Stock Options Trading Millionaire Principles
Having actually been trading stocks and options in the capital markets professionally over the years, I have actually seen many ups and downs.
I have seen paupers end up being millionaires over night …
And
I have seen millionaires end up being paupers overnight …
One story informed to me by my coach is still etched in my mind:
"When, there were two Wall Street stock exchange multi-millionaires. Both were extremely successful and chose to share their insights with others by selling their stock market 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 delighted about what the two masters needed to say about the stock market`s instructions. When they asked their buddy, he was fuming mad. Baffled, they asked their pal about his anger. He stated, `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, people can have different opinions of future market instructions and still profit. The distinctions lay in the stock picking or options technique and in the mental attitude and discipline one utilizes in implementing that technique.
I share here the basic stock and alternative trading concepts I follow. By holding these concepts strongly in your mind, they will assist you regularly to success. These concepts will assist you reduce your risk and permit you to evaluate both what you are doing right and what you may be doing wrong.
You might have read concepts comparable to these before. I and others utilize them due to the fact that they work. And if you memorize and assess these concepts, your mind can use them to assist you in your stock and alternatives trading.
CONCEPT 1.
SIMPLICITY IS MASTERY.
Wendy Kirkland
I learned this from Wendy Kirkland Trading Services, When you feel that the stock and alternatives trading approach that you are following is too complex even for easy understanding, it is probably not the best.
In all aspects of successful stock and alternatives trading, the most basic techniques often emerge triumphant. In the heat of a trade, it is simple for our brains to become emotionally strained. If we have a complex technique, we can not stay up to date with the action. Simpler is much better.
CONCEPT 2.
NOBODY IS OBJECTIVE ENOUGH.
If you feel that you have absolute control over your emotions and can be unbiased in the heat of a stock or options trade, you are either a hazardous types or you are an unskilled trader.
No trader can be absolutely objective, particularly when market action is uncommon or extremely erratic. Just 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 really quickly. For that reason, one should venture to automate as numerous critical elements of your strategy as possible, specifically your profit-taking and stop-loss points.
CONCEPT 3.
HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most crucial concept.
A lot of stock and alternatives traders do the opposite …
They hold on to their losses way too long and watch their equity sink and sink and sink, or they get out of their gains too soon only to see the rate go up and up and up. With time, their gains never cover their losses.
This concept takes time to master effectively. Reflect upon this concept and evaluate your previous stock and choices trades. If you have been unrestrained, you will see its reality.
PRINCIPLE 4.
HESITATE TO LOSE CASH.
Are you like the majority of novices who can`t wait to leap right into the stock and choices market with your cash wishing to trade as soon as possible?
On this point, I have found that many unprincipled traders are more scared of losing out on "the next big trade" than they are afraid of losing cash! The key here is STICK TO YOUR TECHNIQUE! Take stock and choices trades when your method signals to do so and prevent taking trades when the conditions are not fulfilled. 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 scared to discard your money due to the fact that you traded unnecessarily and without following your stock and alternatives technique.
CONCEPT 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you definitely think that your next stock or alternatives 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 normally takes place after that? It isn`t pretty, is it?
No matter how confident you might be when getting in a trade, the stock and options market has a way of doing the unforeseen. Therefore, constantly stay with your portfolio management system. Do not intensify your awaited wins because you might wind up compounding your really real losses.
CONCEPT 6.
EVALUATE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.
You understand by now how various paper trading and genuine stock and alternatives trading is, don`t you?
In the very same method, after you get used to trading real money regularly, you find it exceptionally different when you increase your capital by 10 fold, do not you?
What, then, is the distinction? The difference is in the emotional burden that features the possibility of losing increasingly more genuine money. This takes place when you cross from paper trading to genuine trading and also when you increase your capital after some successes.
After a while, many traders understand their optimal capacity in both dollars and feeling. Are you comfy trading approximately a few thousand or tens of thousands or hundreds of thousands? Know your capability before committing the funds.
CONCEPT 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever seemed like a specialist after a couple of wins and then lose a lot on the next stock or choices trade?
Overconfidence and the incorrect sense of invincibility based upon past wins is a dish for catastrophe. All experts appreciate their next trade and go through all the correct 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 deviate from your stock or options technique. Never.
PRINCIPLE 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or choices technique just to fail badly?
You are the one who identifies whether a technique is successful or fails. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki states, "The financier is the possession or the liability, not the financial investment."
Comprehending yourself initially will cause eventual success.
CONCEPT 9.
CONSISTENCY.
Have you ever altered your mind about how to implement a method? When you make changes day after day, you end up catching nothing but the wind.
Stock exchange variations have more variables than can be mathematically formulated. By following a proven strategy, we are ensured that somebody successful has actually 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 strategy and whether you have followed it precisely before changing anything.
In conclusion …
I hope these simple guidelines 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.
