Stock Option Trading Millionaire Principles

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

I have seen paupers become millionaires over night …

And

I have seen millionaires become paupers overnight …

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

"As soon as, there were two Wall Street stock exchange multi-millionaires. Both were very effective and decided to share their insights with others by offering their stock market forecasts in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to know their views that he invested all of his $20,000 cost savings to purchase both their opinions. His good friends were naturally delighted about what the two masters had to say about the stock market`s direction. When they asked their buddy, he was fuming mad. Baffled, they asked their buddy 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 alternative market, individuals can have different viewpoints of future market direction and still revenue. The distinctions lay in the stock selecting or alternatives technique and in the mental attitude and discipline one utilizes in implementing that technique.

I share here the standard stock and option trading principles I follow. By holding these principles firmly in your mind, they will assist you consistently to profitability. These principles will help you decrease your threat and permit 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 remember and reflect on these concepts, your mind can utilize them to assist you in your stock and choices trading.

PRINCIPLE 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked this up from Options Trading Part Time, When you feel that the stock and alternatives trading method that you are following is too complicated even for easy understanding, it is probably not the best.

In all elements of successful stock and alternatives trading, the most basic approaches typically emerge victorious. In the heat of a trade, it is easy for our brains to end up being emotionally overloaded. If we have a complex method, we can not stay up to date with the action. Simpler is much better.

CONCEPT 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 harmful types or you are an unskilled trader.

No trader can be definitely unbiased, specifically when market action is uncommon or hugely irregular. Much like the ideal storm can still shake the nerves of the most experienced sailors, the best stock exchange storm can still unnerve and sink a trader really rapidly. For that reason, one should strive to automate as lots of vital aspects of your strategy as possible, specifically your profit-taking and stop-loss points.

PRINCIPLE 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial principle.

The majority of 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 get out of their gains too soon just to see the price go up and up and up. Over time, their gains never cover their losses.

This concept takes time to master effectively. Reflect upon this principle and review your previous stock and choices trades. If you have actually been unrestrained, you will see its truth.

CONCEPT 4.

BE AFRAID TO LOSE CASH.

Are you like most newbies who can`t wait to leap right into the stock and alternatives market with your money hoping to trade as soon as possible?

On this point, I have discovered that many unprincipled traders are more scared of missing out on "the next huge trade" than they are afraid of losing cash! The key here is STICK TO YOUR STRATEGY! Take stock and choices trades when your method signals to do so and avoid taking trades when the conditions are not met. Exit trades when your strategy says to do so and leave them alone when the exit conditions are not in place.

The point here is to be scared to get rid of your cash because you traded needlessly and without following your stock and options strategy.

PRINCIPLE 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 huge winner that you break your own finance guidelines and put in everything you have? Do you remember what usually occurs after that? It isn`t pretty, is it?

No matter how confident you may be when going into a trade, the stock and alternatives market has a way of doing the unforeseen. For that reason, always stick to your portfolio management system. Do not intensify your anticipated wins because you may wind up compounding your really genuine losses.

PRINCIPLE 6.

DETERMINE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO 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 method, after you get utilized to trading real cash regularly, you find it very different when you increase your capital by ten fold, don`t you?

What, then, is the difference? The distinction is in the emotional problem that features the possibility of losing more and more real money. 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, a lot of traders realize their optimal capacity in both dollars and emotion. Are you comfy trading up to a couple of thousand or tens of thousands or numerous thousands? Know your capability before committing the funds.

PRINCIPLE 7.

YOU ARE An AMATEUR AT EVERY TRADE.

Ever seemed like a specialist after a couple of wins and after that lose a lot on the next stock or choices trade?

Overconfidence and the false sense of invincibility based upon previous wins is a recipe for catastrophe. All experts respect their next trade and go through all the appropriate steps of their stock or alternatives strategy before entry. Deal with every trade as the first trade you have ever made in your life. Never ever deviate from your stock or choices strategy. Never ever.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or choices technique just to fail terribly?

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

Comprehending yourself first will cause ultimate success.

CONCEPT 9.

CONSISTENCY.

Have you ever altered your mind about how to implement a strategy? 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 ensured that somebody effective has actually stacked the odds in our favour. When you review 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 easy standards that have actually led my ship out of the harshest of seas and into the very best harvests of my life will guide you too. Good Luck.