Stock Option Trading Millionaire Principles

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

I have seen paupers become millionaires over night …

And

I have seen millionaires end up being paupers overnight …

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

"When, there were two Wall Street stock market multi-millionaires. Both were exceptionally effective 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 invested all of his $20,000 savings to buy both their opinions. His good friends were naturally thrilled about what the two masters needed to state about the stock exchange`s direction. When they asked their pal, he was fuming mad. Confused, they asked their buddy about his anger. He said, `One stated 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 alternative market, individuals can have various opinions of future market instructions and still earnings. The differences lay in the stock choosing or alternatives technique and in the mental attitude and discipline one uses in carrying out that strategy.

I share here the standard stock and alternative trading principles I follow. By holding these principles firmly in your mind, they will direct you regularly to profitability. These concepts will assist you reduce your risk and enable you to evaluate both what you are doing right and what you might be doing wrong.

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

PRINCIPLE 1.

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

In all elements of effective stock and options trading, the easiest methods often emerge triumphant. In the heat of a trade, it is easy for our brains to end up being emotionally overwhelmed. If we have a complex strategy, we can not keep up with the action. Simpler is better.

CONCEPT 2.

NOBODY IS OBJECTIVE ENOUGH.

If you feel that you have absolute control over your feelings and can be objective in the heat of a stock or alternatives trade, you are either a hazardous types or you are an unskilled trader.

No trader can be definitely unbiased, specifically when market action is unusual or wildly erratic. Much like the best storm can still shake the nerves of the most skilled sailors, the perfect stock exchange storm can still unnerve and sink a trader very rapidly. Therefore, one must venture to automate as many crucial elements of your method 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 crucial principle.

Many stock and options 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 prematurely just to see the cost go up and up and up. In time, their gains never ever cover their losses.

This concept takes time to master appropriately. Reflect upon this concept and evaluate your past stock and options trades. If you have actually been unrestrained, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE CASH.

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

On this point, I have discovered that the majority of unprincipled traders are more scared 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 prevent taking trades when the conditions are not satisfied. 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 afraid to discard your money because you traded unnecessarily and without following your stock and choices method.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely think that your next stock or alternatives trade is going to be such a huge winner that you break your own finance rules and put in everything you have? Do you remember what generally occurs after that? It isn`t pretty, is it?

No matter how confident you may be when entering a trade, the stock and choices market has a way of doing the unexpected. For that reason, always stay with your portfolio management system. Do not intensify your expected wins because you may end up intensifying your very real losses.

CONCEPT 6.

DETERMINE YOUR PSYCHOLOGICAL 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 money regularly, you find it extremely different when you increase your capital by ten fold, do not you?

What, then, is the distinction? The distinction is in the emotional problem that includes the possibility of losing more and more genuine money. This happens when you cross from paper trading to real trading and also when you increase your capital after some successes.

After a while, the majority of traders realize their optimal capacity in both dollars and feeling. Are you comfortable trading approximately a few thousand or tens of thousands or hundreds of thousands? Know your capacity prior to committing the funds.

PRINCIPLE 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever felt like a specialist after a couple of wins and then lose a lot on the next stock or alternatives trade?

Overconfidence and the incorrect sense of invincibility based upon previous wins is a recipe for disaster. All experts appreciate their next trade and go through all the appropriate actions of their stock or alternatives technique prior to entry. Deal with every trade as the very first trade you have actually ever made in your life. Never ever deviate from your stock or alternatives method. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or choices technique just to stop working badly?

You are the one who identifies whether a technique succeeds 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 investment."

Comprehending yourself first will result in eventual success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever changed your mind about how to execute a method? When you make changes day after day, you end up catching nothing but the wind.

Stock exchange fluctuations have more variables than can be mathematically created. By following a tested strategy, we are guaranteed that someone effective has stacked the odds in our favour. When you examine both winning and losing trades, determine whether the entry, management, and exit fulfilled every criteria in the strategy and whether you have followed it specifically prior to changing anything.

In conclusion …

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