Stock Option Trading Millionaire Concepts
Stock Option Trading Millionaire Principles
Having been trading stocks and alternatives in the capital markets expertly for many years, I have seen lots of ups and downs.
I have actually seen paupers become millionaires overnight …
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 2 Wall Street stock exchange multi-millionaires. Both were incredibly successful and chose to share their insights with others by selling their stock market forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to understand their views that he invested all of his $20,000 cost savings to buy both their viewpoints. His buddies were naturally thrilled about what the two masters had to say about the stock market`s direction. When they asked their friend, he was fuming mad. Confused, they asked their friend about his anger. He said, `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 option market, individuals can have various viewpoints of future market direction and still revenue. The distinctions lay in the stock picking or choices strategy and in the mental attitude and discipline one utilizes in executing that technique.
I share here the standard stock and alternative trading principles I follow. By holding these concepts firmly in your mind, they will direct you consistently to profitability. These concepts will help you decrease your danger and allow you to assess both what you are doing right and what you might be doing wrong.
You may have checked out concepts comparable to these before. I and others use them since they work. And if you memorize and assess these concepts, your mind can use them to direct you in your stock and choices trading.
PRINCIPLE 1.
SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked up this trick from Wendy Kirkland, When you feel that the stock and alternatives trading method that you are following is too complex even for easy understanding, it is probably not the best.
In all aspects of successful stock and choices trading, the most basic approaches typically emerge victorious. In the heat of a trade, it is simple for our brains to end up being mentally overloaded. If we have a complex strategy, we can not keep up with the action. Simpler is better.
PRINCIPLE 2.
NOBODY IS OBJECTIVE ENOUGH.
If you feel that you have outright control over your emotions and can be unbiased 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 objective, particularly when market action is unusual or wildly unpredictable. Similar to the perfect storm can still shake the nerves of the most skilled sailors, the perfect stock exchange storm can still unnerve and sink a trader really rapidly. Therefore, one should endeavor to automate as many important aspects of your strategy 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 principle.
A lot of 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 too soon just to see the rate increase and up and up. Gradually, their gains never ever cover their losses.
This concept takes time to master properly. Reflect upon this concept and evaluate your previous stock and alternatives trades. If you have been undisciplined, you will see its reality.
CONCEPT 4.
HESITATE TO LOSE MONEY.
Are you like a lot of novices who can`t wait to leap right into the stock and choices market with your cash wanting to trade as soon as possible?
On this point, I have found that the majority of unprincipled traders are more afraid of missing out on "the next big trade" than they hesitate of losing cash! The key here is STAY WITH YOUR METHOD! Take stock and alternatives trades when your method signals to do so and avoid 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 scared to discard your cash due to the fact that you traded unnecessarily and without following your stock and choices method.
CONCEPT 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you absolutely think that your next stock or options trade is going to be such a big winner that you break your own money management rules and put in everything you have? Do you remember what typically 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 choices market has a way of doing the unexpected. For that reason, always stay with your portfolio management system. Do not compound your awaited wins since you might end up intensifying your extremely genuine losses.
CONCEPT 6.
EVALUATE YOUR EMOTIONAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.
You understand by now how various paper trading and genuine stock and options trading is, don`t you?
In the very same way, after you get utilized to trading real cash consistently, you find it very various when you increase your capital by ten fold, don`t you?
What, then, is the distinction? The distinction is in the emotional concern that comes with the possibility of losing increasingly more genuine cash. This happens when you cross from paper trading to real trading and likewise when you increase your capital after some successes.
After a while, the majority of traders understand their optimal capacity in both dollars and emotion. Are you comfy trading up to a few thousand or 10s of thousands or numerous thousands? Know your capacity prior to devoting the funds.
PRINCIPLE 7.
YOU ARE A BEGINNER AT EVERY TRADE.
Ever seemed like an expert after a few wins and then lose a lot on the next stock or options 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 steps of their stock or options method before entry. Treat every trade as the very first trade you have actually ever made in your life. Never deviate from your stock or options strategy. Never.
PRINCIPLE 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or alternatives technique only to stop working terribly?
You are the one who figures out whether a technique succeeds or stops working. Your personality and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki states, "The investor is the property or the liability, not the financial investment."
Understanding yourself first will result in eventual success.
CONCEPT 9.
CONSISTENCY.
Have you ever changed your mind about how to execute a method? When you make changes day after day, you wind up capturing nothing but the wind.
Stock exchange fluctuations have more variables than can be mathematically formulated. By following a tested method, we are ensured that someone effective has actually stacked the odds in our favour. When you examine both winning and losing trades, identify whether the entry, management, and exit fulfilled every criteria in the technique and whether you have followed it specifically before altering anything.
In conclusion …
I hope these basic 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.