Stock Option Trading Millionaire Concepts

Having been trading stocks and alternatives in the capital markets expertly throughout the years, I have actually seen numerous ups and downs.

I have seen paupers become millionaires over night …

And

I have seen millionaires end up being paupers over night …

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

"Once, there were 2 Wall Street stock market multi-millionaires. Both were exceptionally effective and chose to share their insights with others by offering their stock market projections in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to understand their views that he invested all of his $20,000 cost savings to buy both their opinions. His good friends were naturally delighted about what the two masters needed to state about the stock exchange`s instructions. When they asked their pal, he was fuming mad. Confused, they asked their buddy 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 alternative market, individuals can have various viewpoints of future market direction and still profit. The differences lay in the stock selecting or choices method and in the mental attitude and discipline one uses in carrying out that strategy.

I share here the basic stock and alternative trading concepts I follow. By holding these principles firmly in your mind, they will assist you consistently to profitability. These principles will assist you decrease your risk 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 because they work. And if you memorize and assess these concepts, your mind can use them to guide you in your stock and options trading.

PRINCIPLE 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I picked up this trick from Option Trading in Your Spare Time, When you feel that the stock and options trading technique that you are following is too intricate even for easy understanding, it is probably not the very best.

In all elements of effective stock and options trading, the most basic approaches typically emerge triumphant. In the heat of a trade, it is easy for our brains to become mentally overwhelmed. If we have a complex technique, we can not keep up with the action. Easier is better.

CONCEPT 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 choices trade, you are either a harmful types or you are an unskilled trader.

No trader can be definitely objective, especially when market action is unusual or wildly erratic. Just like the best storm can still shake the nerves of the most skilled sailors, the perfect stock market storm can still unnerve and sink a trader extremely rapidly. Therefore, one must endeavor to automate as many crucial aspects of your method 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 crucial concept.

A lot of stock and alternatives traders do the opposite …

They hold on to their losses way too long and see their equity sink and sink and sink, or they get out of their gains prematurely only to see the price increase and up and up. Over time, their gains never cover their losses.

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

CONCEPT 4.

HESITATE TO LOSE MONEY.

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

On this point, I have found that most unprincipled traders are more scared of losing out on "the next huge trade" than they are afraid of losing money! The secret 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 fulfilled. 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 money due to the fact that you traded needlessly and without following your stock and alternatives technique.

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 huge winner that you break your own money management rules and put in whatever you have? Do you remember what generally occurs after that? It isn`t pretty, is it?

No matter how positive you might be when entering a trade, the stock and options market has a method of doing the unanticipated. For that reason, constantly stay with your portfolio management system. Do not compound your awaited wins due to the fact that you might end up compounding your extremely genuine losses.

PRINCIPLE 6.

EVALUATE YOUR EMOTIONAL CAPABILITY 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 real cash regularly, you discover it exceptionally various when you increase your capital by 10 fold, do not you?

What, then, is the difference? The distinction remains in the psychological problem that includes the possibility of losing more and more real money. This takes place when you cross from paper trading to real trading and also when you increase your capital after some successes.

After a while, many traders realize their optimal capacity in both dollars and feeling. Are you comfortable trading approximately a few thousand or 10s of thousands or hundreds of thousands? Know your capacity prior to committing the funds.

PRINCIPLE 7.

YOU ARE A NEWBIE AT EVERY TRADE.

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

Overconfidence and the incorrect sense of invincibility based on past wins is a dish for disaster. All experts respect their next trade and go through all the proper actions of their stock or choices method prior to entry. Treat every trade as the first trade you have ever made in your life. Never ever differ your stock or alternatives strategy. Never ever.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or options technique just to fail terribly?

You are the one who figures out whether a method is successful or stops working. Your character and your discipline make or break the method that you utilize not vice versa. Like Robert Kiyosaki states, "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 implement a method? When you make changes day after day, you end up capturing nothing but the wind.

Stock market variations have more variables than can be mathematically developed. By following a tested method, we are guaranteed that someone successful has stacked the odds in our favour. When you evaluate both winning and losing trades, identify whether the entry, management, and exit satisfied every criteria in the technique and whether you have followed it specifically prior to changing anything.

In conclusion …

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