Stock Option Trading Millionaire ConceptsStock Option Trading Millionaire Concepts

Stock Options Trading Millionaire Principles

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

I have actually seen paupers become millionaires over night …

And

I have seen millionaires become paupers overnight …

One story told 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 very successful and chose 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 viewpoints. His friends were naturally excited about what the two masters had to state about the stock exchange`s direction. When they asked their friend, he was fuming mad. Confused, they asked their friend 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 various viewpoints of future market direction and still profit. The differences lay in the stock picking or options method and in the mental attitude and discipline one utilizes in implementing that method.

I share here the standard stock and choice trading concepts I follow. By holding these principles securely in your mind, they will assist you consistently to success. These principles will assist you decrease your risk and permit you to evaluate both what you are doing right and what you might be doing wrong.

You may have read ideas comparable to these before. I and others use them due to the fact that they work. And if you remember and assess these concepts, your mind can utilize them to guide you in your stock and choices trading.

CONCEPT 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I learned this from Wendy Kirkland, When you feel that the stock and alternatives trading technique that you are following is too complicated even for simple understanding, it is most likely not the best.

In all elements of successful stock and alternatives trading, the easiest methods frequently emerge triumphant. In the heat of a trade, it is simple for our brains to end up being mentally overwhelmed. If we have a complex method, we can not keep up with the action. Easier is much better.

CONCEPT 2.

NO ONE IS OBJECTIVE 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 harmful types or you are an unskilled trader.

No trader can be absolutely unbiased, especially when market action is unusual or extremely irregular. Similar to the perfect storm can still shake the nerves of the most experienced sailors, the ideal stock market storm can still unnerve and sink a trader extremely quickly. For that reason, one must venture to automate as many crucial aspects of your strategy as possible, especially 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 choices traders do the opposite …

They hang on to their losses way too long and watch their equity sink and sink and sink, or they leave their gains too soon just to see the cost go up and up and up. Gradually, their gains never cover their losses.

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

PRINCIPLE 4.

BE AFRAID TO LOSE MONEY.

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

On this point, I have actually discovered that many unprincipled traders are more afraid of losing out on "the next big trade" than they are afraid of losing money! The secret here is STAY WITH YOUR STRATEGY! Take stock and alternatives trades when your technique signals to do so and prevent taking trades when the conditions are not fulfilled. Exit trades when your technique says 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 unnecessarily and without following your stock and options technique.

PRINCIPLE 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 big winner that you break your own money management rules and put in whatever you have? Do you remember what typically happens after that? It isn`t pretty, is it?

No matter how positive you might be when getting in a trade, the stock and choices market has a way of doing the unexpected. Therefore, always stay with your portfolio management system. Do not compound your expected wins since you might end up intensifying your very real losses.

CONCEPT 6.

EVALUATE YOUR EMOTIONAL CAPACITY PRIOR TO 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 method, after you get utilized to trading genuine cash regularly, you discover it extremely various when you increase your capital by 10 fold, do not you?

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

After a while, many traders realize their maximum capacity in both dollars and feeling. Are you comfy trading up to a few thousand or tens of thousands or numerous thousands? Know your capability prior to devoting the funds.

CONCEPT 7.

YOU ARE A NOVICE 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 past wins is a dish for catastrophe. All professionals appreciate their next trade and go through all the proper steps of their stock or choices technique before entry. Deal with every trade as the very first trade you have ever made in your life. Never differ your stock or options method. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or alternatives strategy only to stop working terribly?

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

Understanding yourself first will cause ultimate success.

CONCEPT 9.

CONSISTENCY.

Have you ever changed 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 fluctuations have more variables than can be mathematically developed. By following a proven strategy, we are assured that somebody successful has actually stacked the odds in our favour. When you review both winning and losing trades, figure out whether the entry, management, and exit met every criteria in the technique and whether you have followed it precisely before altering anything.

In conclusion …

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