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 seen paupers become millionaires overnight …

And

I have actually seen millionaires end up being paupers over night …

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

"As soon as, there were 2 Wall Street stock exchange multi-millionaires. Both were incredibly 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 spent all of his $20,000 savings to purchase both their viewpoints. His buddies were naturally delighted about what the two masters had 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 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, people can have various opinions of future market direction and still earnings. The differences lay in the stock choosing or alternatives technique and in the mental attitude and discipline one uses in executing 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 risk and allow you to examine both what you are doing right and what you may 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 review these concepts, your mind can utilize them to direct you in your stock and choices trading.

PRINCIPLE 1.

SIMPLICITY IS MASTERY.
Wendy Kirkland
I learned this from Wendy Kirkland Trading, When you feel that the stock and options trading method that you are following is too complicated even for simple understanding, it is probably not the very best.

In all elements of successful stock and alternatives trading, the simplest methods typically emerge victorious. In the heat of a trade, it is easy for our brains to become emotionally overloaded. If we have a complex technique, we can not keep up with the action. Simpler is better.

CONCEPT 2.

NO ONE IS GOAL ENOUGH.

If you feel that you have outright control over your emotions and can be objective in the heat of a stock or alternatives trade, you are either a harmful species or you are an inexperienced trader.

No trader can be absolutely objective, particularly when market action is uncommon or extremely unpredictable. Just like the best storm can still shake the nerves of the most skilled sailors, the best stock market storm can still unnerve and sink a trader very rapidly. For that reason, one must strive to automate as many crucial aspects 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.

The majority of stock and alternatives traders do the opposite …

They hang on to their losses way too long and view their equity sink and sink and sink, or they get out of their gains too soon only to see the price go up and up and up. Gradually, their gains never cover their losses.

This principle requires time to master effectively. Reflect upon this concept and examine your past stock and options trades. If you have been unrestrained, you will see its reality.

CONCEPT 4.

HESITATE TO LOSE MONEY.

Are you like the majority of beginners who can`t wait to jump right into the stock and choices market with your cash wishing to trade as soon as possible?

On this point, I have found that a lot of unprincipled traders are more scared of missing out on "the next huge trade" than they hesitate of losing cash! The secret here is ADHERE TO YOUR TECHNIQUE! Take stock and options trades when your strategy signals to do so and prevent 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 scared to throw away your money due to the fact that you traded needlessly and without following your stock and choices 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 huge winner that you break your own money management guidelines and put in whatever you have? Do you remember what generally occurs after that? It isn`t pretty, is it?

No matter how confident you may be when getting in a trade, the stock and choices market has a method of doing the unforeseen. Therefore, always stick to your portfolio management system. Do not intensify your expected wins due to the fact that you might wind up intensifying your very real losses.

CONCEPT 6.

DETERMINE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

You know by now how different paper trading and real stock and options trading is, do not you?

In the very same method, after you get used to trading genuine cash regularly, you find it extremely various when you increase your capital by 10 fold, do not you?

What, then, is the difference? The difference remains in the emotional burden that features the possibility of losing a growing number of genuine money. This happens when you cross from paper trading to genuine trading and likewise when you increase your capital after some successes.

After a while, most traders recognize their maximum capability in both dollars and emotion. Are you comfy trading as much as a couple of thousand or 10s of thousands or hundreds of thousands? Know your capacity prior to dedicating the funds.

PRINCIPLE 7.

YOU ARE A NEWBIE AT EVERY TRADE.

Ever felt like a specialist after a couple of wins and then lose a lot on the next stock or options trade?

Overconfidence and the incorrect sense of invincibility based upon previous wins is a dish for catastrophe. All specialists respect their next trade and go through all the appropriate actions of their stock or choices strategy before entry. Treat every trade as the first trade you have ever made in your life. Never differ your stock or choices method. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or options method just to fail severely?

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

Comprehending yourself initially will lead to ultimate success.

PRINCIPLE 9.

CONSISTENCY.

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

Stock market variations have more variables than can be mathematically created. By following a proven strategy, we are ensured that somebody effective has stacked the chances in our favour. When you review both winning and losing trades, determine whether the entry, management, and exit met every requirements in the strategy and whether you have actually followed it precisely prior to changing anything.

In conclusion …

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