Stock Options Trading Millionaire Concepts
Having been trading stocks and options in the capital markets expertly over the years, I have actually seen many ups and downs.
I have actually seen paupers become millionaires overnight …
And
I have seen millionaires become paupers overnight …
One story told to me by my mentor is still etched in my mind:
"As soon as, there were two Wall Street stock market multi-millionaires. Both were exceptionally successful and chose to share their insights with others by selling 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 spent all of his $20,000 cost savings to purchase both their viewpoints. His buddies were naturally thrilled about what the two masters needed to say about the stock market`s instructions. When they asked their buddy, he was fuming mad. Baffled, they asked their good friend about his anger. He stated, `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 choice market, people can have different viewpoints of future market direction and still profit. The distinctions lay in the stock choosing or options method and in the mental attitude and discipline one utilizes in executing that method.
I share here the standard stock and option trading principles I follow. By holding these concepts securely in your mind, they will direct you consistently to success. These principles will assist you decrease your risk and allow you to evaluate both what you are doing right and what you might be doing wrong.
You might have read ideas comparable to these before. I and others utilize them due to the fact that they work. And if you remember and review these principles, your mind can utilize them to direct you in your stock and options trading.
PRINCIPLE 1.
SIMPLICITY IS MASTERY.
Wendy Kirkland
I learned this from Books by Wendy Kirkland, When you feel that the stock and alternatives trading technique that you are following is too complex even for easy understanding, it is probably not the very best.
In all aspects of effective stock and alternatives trading, the most basic approaches often emerge victorious. In the heat of a trade, it is easy for our brains to become mentally overwhelmed. If we have a complex strategy, we can not keep up with the action. Easier is much better.
CONCEPT 2.
NO ONE IS OBJECTIVE ENOUGH.
If you feel that you have outright control over your emotions and can be objective in the heat of a stock or choices trade, you are either a dangerous types or you are an unskilled trader.
No trader can be definitely unbiased, especially when market action is unusual or hugely unpredictable. Similar to the perfect storm can still shake the nerves of the most seasoned sailors, the perfect stock exchange storm can still unnerve and sink a trader very rapidly. For that reason, one should endeavor to automate as numerous crucial elements of your strategy as possible, particularly your profit-taking and stop-loss points.
CONCEPT 3.
HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most crucial principle.
Most stock and options traders do the opposite …
They hold on to their losses way too long and view their equity sink and sink and sink, or they get out of their gains too soon only to see the price go up and up and up. Over time, their gains never cover their losses.
This concept takes some time to master appropriately. Reflect upon this principle and examine your past stock and alternatives trades. If you have actually been undisciplined, you will see its fact.
PRINCIPLE 4.
BE AFRAID TO LOSE CASH.
Are you like the majority of novices who can`t wait to leap right into the stock and choices market with your cash wishing to trade as soon as possible?
On this point, I have actually discovered that many unprincipled traders are more scared of losing out on "the next big trade" than they hesitate of losing money! The secret here is STAY WITH YOUR TECHNIQUE! 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 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 since you traded unnecessarily and without following your stock and options method.
PRINCIPLE 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you definitely think that your next stock or choices trade is going to be such a big winner that you break your own money management guidelines and put in everything you have? Do you remember what normally occurs after that? It isn`t pretty, is it?
No matter how confident you might be when entering a trade, the stock and choices market has a way of doing the unanticipated. Therefore, constantly stay with your portfolio management system. Do not intensify your anticipated wins because you may end up compounding your extremely real losses.
CONCEPT 6.
EVALUATE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.
You know by now how various paper trading and genuine stock and choices trading is, don`t you?
In the very same method, after you get used to trading real money regularly, you find it very different when you increase your capital by ten fold, don`t you?
What, then, is the distinction? The difference is in the psychological concern that includes the possibility of losing more and more real money. This occurs when you cross from paper trading to real trading and likewise when you increase your capital after some successes.
After a while, a lot of traders recognize their optimal capability in both dollars and feeling. Are you comfy trading approximately a few thousand or tens of thousands or numerous thousands? Know your capability before devoting the funds.
CONCEPT 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever felt like a professional after a few wins and then lose a lot on the next stock or options trade?
Overconfidence and the false sense of invincibility based upon past wins is a dish for catastrophe. All specialists respect their next trade and go through all the appropriate actions of their stock or alternatives strategy prior to entry. Deal with every trade as the first trade you have ever made in your life. Never deviate from your stock or options technique. Never.
PRINCIPLE 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or choices technique just to stop working terribly?
You are the one who figures out whether a technique is successful or fails. Your character and your discipline make or break the strategy that you utilize not vice versa. Like Robert Kiyosaki says, "The financier is the possession or the liability, not the financial investment."
Understanding yourself first will cause eventual success.
PRINCIPLE 9.
CONSISTENCY.
Have you ever changed your mind about how to implement a method? When you make changes day after day, you end up catching nothing but the wind.
Stock market changes have more variables than can be mathematically created. By following a proven technique, we are ensured that somebody effective has actually stacked the chances in our favour. When you evaluate both winning and losing trades, figure out whether the entry, management, and exit satisfied every criteria in the method and whether you have actually followed it exactly prior to changing anything.
In conclusion …
I hope these basic guidelines that have led my ship of the harshest of seas and into the best harvests of my life will guide you too. Good Luck.