Stock Options Trading Millionaire Concepts
Having actually been trading stocks and options in the capital markets professionally over the years, I have actually seen numerous ups and downs.
I have actually seen paupers end up being millionaires over night .
I have seen millionaires end up being paupers overnight .
One story informed to me by my mentor is still engraved in my mind:
“Once, there were two Wall Street stock exchange multi-millionaires. Both were extremely effective and decided to share their insights with others by selling their stock market 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 good friends were naturally thrilled about what the two masters had to say about the stock market`s instructions. When they asked their pal, he was fuming mad. Baffled, they asked their good friend 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, individuals can have different viewpoints of future market direction and still revenue. The differences lay in the stock picking or choices technique and in the mental attitude and discipline one uses in executing that method.
I share here the standard stock and alternative trading concepts I follow. By holding these concepts firmly in your mind, they will assist you consistently to success. These principles will help you decrease your danger and permit you to examine 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 since they work. And if you memorize and review these principles, your mind can use them to assist you in your stock and choices trading.
CONCEPT 1.
SIMPLENESS 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 intricate even for simple understanding, it is most likely not the very best.
In all aspects of successful stock and choices trading, the most basic techniques often 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 keep up with the action. Easier 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 alternatives trade, you are either a harmful species or you are an unskilled trader.
No trader can be definitely objective, particularly when market action is unusual or extremely unpredictable. Similar to the perfect storm can still shake the nerves of the most seasoned sailors, the ideal stock market storm can still unnerve and sink a trader extremely quickly. For that reason, one need to venture to automate as lots of crucial elements of your technique as possible, especially your profit-taking and stop-loss points.
PRINCIPLE 3.
HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most important principle.
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 just to see the price go up and up and up. Gradually, their gains never ever cover their losses.
This concept takes some time to master correctly. Reflect upon this concept and evaluate your past stock and alternatives trades. If you have been undisciplined, you will see its fact.
CONCEPT 4.
BE AFRAID TO LOSE MONEY.
Are you like most newbies who can`t wait to jump right into the stock and alternatives market with your money intending to trade as soon as possible?
On this point, I have found that most unprincipled traders are more afraid of losing out on “the next big trade” than they are afraid of losing money! The key here is STICK TO YOUR METHOD! Take stock and options trades when your strategy signals to do so and avoid taking trades when the conditions are not satisfied. Exit trades when your method states 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 options strategy.
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 everything you have? Do you remember what typically takes place after that? It isn`t pretty, is it?
No matter how confident you may be when getting in a trade, the stock and options market has a method of doing the unexpected. Therefore, always stick to your portfolio management system. Do not compound your awaited wins since you may wind up compounding your very genuine losses.
CONCEPT 6.
EVALUATE YOUR PSYCHOLOGICAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.
You understand by now how various paper trading and real 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 extremely different when you increase your capital by 10 fold, don`t you?
What, then, is the difference? The difference is in the emotional concern that features the possibility of losing more and more genuine money. This occurs 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 comfortable trading approximately a few thousand or tens of thousands or hundreds of thousands? Know your capacity before devoting the funds.
CONCEPT 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever seemed like a professional after a couple of wins and then lose a lot on the next stock or alternatives trade?
Overconfidence and the incorrect sense of invincibility based upon previous wins is a recipe for disaster. All specialists appreciate their next trade and go through all the appropriate actions of their stock or choices strategy before entry. Deal with every trade as the very first trade you have actually ever made in your life. Never ever deviate from your stock or options technique. Never ever.
PRINCIPLE 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or options technique just to stop working terribly?
You are the one who determines whether a method succeeds or stops working. Your personality and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki says, “The financier is the asset or the liability, not the financial investment.”
Understanding 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 catching nothing but the wind.
Stock exchange changes have more variables than can be mathematically formulated. By following a tested strategy, we are assured that someone successful has stacked the chances in our favour. When you evaluate both winning and losing trades, identify whether the entry, management, and exit satisfied every criteria in the method and whether you have actually followed it precisely before changing anything.
In conclusion
I hope these easy guidelines that have led my ship out of the harshest of seas and into the very best harvests of my life will direct you too. Best of luck.