Stock Option Trading Millionaire Concepts

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

I have seen paupers end up being millionaires overnight …

And

I have seen millionaires become paupers overnight …

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

"Once, 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 viewpoints. One trader was so curious to know their views that he invested all of his $20,000 savings to purchase both their opinions. His buddies were naturally excited about what the two masters needed to say about the stock exchange`s direction. When they asked their buddy, he was fuming mad. Confused, they asked their buddy 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 distinctions lay in the stock choosing or options method and in the mental attitude and discipline one uses in carrying out that method.

I share here the standard stock and option trading principles I follow. By holding these principles securely in your mind, they will guide you consistently to profitability. These principles will help you reduce your risk and permit you to examine both what you are doing right and what you might be doing wrong.

You may have checked out concepts similar to these before. I and others use them since they work. And if you remember and assess these concepts, your mind can use them to assist you in your stock and alternatives trading.

CONCEPT 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked this up from Books by Wendy Kirkland, When you feel that the stock and alternatives trading approach that you are following is too intricate even for simple understanding, it is most likely not the very best.

In all elements of effective stock and alternatives trading, the simplest approaches often emerge victorious. In the heat of a trade, it is simple for our brains to become mentally overloaded. If we have a complex technique, we can not stay up to date with the action. Easier is much better.

PRINCIPLE 2.

NO ONE 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 choices trade, you are either a harmful types or you are an unskilled trader.

No trader can be absolutely objective, particularly when market action is unusual or extremely unpredictable. Similar to the perfect storm can still shake the nerves of the most experienced sailors, the perfect stock market storm can still unnerve and sink a trader really quickly. For that reason, one need to strive to automate as many important elements of your strategy as possible, particularly 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 choices 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 prematurely only to see the rate go up and up and up. With time, their gains never cover their losses.

This principle requires time to master correctly. Contemplate this principle and evaluate your past stock and options trades. If you have actually been undisciplined, you will see its fact.

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like a lot of beginners who can`t wait to jump right into the stock and choices market with your money wishing to trade as soon as possible?

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

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

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

No matter how positive you may be when entering a trade, the stock and options market has a way of doing the unexpected. For that reason, constantly adhere to your portfolio management system. Do not intensify your awaited wins due to the fact that you might end up compounding your very genuine losses.

PRINCIPLE 6.

DETERMINE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

You understand by now how different paper trading and genuine stock and alternatives trading is, do not you?

In the very same method, after you get used to trading real cash regularly, you find it incredibly various when you increase your capital by 10 fold, don`t you?

What, then, is the distinction? The difference is in the psychological problem that comes with the possibility of losing a growing number of real cash. This occurs when you cross from paper trading to real trading and likewise when you increase your capital after some successes.

After a while, many traders realize their optimal capacity in both dollars and emotion. Are you comfortable trading as much as a couple of thousand or 10s of thousands or numerous thousands? Know your capability prior to devoting the funds.

PRINCIPLE 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever seemed like a professional after a couple of wins and then lose a lot on the next stock or options trade?

Overconfidence and the incorrect sense of invincibility based on previous wins is a recipe for catastrophe. All professionals respect their next trade and go through all the proper actions of their stock or options method before entry. Deal with every trade as the very first trade you have actually ever made in your life. Never deviate from your stock or choices method. Never ever.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

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

You are the one who figures out whether a technique prospers or stops working. Your character and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki says, "The financier is the possession or the liability, not the investment."

Understanding yourself first will result in ultimate success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock market fluctuations have more variables than can be mathematically formulated. By following a proven strategy, we are guaranteed that someone successful has stacked the odds in our favour. When you examine both winning and losing trades, identify whether the entry, management, and exit satisfied every requirements in the strategy and whether you have actually followed it specifically before changing anything.

In conclusion …

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