Stock Option Trading Millionaire Principles

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

I have seen paupers end up being millionaires over night …

And

I have seen millionaires end up being paupers over night …

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

"As soon as, there were 2 Wall Street stock exchange multi-millionaires. Both were incredibly effective and chose to share their insights with others by offering their stock market forecasts 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 savings to purchase both their opinions. His pals were naturally thrilled about what the two masters had to state about the stock exchange`s direction. When they asked their good friend, he was fuming mad. Baffled, they asked their good friend 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, individuals can have various viewpoints of future market direction and still earnings. The differences lay in the stock picking or options method and in the mental attitude and discipline one uses in carrying out that strategy.

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

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

PRINCIPLE 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I learned this from Option Trading in Your Spare Time, When you feel that the stock and choices trading technique that you are following is too complex even for easy understanding, it is most likely not the best.

In all elements of successful stock and options trading, the most basic techniques often emerge victorious. In the heat of a trade, it is easy for our brains to become emotionally overwhelmed. If we have a complex technique, we can not keep up with the action. Simpler 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 options trade, you are either an unsafe types or you are an inexperienced trader.

No trader can be absolutely unbiased, particularly when market action is unusual or extremely erratic. Just like the best storm can still shake the nerves of the most seasoned sailors, the best stock exchange storm can still unnerve and sink a trader extremely rapidly. For that reason, one should endeavor to automate as many crucial aspects of your strategy as possible, specifically your profit-taking and stop-loss points.

PRINCIPLE 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most important principle.

A lot of stock and alternatives traders do the opposite …

They hold on to their losses way too long and enjoy their equity sink and sink and sink, or they leave their gains too soon only to see the cost increase and up and up. In time, their gains never cover their losses.

This concept takes time to master properly. Reflect upon this concept and examine your past stock and choices trades. If you have been unrestrained, you will see its fact.

PRINCIPLE 4.

HESITATE TO LOSE MONEY.

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

On this point, I have found that the majority of unprincipled traders are more scared of missing out on "the next huge trade" than they hesitate of losing money! The secret here is STICK 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 technique 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 cash due to the fact that you traded needlessly and without following your stock and alternatives strategy.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely believe that your next stock or alternatives trade is going to be such a big winner that you break your own finance rules and put in whatever you have? Do you remember what typically takes place after that? It isn`t pretty, is it?

No matter how confident you may be when getting in a trade, the stock and alternatives market has a way of doing the unforeseen. Therefore, always adhere to your portfolio management system. Do not intensify your awaited wins because you may wind up intensifying your very real losses.

PRINCIPLE 6.

GAUGE YOUR EMOTIONAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

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

What, then, is the distinction? The distinction remains in the emotional concern that includes the possibility of losing increasingly more genuine cash. This occurs when you cross from paper trading to genuine trading and likewise when you increase your capital after some successes.

After a while, most traders recognize their optimal capability in both dollars and emotion. Are you comfortable trading as much as a couple of thousand or 10s of thousands or hundreds of thousands? Know your capability before committing the funds.

CONCEPT 7.

YOU ARE A NOVICE AT EVERY TRADE.

Ever seemed like a specialist after a few wins and after that lose a lot on the next stock or alternatives trade?

Overconfidence and the incorrect sense of invincibility based upon previous wins is a dish for catastrophe. All specialists respect their next trade and go through all the proper steps 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 deviate from your stock or options method. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or options method only to stop working terribly?

You are the one who determines whether a strategy prospers or stops working. Your character and your discipline make or break the technique that you utilize not vice versa. Like Robert Kiyosaki states, "The financier is the property 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 exchange changes have more variables than can be mathematically developed. By following a proven strategy, we are assured that somebody successful has stacked the chances in our favour. When you examine both winning and losing trades, determine whether the entry, management, and exit fulfilled every requirements in the method and whether you have actually followed it exactly before altering anything.

In conclusion …

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