Stock Option Trading Millionaire Concepts

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

I have seen paupers end up being millionaires overnight …

And

I have seen millionaires become paupers overnight …

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

"As soon as, there were two Wall Street stock exchange multi-millionaires. Both were incredibly effective and decided to share their insights with others by selling their stock exchange forecasts in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to understand their views that he spent all of his $20,000 cost savings to purchase both their viewpoints. His friends were naturally delighted about what the two masters had to say about the stock market`s instructions. When they asked their pal, he was fuming mad. Confused, they asked their good friend about his anger. He said, `One stated BULLISH and the other said BEARISH!`."

The point of this illustration is that it was the trader who was wrong. In today`s stock and alternative market, people can have various viewpoints of future market instructions and still earnings. The distinctions lay in the stock selecting or options method and in the mental attitude and discipline one utilizes in implementing that method.

I share here the fundamental stock and choice trading concepts I follow. By holding these principles strongly in your mind, they will guide you regularly to success. These principles will assist you reduce your risk and permit you to assess both what you are doing right and what you might be doing wrong.

You may have read concepts comparable to these before. I and others utilize them because they work. And if you memorize and reflect on these principles, your mind can use them to direct you in your stock and options trading.

PRINCIPLE 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I learned this from Option Trading in Your Spare Time, When you feel that the stock and alternatives trading method that you are following is too complicated even for simple understanding, it is most likely not the best.

In all aspects of successful stock and options trading, the simplest techniques frequently 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. Simpler is better.

CONCEPT 2.

NO ONE IS GOAL ENOUGH.

If you feel that you have absolute control over your emotions and can be unbiased in the heat of a stock or options trade, you are either a dangerous types or you are an inexperienced trader.

No trader can be definitely objective, specifically when market action is unusual or wildly erratic. Much like the ideal storm can still shake the nerves of the most seasoned sailors, the best stock market storm can still unnerve and sink a trader really rapidly. Therefore, one should venture to automate as lots of crucial elements of your strategy as possible, specifically your profit-taking and stop-loss points.

CONCEPT 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most crucial concept.

Many stock and options traders do the opposite …

They hold on to their losses way too long and watch their equity sink and sink and sink, or they leave their gains too soon only to see the price increase and up and up. Gradually, their gains never ever cover their losses.

This concept takes some time to master appropriately. Contemplate this concept and examine your previous stock and choices trades. If you have actually been unrestrained, you will see its fact.

PRINCIPLE 4.

HESITATE TO LOSE MONEY.

Are you like the majority of novices who can`t wait to jump right into the stock and choices market with your cash hoping 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 big trade" than they are afraid of losing cash! The key here is STICK TO YOUR TECHNIQUE! Take stock and options trades when your strategy signals to do so and avoid taking trades when the conditions are not fulfilled. Exit trades when your technique states to do so and leave them alone when the exit conditions are not in place.

The point here is to be afraid to get rid of your cash because you traded needlessly and without following your stock and alternatives strategy.

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 rules and put in whatever you have? Do you remember what typically occurs after that? It isn`t pretty, is it?

No matter how confident you might be when going into a trade, the stock and alternatives market has a way of doing the unforeseen. Therefore, always stay with your portfolio management system. Do not compound your expected wins due to the fact that you may end up intensifying your extremely genuine losses.

PRINCIPLE 6.

GAUGE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same method, after you get utilized to trading real cash regularly, you find it extremely different when you increase your capital by 10 fold, don`t you?

What, then, is the difference? The distinction is in the emotional burden that comes with the possibility of losing a growing number of genuine money. This occurs when you cross from paper trading to real trading and also when you increase your capital after some successes.

After a while, most traders realize their optimal capability in both dollars and emotion. Are you comfortable trading as much as a few thousand or 10s of thousands or hundreds of thousands? Know your capability before committing the funds.

CONCEPT 7.

YOU ARE A NEWBIE AT EVERY TRADE.

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

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

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or alternatives strategy just to fail badly?

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

Comprehending yourself first will cause eventual success.

CONCEPT 9.

CONSISTENCY.

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

Stock market changes have more variables than can be mathematically formulated. By following a proven technique, we are guaranteed that somebody successful has stacked the chances in our favour. When you examine both winning and losing trades, figure out whether the entry, management, and exit satisfied every requirements in the strategy and whether you have followed it precisely before changing anything.

In conclusion …

I hope these easy standards 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.