Stock Options Trading Millionaire Principles

Having actually been trading stocks and choices in the capital markets professionally over the years, I have seen numerous ups and downs.

I have actually seen paupers become millionaires overnight …

And

I have actually seen millionaires end up being paupers overnight …

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

"When, there were two Wall Street stock market multi-millionaires. Both were very successful and decided to share their insights with others by selling their stock exchange forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to understand their views that he spent all of his $20,000 cost savings to purchase both their opinions. His pals were naturally thrilled about what the two masters needed to state about the stock exchange`s direction. When they asked their pal, he was fuming mad. Baffled, they asked their buddy 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 choice market, people can have different opinions of future market instructions and still earnings. The distinctions lay in the stock choosing or choices strategy and in the mental attitude and discipline one utilizes in executing that method.

I share here the basic stock and choice trading principles I follow. By holding these principles firmly in your mind, they will assist you consistently to profitability. These concepts will assist you reduce your risk and allow you to evaluate both what you are doing right and what you might 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 use them to guide you in your stock and options trading.

PRINCIPLE 1.

SIMPLENESS IS PROFICIENCY.
Wendy Kirkland
I learned this from https://store.stockcharts.com/products/companion-chartpack-for-wendy-kirklands-option-trading-in-your-spare-time , When you feel that the stock and choices trading approach that you are following is too complicated even for easy understanding, it is probably not the very best.

In all elements of effective stock and options trading, the easiest methods typically emerge victorious. In the heat of a trade, it is simple for our brains to end up being mentally overloaded. If we have a complex technique, we can not stay up to date with the action. Easier is much better.

CONCEPT 2.

NO ONE IS OBJECTIVE ENOUGH.

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

No trader can be absolutely unbiased, specifically when market action is uncommon or extremely unpredictable. Much like the best 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 need to venture to automate as numerous crucial elements of your method as possible, specifically your profit-taking and stop-loss points.

CONCEPT 3.

HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most essential principle.

Many stock and alternatives 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 just to see the cost go up and up and up. In time, their gains never cover their losses.

This concept takes time to master appropriately. Reflect upon this principle and examine your previous stock and choices trades. If you have been undisciplined, you will see its fact.

PRINCIPLE 4.

HESITATE TO LOSE MONEY.

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

On this point, I have discovered that a lot of unprincipled traders are more afraid of missing out on "the next big trade" than they hesitate of losing cash! The key here is ADHERE TO YOUR METHOD! Take stock and options trades when your strategy signals to do so and prevent 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 scared to discard your money because you traded needlessly and without following your stock and choices method.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely believe that your next stock or choices trade is going to be such a huge winner that you break your own finance rules and put in everything you have? Do you remember what generally happens after that? It isn`t pretty, is it?

No matter how confident you may be when getting in a trade, the stock and alternatives market has a way of doing the unexpected. Therefore, always stick to your portfolio management system. Do not compound your anticipated wins since you may wind up compounding your extremely genuine losses.

CONCEPT 6.

DETERMINE YOUR EMOTIONAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.

You understand by now how various paper trading and genuine stock and choices trading is, don`t you?

In the very same way, after you get used to trading genuine cash consistently, you find it incredibly different when you increase your capital by ten fold, don`t you?

What, then, is the difference? The distinction is in the emotional burden that comes with the possibility of losing more and more real cash. This happens 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 realize their maximum capability in both dollars and feeling. Are you comfortable trading approximately a few thousand or 10s of thousands or hundreds of thousands? Know your capability before committing the funds.

CONCEPT 7.

YOU ARE An AMATEUR AT EVERY TRADE.

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

Overconfidence and the false sense of invincibility based on past wins is a recipe for disaster. All specialists appreciate their next trade and go through all the correct actions of their stock or choices strategy before entry. Treat every trade as the very first trade you have ever made in your life. Never differ your stock or choices technique. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or alternatives technique only to fail terribly?

You are the one who determines whether a method prospers or fails. Your character and your discipline make or break the technique that you use not vice versa. Like Robert Kiyosaki says, "The investor is the possession or the liability, not the financial investment."

Comprehending yourself first will lead to eventual success.

PRINCIPLE 9.

CONSISTENCY.

Have you ever changed your mind about how to execute a method? 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 tested strategy, we are guaranteed that someone successful has stacked the odds in our favour. When you review both winning and losing trades, identify whether the entry, management, and exit fulfilled every requirements in the strategy and whether you have followed it precisely prior to altering anything.

In conclusion …

I hope these simple guidelines that have actually led my ship of the harshest of seas and into the very best harvests of my life will assist you too. Best of luck.