Stock Option Trading Millionaire Principles

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

I have seen paupers end up being millionaires overnight …

And

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

One story informed to me by my mentor is still engraved in my mind:

"Once, there were two Wall Street stock exchange multi-millionaires. Both were very successful and chose to share their insights with others by offering their stock exchange forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to understand their views that he invested all of his $20,000 cost savings to purchase both their viewpoints. His good friends were naturally thrilled about what the two masters needed to say about the stock market`s direction. When they asked their buddy, he was fuming mad. Baffled, they asked their buddy about his anger. He said, `One said 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 choice market, people can have different viewpoints of future market direction and still revenue. The differences lay in the stock choosing or alternatives method and in the mental attitude and discipline one uses in implementing that strategy.

I share here the basic stock and alternative trading principles I follow. By holding these concepts firmly in your mind, they will direct you consistently to success. These principles will help you decrease your danger and permit you to assess both what you are doing right and what you may be doing wrong.

You may have read ideas comparable 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 assist you in your stock and choices trading.

PRINCIPLE 1.

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

In all aspects of effective stock and choices trading, the easiest techniques frequently emerge victorious. In the heat of a trade, it is easy for our brains to end up being emotionally overloaded. If we have a complex technique, we can not stay up to date with the action. Easier is better.

PRINCIPLE 2.

NOBODY IS GOAL ENOUGH.

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

No trader can be definitely objective, specifically when market action is unusual or hugely unpredictable. Similar to the ideal storm can still shake the nerves of the most seasoned sailors, the ideal stock exchange storm can still unnerve and sink a trader really quickly. For that reason, one should strive to automate as numerous crucial elements of your strategy as possible, specifically your profit-taking and stop-loss points.

CONCEPT 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most essential principle.

The majority of stock and alternatives traders do the opposite …

They hang on to their losses way too long and view their equity sink and sink and sink, or they get out of their gains prematurely just to see the price go up and up and up. Gradually, their gains never cover their losses.

This principle requires time to master effectively. Reflect upon this principle 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 MONEY.

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

On this point, I have found that the majority of unprincipled traders are more scared of losing out on "the next big trade" than they hesitate of losing cash! The secret here is STICK TO YOUR TECHNIQUE! Take stock and alternatives trades when your strategy signals to do so and avoid taking trades when the conditions are not met. 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 afraid to discard your cash because you traded needlessly and without following your stock and choices technique.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely believe that your next stock or options trade is going to be such a big winner that you break your own finance rules and put in everything you have? Do you remember what typically 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 unexpected. For that reason, always stick to your portfolio management system. Do not intensify your anticipated wins since you may wind up compounding your really real losses.

CONCEPT 6.

DETERMINE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

You know by now how various paper trading and genuine stock and choices trading is, do not you?

In the very same way, after you get used to trading genuine cash regularly, you discover 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 features the possibility of losing more and more genuine cash. This takes place when you cross from paper trading to real trading and likewise when you increase your capital after some successes.

After a while, the majority of traders recognize their maximum capability in both dollars and emotion. Are you comfortable trading approximately a few thousand or 10s of thousands or hundreds of thousands? Know your capacity before dedicating the funds.

CONCEPT 7.

YOU ARE A BEGINNER AT EVERY TRADE.

Ever seemed like a specialist after a few wins and then 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 experts appreciate their next trade and go through all the proper actions of their stock or choices strategy prior to entry. Treat every trade as the first trade you have actually ever made in your life. Never ever differ your stock or alternatives method. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or choices method just to stop working severely?

You are the one who identifies whether a technique succeeds or stops working. Your character and your discipline make or break the strategy that you utilize not vice versa. Like Robert Kiyosaki states, "The investor is the asset or the liability, not the financial investment."

Comprehending yourself first will lead to eventual success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever altered your mind about how to execute a strategy? When you make changes day after day, you wind up capturing nothing but the wind.

Stock market changes have more variables than can be mathematically developed. By following a proven strategy, we are ensured that someone successful has actually stacked the chances in our favour. When you review both winning and losing trades, determine whether the entry, management, and exit satisfied every criteria in the method and whether you have actually followed it exactly before altering anything.

In conclusion …

I hope these simple guidelines that have actually led my ship of the harshest of seas and into the best harvests of my life will direct you too. All the best.