Stock Option Trading Millionaire Principles

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

I have actually seen paupers end up being millionaires overnight …

And

I have actually seen millionaires end up being paupers over night …

One story informed 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 extremely successful and decided 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 understand their views that he invested all of his $20,000 savings to buy both their opinions. His friends were naturally excited 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 buddy 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 option market, people can have various opinions of future market direction and still earnings. The differences lay in the stock choosing or options strategy and in the mental attitude and discipline one uses in carrying out that strategy.

I share here the basic stock and choice trading principles I follow. By holding these principles firmly in your mind, they will direct you consistently to profitability. These principles will assist you decrease your threat and permit you to examine both what you are doing right and what you may be doing wrong.

You might have checked out concepts comparable to these before. I and others use them due to the fact that they work. And if you remember and assess these principles, your mind can use them to assist you in your stock and alternatives trading.

PRINCIPLE 1.

SIMPLENESS IS PROFICIENCY.
Wendy Kirkland
I picked up this trick from Wendy Kirkland Trading, 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 aspects of successful stock and options trading, the most basic techniques typically emerge victorious. In the heat of a trade, it is easy for our brains to become emotionally overwhelmed. If we have a complex strategy, we can not keep up with the action. Simpler is much better.

PRINCIPLE 2.

NOBODY IS GOAL ENOUGH.

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

No trader can be definitely unbiased, particularly when market action is unusual or extremely irregular. Much like the perfect storm can still shake the nerves of the most seasoned sailors, the perfect stock market storm can still unnerve and sink a trader very rapidly. Therefore, one need to strive to automate as many important 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 crucial principle.

The majority of stock and options traders do the opposite …

They hang on to their losses way too long and view their equity sink and sink and sink, or they leave their gains too soon only to see the price go up and up and up. With time, their gains never ever cover their losses.

This principle requires time to master effectively. Reflect upon this concept and examine your previous stock and options trades. If you have actually been undisciplined, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE CASH.

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

On this point, I have discovered that a lot of unprincipled traders are more afraid of losing out on “the next huge trade” than they are afraid of losing cash! The secret here is ADHERE TO YOUR TECHNIQUE! Take stock and choices trades when your method signals to do so and prevent taking trades when the conditions are not satisfied. Exit trades when your strategy states 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 since you traded unnecessarily and without following your stock and choices strategy.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely believe that your next stock or choices trade is going to be such a huge winner that you break your own money management rules and put in everything you have? Do you remember what usually occurs after that? It isn`t quite, is it?

No matter how confident you might be when getting in a trade, the stock and alternatives market has a way of doing the unexpected. Therefore, constantly stick to your portfolio management system. Do not intensify your anticipated wins due to the fact that you may wind up intensifying your very genuine losses.

CONCEPT 6.

ASSESS YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

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

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

After a while, a lot of traders recognize their maximum capability in both dollars and emotion. Are you comfy trading approximately a few thousand or 10s of thousands or numerous thousands? Know your capacity before committing the funds.

CONCEPT 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever felt like a specialist after a few wins and after that lose a lot on the next stock or choices 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 appropriate actions of their stock or choices method before entry. Treat every trade as the first trade you have ever made in your life. Never ever differ your stock or choices strategy. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or alternatives technique just to stop working terribly?

You are the one who determines whether a technique is successful or fails. Your character and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki says, “The financier is the property or the liability, not the investment.”

Understanding yourself initially will cause eventual success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock market fluctuations have more variables than can be mathematically developed. By following a proven method, we are guaranteed that somebody successful has actually stacked the odds in our favour. When you examine both winning and losing trades, determine whether the entry, management, and exit met every criteria in the technique and whether you have followed it exactly prior to changing anything.

In conclusion …

I hope these easy guidelines that have led my ship of the harshest of seas and into the very best harvests of my life will direct you too. All the best.