Stock Options Trading Millionaire Concepts

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

I have seen paupers become millionaires over night …

And

I have seen millionaires end up being paupers overnight …

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

"Once, there were two Wall Street stock market multi-millionaires. Both were exceptionally effective and decided 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 understand their views that he spent all of his $20,000 savings to purchase both their opinions. His pals were naturally excited about what the two masters needed to say about the stock market`s instructions. When they asked their pal, he was fuming mad. Baffled, they asked their good friend about his anger. He said, `One said 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 option market, individuals can have different opinions of future market direction and still profit. The distinctions lay in the stock choosing or choices method and in the mental attitude and discipline one utilizes in executing that method.

I share here the fundamental stock and option trading concepts I follow. By holding these principles firmly in your mind, they will assist you consistently to success. These concepts will help you reduce your danger and allow you to evaluate both what you are doing right and what you might be doing wrong.

You may have read ideas comparable to these before. I and others utilize them since they work. And if you memorize and review these principles, your mind can utilize them to guide you in your stock and alternatives trading.

CONCEPT 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked this up from Books by Wendy Kirkland, When you feel that the stock and choices trading approach that you are following is too intricate even for easy understanding, it is probably not the best.

In all elements of successful stock and choices trading, the simplest approaches frequently emerge triumphant. In the heat of a trade, it is simple for our brains to become emotionally strained. If we have a complex strategy, we can not keep up with the action. Easier is better.

PRINCIPLE 2.

NO ONE IS GOAL ENOUGH.

If you feel that you have outright control over your feelings and can be unbiased in the heat of a stock or choices trade, you are either a hazardous species or you are an inexperienced trader.

No trader can be absolutely objective, especially when market action is uncommon or extremely erratic. Much like the perfect storm can still shake the nerves of the most seasoned sailors, the best stock market storm can still unnerve and sink a trader very quickly. Therefore, one must venture to automate as lots of vital elements of your method as possible, specifically your profit-taking and stop-loss points.

CONCEPT 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most essential concept.

Many stock and choices traders do the opposite …

They hold on to their losses way too long and see their equity sink and sink and sink, or they leave their gains too soon just to see the price go up and up and up. In time, their gains never ever cover their losses.

This principle takes some time to master correctly. Reflect upon this principle and review your past stock and choices trades. If you have been undisciplined, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE CASH.

Are you like most beginners 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 actually discovered that the majority of unprincipled traders are more scared of losing out on "the next big trade" than they hesitate of losing money! The secret here is STAY WITH YOUR TECHNIQUE! Take stock and options trades when your strategy signals to do so and prevent taking trades when the conditions are not satisfied. Exit trades when your method says to do so and leave them alone when the exit conditions are not in place.

The point here is to be afraid to throw away 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 definitely think 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 everything you have? Do you remember what usually takes place after that? It isn`t quite, is it?

No matter how positive you might be when getting in a trade, the stock and alternatives market has a method of doing the unforeseen. Therefore, always stay with your portfolio management system. Do not intensify your expected wins due to the fact that you may end up compounding your really genuine losses.

PRINCIPLE 6.

ASSESS YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

You know by now how different paper trading and real stock and alternatives trading is, don`t you?

In the very same method, after you get utilized to trading genuine money regularly, you discover it extremely various when you increase your capital by ten fold, don`t you?

What, then, is the difference? The difference is in the emotional burden that comes with the possibility of losing increasingly more genuine cash. 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 realize their optimal capability in both dollars and emotion. Are you comfy trading up to a few thousand or tens of thousands or hundreds of thousands? Know your capability prior to committing the funds.

PRINCIPLE 7.

YOU ARE A NOVICE AT EVERY TRADE.

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

Overconfidence and the false sense of invincibility based on previous wins is a recipe for disaster. All experts 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 differ your stock or alternatives technique. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or choices strategy only to fail badly?

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

Comprehending yourself first will cause eventual success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock exchange variations have more variables than can be mathematically formulated. By following a proven technique, we are assured that someone effective has stacked the odds in our favour. When you examine both winning and losing trades, figure out whether the entry, management, and exit met every requirements in the technique and whether you have actually followed it precisely prior to altering 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 assist you too. Best of luck.