Stock Option Trading Millionaire Concepts
Having actually been trading stocks and options in the capital markets expertly throughout the years, I have seen numerous ups and downs.
I have seen paupers become millionaires overnight …
And
I have seen millionaires become paupers over night …
One story told to me by my mentor is still engraved in my mind:
"Once, there were 2 Wall Street stock exchange multi-millionaires. Both were extremely successful and chose to share their insights with others by selling their stock exchange projections in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to know their views that he spent all of his $20,000 savings to purchase both their viewpoints. His good friends were naturally excited about what the two masters had to say about the stock exchange`s instructions. When they asked their friend, he was fuming mad. Confused, they asked their buddy about his anger. He stated, `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 various viewpoints of future market direction and still earnings. The differences lay in the stock picking or choices method and in the mental attitude and discipline one uses in carrying out that method.
I share here the basic stock and option trading principles I follow. By holding these concepts firmly in your mind, they will direct you regularly to profitability. These concepts will help you decrease your risk and allow you to assess 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 use them because they work. And if you memorize and assess these concepts, your mind can utilize them to assist you in your stock and choices trading.
CONCEPT 1.
SIMPLENESS IS MASTERY.
Wendy Kirkland
I learned this from -, When you feel that the stock and options trading approach that you are following is too complex even for simple understanding, it is probably not the very best.
In all aspects of effective stock and choices trading, the simplest methods frequently emerge triumphant. In the heat of a trade, it is easy for our brains to end up being emotionally strained. If we have a complex method, we can not stay up to date with the action. Easier is better.
CONCEPT 2.
NOBODY IS OBJECTIVE ENOUGH.
If you feel that you have outright control over your feelings and can be objective in the heat of a stock or choices trade, you are either an unsafe types or you are an inexperienced trader.
No trader can be absolutely unbiased, especially when market action is unusual or wildly unpredictable. Similar to the ideal 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. For that reason, one need to venture to automate as lots of vital elements of your method 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 important principle.
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 just to see the price increase and up and up. Gradually, their gains never ever cover their losses.
This principle takes time to master effectively. Contemplate this concept and evaluate your past stock and options trades. If you have been unrestrained, you will see its truth.
CONCEPT 4.
BE AFRAID TO LOSE CASH.
Are you like the majority of beginners who can`t wait to leap right into the stock and choices market with your money wanting to trade as soon as possible?
On this point, I have found that most unprincipled traders are more afraid of missing out on "the next big trade" than they are afraid of losing money! The key here is STICK TO YOUR STRATEGY! Take stock and alternatives trades when your method signals to do so and avoid taking trades when the conditions are not met. Exit trades when your method states 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 because you traded unnecessarily and without following your stock and alternatives method.
PRINCIPLE 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 huge winner that you break your own finance guidelines and put in everything you have? Do you remember what typically happens after that? It isn`t quite, is it?
No matter how positive you might be when going into a trade, the stock and choices market has a way of doing the unforeseen. Therefore, always stay with your portfolio management system. Do not intensify your awaited wins due to the fact that you may wind up intensifying your extremely real losses.
PRINCIPLE 6.
GAUGE YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.
You know by now how different paper trading and genuine stock and options trading is, do not you?
In the very same method, after you get utilized to trading real cash regularly, you find it extremely various when you increase your capital by 10 fold, don`t you?
What, then, is the difference? The difference remains in the emotional burden that features the possibility of losing a growing number of 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 understand their optimal capacity in both dollars and feeling. Are you comfortable trading approximately a few thousand or 10s of thousands or numerous thousands? Know your capability prior to committing the funds.
PRINCIPLE 7.
YOU ARE A BEGINNER AT EVERY TRADE.
Ever felt like a specialist after a couple of wins and after that lose a lot on the next stock or alternatives trade?
Overconfidence and the incorrect sense of invincibility based on past wins is a recipe for catastrophe. All specialists respect their next trade and go through all the proper actions of their stock or alternatives strategy prior to entry. Deal with every trade as the very first trade you have actually ever made in your life. Never ever deviate from your stock or alternatives method. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or choices method just to stop working terribly?
You are the one who figures out whether a method is successful or stops working. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki says, "The investor is the property or the liability, not the financial investment."
Comprehending yourself first will result in ultimate success.
CONCEPT 9.
CONSISTENCY.
Have you ever changed your mind about how to execute a technique? 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 guaranteed that somebody successful has stacked the chances in our favour. When you examine both winning and losing trades, identify whether the entry, management, and exit satisfied every requirements in the technique and whether you have actually followed it precisely prior to altering anything.
In conclusion …
I hope these basic standards that have actually led my ship of the harshest of seas and into the best harvests of my life will assist you too. All the best.