Stock Option Trading Millionaire Principles
Having been trading stocks and alternatives in the capital markets professionally throughout the years, I have seen many ups and downs.
I have seen paupers become millionaires over night …
And
I have actually seen millionaires become paupers over night …
One story told to me by my coach is still engraved in my mind:
"Once, there were 2 Wall Street stock exchange multi-millionaires. Both were extremely successful and chose to share their insights with others by offering their stock exchange projections in newsletters. Each charged US$ 10,000 for their viewpoints. 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 excited about what the two masters needed to say about the stock market`s direction. When they asked their pal, he was fuming mad. Confused, they asked their pal 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 choice market, individuals can have different opinions of future market instructions and still revenue. The differences lay in the stock selecting or options method and in the mental attitude and discipline one utilizes in implementing that strategy.
I share here the standard stock and alternative trading principles I follow. By holding these concepts securely in your mind, they will assist you regularly to success. These concepts will help you reduce your danger and allow you to assess both what you are doing right and what you might be doing wrong.
You may have read concepts comparable to these prior to. I and others utilize them since they work. And if you remember and reflect on these principles, your mind can use them to assist you in your stock and alternatives trading.
PRINCIPLE 1.
SIMPLENESS IS MASTERY.
Wendy Kirkland
I learned this from Wendy Kirkland, When you feel that the stock and alternatives trading approach that you are following is too complex even for easy understanding, it is probably not the very best.
In all elements of effective stock and choices trading, the simplest techniques frequently emerge triumphant. In the heat of a trade, it is simple for our brains to end up being mentally overloaded. If we have a complex method, we can not keep up with the action. Easier is much better.
PRINCIPLE 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 species or you are an inexperienced trader.
No trader can be definitely objective, particularly when market action is unusual or wildly unpredictable. Similar to the best storm can still shake the nerves of the most experienced sailors, the ideal stock market storm can still unnerve and sink a trader very rapidly. Therefore, one must venture to automate as lots of vital elements of your strategy as possible, especially your profit-taking and stop-loss points.
PRINCIPLE 3.
HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most essential principle.
A lot of stock and options traders do the opposite …
They hang on to their losses way too long and enjoy their equity sink and sink and sink, or they get out of their gains prematurely just to see the cost go up and up and up. In time, their gains never ever cover their losses.
This principle takes some time to master appropriately. Contemplate this principle and review your previous stock and options trades. If you have actually been undisciplined, you will see its truth.
CONCEPT 4.
HESITATE TO LOSE MONEY.
Are you like a lot of newbies who can`t wait to leap right into the stock and choices market with your cash intending to trade as soon as possible?
On this point, I have actually found that many unprincipled traders are more scared of losing out on "the next big trade" than they are afraid of losing money! The secret here is STICK TO YOUR TECHNIQUE! Take stock and alternatives trades when your strategy signals to do so and prevent 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 cash since you traded needlessly and without following your stock and options strategy.
PRINCIPLE 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you definitely believe that your next stock or options trade is going to be such a huge winner that you break your own money management guidelines and put in whatever you have? Do you remember what usually happens after that? It isn`t pretty, is it?
No matter how positive you might be when getting in a trade, the stock and alternatives market has a method of doing the unanticipated. Therefore, always adhere to your portfolio management system. Do not intensify your awaited wins because you might end up intensifying your very genuine losses.
PRINCIPLE 6.
GAUGE YOUR EMOTIONAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.
You understand by now how different paper trading and genuine stock and choices trading is, don`t you?
In the very same method, after you get utilized to trading genuine money regularly, you find it extremely various when you increase your capital by 10 fold, do not you?
What, then, is the distinction? The difference remains in the psychological problem that features the possibility of losing more and more genuine 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, most traders understand their optimal capability in both dollars and emotion. Are you comfortable trading up to a few thousand or tens of thousands or hundreds of thousands? Know your capacity before dedicating the funds.
PRINCIPLE 7.
YOU ARE A BEGINNER AT EVERY TRADE.
Ever seemed like a professional after a few wins and after that lose a lot on the next stock or options trade?
Overconfidence and the false sense of invincibility based upon previous wins is a recipe for catastrophe. All professionals respect their next trade and go through all the proper steps of their stock or alternatives method before entry. Treat every trade as the very first trade you have ever made in your life. Never deviate from your stock or choices technique. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or choices strategy only to stop working severely?
You are the one who determines whether a technique is successful or stops working. Your personality and your discipline make or break the method that you utilize not vice versa. Like Robert Kiyosaki says, "The financier is the possession or the liability, not the investment."
Comprehending yourself initially will lead to eventual success.
CONCEPT 9.
CONSISTENCY.
Have you ever altered your mind about how to implement a technique? When you make changes day after day, you wind up capturing nothing but the wind.
Stock exchange changes have more variables than can be mathematically developed. By following a tested method, we are guaranteed that somebody successful has actually stacked the chances in our favour. When you examine both winning and losing trades, figure out whether the entry, management, and exit met every criteria in the technique and whether you have actually followed it specifically before changing anything.
In conclusion …
I hope these simple standards that have led my ship out of the harshest of seas and into the very best harvests of my life will guide you too. Good Luck.