Stock Options Trading Millionaire Concepts

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

I have seen paupers end up being millionaires over night …

And

I have actually seen millionaires end up being paupers overnight …

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

"As soon as, there were 2 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 cost savings to purchase both their viewpoints. His pals were naturally delighted about what the two masters needed to say about the stock exchange`s direction. When they asked their friend, he was fuming mad. Baffled, they asked their good friend about his anger. He said, `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 choice market, individuals can have various viewpoints of future market instructions and still profit. The distinctions lay in the stock selecting or choices method and in the mental attitude and discipline one uses in executing that technique.

I share here the standard stock and alternative trading concepts I follow. By holding these concepts securely in your mind, they will assist you regularly to profitability. These principles will assist you reduce your danger and enable you to assess both what you are doing right and what you might be doing wrong.

You might have read ideas similar to these before. I and others utilize them due to the fact that they work. And if you memorize and assess these concepts, your mind can use them to guide you in your stock and options trading.

CONCEPT 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked this up from Option Trading in Your Spare Time, When you feel that the stock and alternatives trading approach that you are following is too complex even for simple understanding, it is probably not the best.

In all elements of successful stock and choices trading, the easiest methods often emerge victorious. In the heat of a trade, it is easy for our brains to end up being emotionally strained. If we have a complex technique, we can not keep up with the action. Simpler 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 species or you are an unskilled trader.

No trader can be absolutely unbiased, especially when market action is unusual or wildly erratic. Just like 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 quickly. For that reason, one should endeavor to automate as numerous crucial aspects of your strategy as possible, particularly your profit-taking and stop-loss points.

PRINCIPLE 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial principle.

A lot of stock and choices traders do the opposite …

They hang on to their losses way too long and view their equity sink and sink and sink, or they leave their gains prematurely just to see the rate go up and up and up. In time, their gains never cover their losses.

This concept requires time to master correctly. Reflect upon this concept and review your previous stock and options trades. If you have been undisciplined, you will see its reality.

CONCEPT 4.

BE AFRAID TO LOSE MONEY.

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

On this point, I have found that a lot of unprincipled traders are more afraid of missing out on "the next huge trade" than they hesitate of losing money! The key here is ADHERE TO 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 technique says to do so and leave them alone when the exit conditions are not in place.

The point here is to be afraid to discard your cash since you traded needlessly and without following your stock and alternatives method.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely believe that your next stock or alternatives trade is going to be such a big 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 quite, is it?

No matter how confident you might be when getting in a trade, the stock and alternatives market has a method of doing the unexpected. Therefore, always stay with your portfolio management system. Do not compound your expected wins because you may end up compounding your really genuine losses.

PRINCIPLE 6.

DETERMINE 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 money regularly, you discover it very various when you increase your capital by 10 fold, don`t 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 occurs 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 understand their optimal capacity in both dollars and feeling. Are you comfortable trading up to a couple of thousand or tens of thousands or hundreds of thousands? Know your capability before committing the funds.

CONCEPT 7.

YOU ARE A BEGINNER AT EVERY TRADE.

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

Overconfidence and the incorrect sense of invincibility based upon past wins is a dish for disaster. All specialists appreciate their next trade and go through all the appropriate steps of their stock or alternatives method 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 method. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or choices technique just to stop working terribly?

You are the one who determines whether a strategy succeeds or fails. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki says, "The financier is the asset or the liability, not the financial investment."

Comprehending yourself initially will result in eventual success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever changed your mind about how to execute a strategy? When you make changes day after day, you end up capturing nothing but the wind.

Stock exchange variations have more variables than can be mathematically formulated. By following a proven strategy, we are guaranteed that someone successful has actually stacked the chances in our favour. When you review both winning and losing trades, identify whether the entry, management, and exit fulfilled every requirements in the method and whether you have actually followed it exactly prior to altering anything.

In conclusion …

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