Stock Option Trading Millionaire Concepts

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

I have actually seen paupers end up being millionaires over night …

And

I have seen millionaires end up being paupers over night …

One story told to me by my coach is still etched in my mind:

"Once, there were two Wall Street stock market multi-millionaires. Both were extremely 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 know their views that he spent all of his $20,000 cost savings to purchase both their viewpoints. His buddies were naturally excited about what the two masters needed to state about the stock market`s direction. When they asked their friend, he was fuming mad. Baffled, they asked their good friend about his anger. He stated, `One said 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, people can have various viewpoints of future market instructions and still earnings. The distinctions lay in the stock choosing or alternatives strategy and in the mental attitude and discipline one utilizes in executing that strategy.

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

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

CONCEPT 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked this up from Wendy Kirkland, When you feel that the stock and alternatives trading method that you are following is too complicated even for easy understanding, it is most likely not the very best.

In all elements of successful stock and alternatives trading, the easiest techniques frequently emerge triumphant. In the heat of a trade, it is simple for our brains to end up being mentally strained. If we have a complex method, we can not keep up with the action. Simpler is better.

PRINCIPLE 2.

NO ONE IS GOAL ENOUGH.

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

No trader can be definitely objective, specifically when market action is uncommon or extremely erratic. Similar to the ideal storm can still shake the nerves of the most seasoned sailors, the ideal stock market storm can still unnerve and sink a trader really quickly. Therefore, one must venture to automate as lots of critical elements 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 essential principle.

A lot of stock and choices traders do the opposite …

They hang on to their losses way too long and see their equity sink and sink and sink, or they leave their gains too soon only to see the rate increase and up and up. In time, their gains never ever cover their losses.

This principle takes some time to master effectively. Contemplate this principle and examine your past stock and choices trades. If you have been undisciplined, you will see its reality.

PRINCIPLE 4.

BE AFRAID TO LOSE CASH.

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

On this point, I have actually discovered that a lot of unprincipled traders are more scared of missing out on "the next huge trade" than they are afraid of losing money! The secret here is STICK TO YOUR TECHNIQUE! Take stock and alternatives trades when your technique signals to do so and prevent taking trades when the conditions are not fulfilled. 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 discard your cash due to the fact that you traded unnecessarily and without following your stock and alternatives 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 everything you have? Do you remember what typically occurs after that? It isn`t quite, is it?

No matter how confident you might be when going into a trade, the stock and options market has a way of doing the unexpected. Therefore, always stay with your portfolio management system. Do not compound your anticipated wins since you might wind up intensifying your very genuine losses.

PRINCIPLE 6.

GAUGE YOUR PSYCHOLOGICAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.

You understand by now how various paper trading and genuine stock and choices trading is, do not you?

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

What, then, is the distinction? The difference remains in the psychological problem that comes with the possibility of losing more and more real cash. This occurs when you cross from paper trading to genuine trading and also when you increase your capital after some successes.

After a while, many traders recognize their optimal capacity in both dollars and feeling. Are you comfy trading as much as a few thousand or tens of thousands or numerous thousands? Know your capability prior to dedicating the funds.

CONCEPT 7.

YOU ARE A NEWBIE AT EVERY TRADE.

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

Overconfidence and the false sense of invincibility based on previous wins is a dish for disaster. All professionals appreciate their next trade and go through all the proper actions of their stock or options method before entry. Treat every trade as the very first trade you have ever made in your life. Never deviate from your stock or options technique. Never ever.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or choices strategy just to fail terribly?

You are the one who determines whether a strategy prospers or stops working. Your personality and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki says, "The financier is the property or the liability, not the financial investment."

Comprehending yourself initially will cause ultimate success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever altered your mind about how to execute a technique? When you make changes day after day, you wind up catching nothing but the wind.

Stock market fluctuations have more variables than can be mathematically created. By following a proven method, we are guaranteed that somebody effective has stacked the odds in our favour. When you evaluate both winning and losing trades, identify whether the entry, management, and exit fulfilled every criteria in the strategy and whether you have followed it specifically prior to altering anything.

In conclusion …

I hope these easy guidelines that have actually led my ship out of the harshest of seas and into the best harvests of my life will guide you too. Good Luck.