Stock Option Trading Millionaire Concepts

Stock Option Trading Millionaire Concepts

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

I have actually seen paupers end up being millionaires overnight …

And

I have actually seen millionaires end up being paupers overnight …

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

"When, there were two Wall Street stock market multi-millionaires. Both were incredibly effective and decided to share their insights with others by offering their stock market forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to know their views that he spent all of his $20,000 savings to purchase both their opinions. His pals were naturally delighted about what the two masters needed to state about the stock exchange`s direction. When they asked their pal, he was fuming mad. Confused, 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 various viewpoints of future market instructions and still profit. The differences lay in the stock selecting or alternatives strategy and in the mental attitude and discipline one utilizes in executing that method.

I share here the standard stock and choice trading concepts I follow. By holding these concepts securely in your mind, they will direct you regularly to success. These concepts will assist you decrease your danger and permit you to examine both what you are doing right and what you might be doing wrong.

You might have read concepts similar to these prior to. I and others utilize them since they work. And if you remember and review these principles, your mind can use them to assist you in your stock and options trading.

PRINCIPLE 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked up this trick from Books by Wendy Kirkland, When you feel that the stock and options trading approach that you are following is too complex even for easy understanding, it is probably not the best.

In all aspects of successful stock and options trading, the simplest techniques often emerge victorious. In the heat of a trade, it is simple for our brains to end up being emotionally overwhelmed. If we have a complex technique, we can not keep up 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 unbiased in the heat of a stock or options trade, you are either a hazardous types or you are an unskilled trader.

No trader can be absolutely objective, particularly when market action is unusual or wildly erratic. Just like the best storm can still shake the nerves of the most experienced sailors, the ideal stock exchange storm can still unnerve and sink a trader really rapidly. For that reason, one must strive to automate as numerous crucial elements of your method as possible, especially your profit-taking and stop-loss points.

CONCEPT 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most essential principle.

Many stock and choices traders do the opposite …

They hang 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 go up and up and up. Gradually, their gains never ever cover their losses.

This principle requires time to master appropriately. Reflect upon this concept and examine your past stock and alternatives trades. If you have actually been unrestrained, you will see its fact.

CONCEPT 4.

HESITATE TO LOSE CASH.

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

On this point, I have discovered that most unprincipled traders are more scared of losing out on "the next big trade" than they are afraid of losing money! The key here is STAY WITH YOUR STRATEGY! Take stock and choices trades when your technique signals to do so and avoid 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 throw away your money since you traded unnecessarily and without following your stock and options method.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely think that your next stock or alternatives trade is going to be such a huge winner that you break your own money management rules and put in whatever you have? Do you remember what usually happens after that? It isn`t quite, is it?

No matter how positive you might be when entering a trade, the stock and choices market has a method of doing the unanticipated. For that reason, constantly stick to your portfolio management system. Do not compound your anticipated wins due to the fact that you may wind up intensifying your very genuine losses.

CONCEPT 6.

DETERMINE YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same method, after you get utilized to trading real cash consistently, you discover it very various when you increase your capital by ten fold, don`t you?

What, then, is the distinction? The difference remains in the emotional problem that includes the possibility of losing a growing number of real money. This happens when you cross from paper trading to genuine trading and also when you increase your capital after some successes.

After a while, the majority of traders recognize their maximum capacity in both dollars and emotion. Are you comfortable trading up to a couple of thousand or 10s of thousands or numerous thousands? Know your capability before dedicating the funds.

CONCEPT 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever felt like an expert after a few wins and after that lose a lot on the next stock or alternatives trade?

Overconfidence and the incorrect sense of invincibility based upon past wins is a recipe for catastrophe. All experts respect their next trade and go through all the proper actions of their stock or choices strategy prior to entry. Deal with every trade as the first trade you have actually ever made in your life. Never ever differ your stock or alternatives method. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or alternatives technique only to fail badly?

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

Comprehending yourself initially will lead to ultimate success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever altered 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 market variations have more variables than can be mathematically formulated. By following a tested strategy, we are ensured that somebody effective has stacked the chances in our favour. When you evaluate both winning and losing trades, figure out whether the entry, management, and exit met every criteria in the technique and whether you have followed it specifically prior to changing anything.

In conclusion …

I hope these basic standards that have led my ship out of the harshest of seas and into the very best harvests of my life will direct you too. Best of luck.