Stock Option Trading Millionaire Concepts

Having been trading stocks and choices 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 overnight …

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

"Once, there were two Wall Street stock exchange multi-millionaires. Both were extremely effective and chose to share their insights with others by selling their stock exchange projections in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to understand their views that he spent all of his $20,000 cost savings to buy both their viewpoints. His friends were naturally delighted about what the two masters had to state about the stock exchange`s instructions. When they asked their good friend, he was fuming mad. Baffled, they asked their good friend about his anger. He said, `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 choice market, individuals can have various viewpoints of future market direction and still revenue. The differences lay in the stock choosing or choices method and in the mental attitude and discipline one utilizes in carrying out that technique.

I share here the basic stock and choice trading principles I follow. By holding these principles strongly in your mind, they will assist you regularly to profitability. These principles will help you reduce your threat and permit you to assess both what you are doing right and what you may be doing wrong.

You may have checked out concepts similar to these prior to. I and others utilize them since they work. And if you memorize and reflect on these concepts, your mind can utilize them to direct you in your stock and choices trading.

CONCEPT 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I learned this from Wendy Kirkland, When you feel that the stock and choices trading method that you are following is too complex even for basic understanding, it is most likely not the best.

In all aspects of effective stock and alternatives trading, the easiest methods typically emerge victorious. In the heat of a trade, it is easy for our brains to end up being mentally strained. If we have a complex method, we can not keep up with the action. Easier is better.

PRINCIPLE 2.

NO ONE IS GOAL ENOUGH.

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

No trader can be definitely unbiased, especially when market action is unusual or hugely erratic. Just like the best storm can still shake the nerves of the most experienced sailors, the ideal stock market storm can still unnerve and sink a trader extremely rapidly. For that reason, one need to strive to automate as lots of crucial aspects of your method as possible, specifically your profit-taking and stop-loss points.

PRINCIPLE 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial concept.

Many stock and alternatives 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 only to see the price go up and up and up. Over time, their gains never ever cover their losses.

This concept requires time to master properly. Reflect upon this principle and review 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 the majority of newbies who can`t wait to jump right into the stock and alternatives market with your cash intending to trade as soon as possible?

On this point, I have actually found that the majority of unprincipled traders are more afraid of missing out on "the next huge trade" than they are afraid of losing cash! The key here is STAY WITH YOUR TECHNIQUE! Take stock and options trades when your technique signals to do so and avoid 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 scared to get rid of your cash because you traded needlessly and without following your stock and choices technique.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely believe that your next stock or alternatives trade is going to be such a huge winner that you break your own finance guidelines and put in whatever you have? Do you remember what usually happens after that? It isn`t pretty, is it?

No matter how positive you may be when entering a trade, the stock and alternatives market has a method of doing the unanticipated. Therefore, always stay with your portfolio management system. Do not intensify your expected wins because you may end up compounding your really real losses.

PRINCIPLE 6.

GAUGE YOUR EMOTIONAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.

You understand by now how various paper trading and genuine stock and choices trading is, don`t you?

In the very same way, after you get utilized to trading real money regularly, you discover it incredibly different when you increase your capital by 10 fold, don`t you?

What, then, is the distinction? The difference is in the emotional burden that comes with the possibility of losing more and more genuine 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, a lot of traders understand their maximum capacity in both dollars and feeling. Are you comfortable trading as much as a couple of thousand or tens of thousands or numerous thousands? Know your capacity before committing the funds.

CONCEPT 7.

YOU ARE A NEWBIE AT EVERY TRADE.

Ever felt like a specialist after a few 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 catastrophe. All specialists appreciate their next trade and go through all the proper actions of their stock or choices method prior to entry. Treat every trade as the very first trade you have actually ever made in your life. Never deviate from your stock or choices technique. Never ever.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

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

You are the one who determines whether a method is successful or fails. Your character and your discipline make or break the technique that you utilize not vice versa. Like Robert Kiyosaki states, "The financier is the possession or the liability, not the financial investment."

Comprehending yourself first will result in eventual success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever changed 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 changes have more variables than can be mathematically developed. By following a tested method, we are ensured that somebody effective has stacked the chances in our favour. When you evaluate both winning and losing trades, determine whether the entry, management, and exit satisfied every requirements in the technique and whether you have actually followed it exactly prior to altering anything.

In conclusion …

I hope these easy guidelines that have actually led my ship out of the harshest of seas and into the best harvests of my life will guide you too. Best of luck.