expert after a few wins and after that lose a lot on the next stock or options trade?
Overconfidence and the incorrect sense of invincibility based upon previous wins is a recipe for catastrophe. All specialists appreciate their next trade and go through all the correct steps of their stock or alternatives strategy before entry. Deal with every trade as the very first trade you have ever made in your life. Never deviate from your stock or options technique. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or alternatives strategy just to stop working terribly?
You are the one who identifies whether a strategy is successful or fails. Your personality and your discipline make or break the strategy that you utilize not vice versa. Like Robert Kiyosaki says, "The investor is the property or the liability, not the financial investment."
Comprehending yourself initially will lead to ultimate success.
PRINCIPLE 9.
CONSISTENCY.
Have you ever changed your mind about how to carry out a technique? When you make changes day after day, you end up capturing nothing but the wind.
Stock market fluctuations have more variables than can be mathematically developed. By following a proven method, we are guaranteed that somebody successful has actually stacked the chances in our favour. When you examine both winning and losing trades, identify whether the entry, management, and exit satisfied every criteria in the technique and whether you have followed it precisely before altering anything.
In conclusion …
I hope these basic standards 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.