Stock Option Trading Millionaire Concepts

Having been trading stocks and options in the capital markets expertly over the years, I have seen lots of ups and downs.

I have actually seen paupers become millionaires overnight …

And

I have seen millionaires become paupers overnight …

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

"Once, there were 2 Wall Street stock exchange multi-millionaires. Both were exceptionally effective and decided to share their insights with others by offering 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 buy both their opinions. His good friends were naturally delighted about what the two masters had to say about the stock market`s instructions. When they asked their good friend, he was fuming mad. Baffled, 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 alternative market, people can have different viewpoints of future market direction and still profit. The distinctions lay in the stock picking or options strategy and in the mental attitude and discipline one utilizes in implementing that method.

I share here the basic stock and choice trading concepts I follow. By holding these principles strongly in your mind, they will direct you regularly to profitability. These concepts will help you reduce your threat and permit you to assess both what you are doing right and what you might be doing wrong.

You might have read concepts similar 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 assist you in your stock and alternatives trading.

PRINCIPLE 1.

SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked this up from Wendy Kirkland, When you feel that the stock and choices trading approach that you are following is too complicated even for basic understanding, it is probably not the best.

In all elements of effective stock and options trading, the most basic techniques frequently emerge triumphant. In the heat of a trade, it is simple for our brains to end up being emotionally overwhelmed. If we have a complex method, we can not keep up with the action. Easier is better.

PRINCIPLE 2.

NOBODY IS GOAL 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 hazardous types or you are an unskilled trader.

No trader can be definitely unbiased, specifically when market action is uncommon or hugely irregular. Similar to the ideal storm can still shake the nerves of the most seasoned sailors, the ideal stock market storm can still unnerve and sink a trader very quickly. For that reason, one must venture to automate as lots of vital aspects of your strategy as possible, specifically your profit-taking and stop-loss points.

PRINCIPLE 3.

HANG ON TO YOUR GAINS AND CUT YOUR LOSSES.

This is the most important principle.

Many stock and choices traders do the opposite …

They hang on to their losses way too long and enjoy 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. With time, their gains never cover their losses.

This concept requires time to master effectively. Reflect upon this concept and evaluate your past stock and alternatives trades. If you have been unrestrained, you will see its truth.

PRINCIPLE 4.

HESITATE TO LOSE MONEY.

Are you like a lot of beginners 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 found that the majority of unprincipled traders are more afraid of losing out on "the next big trade" than they hesitate of losing cash! The key here is ADHERE TO YOUR STRATEGY! Take stock and choices 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 options method.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely believe that your next stock or options trade is going to be such a big winner that you break your own finance rules and put in whatever you have? Do you remember what usually occurs after that? It isn`t quite, is it?

No matter how positive you might be when entering a trade, the stock and alternatives market has a method of doing the unforeseen. For that reason, constantly adhere to your portfolio management system. Do not compound your expected wins due to the fact that you might wind up intensifying your extremely genuine losses.

PRINCIPLE 6.

GAUGE YOUR EMOTIONAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

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

In the very same method, after you get utilized to trading genuine money regularly, you find it very various when you increase your capital by ten fold, do not you?

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

After a while, many traders understand their maximum capacity in both dollars and feeling. Are you comfy trading up to a couple of thousand or tens of thousands or hundreds of thousands? Know your capability before devoting the funds.

CONCEPT 7.

YOU ARE A NEWBIE AT EVERY TRADE.

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

Overconfidence and the incorrect sense of invincibility based on previous wins is a dish for catastrophe. All professionals respect their next trade and go through all the appropriate steps of their stock or options technique 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.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or alternatives strategy just to fail severely?

You are the one who determines whether a technique is successful or stops working. Your personality and your discipline make or break the technique that you use not vice versa. Like Robert Kiyosaki says, "The investor is the property or the liability, not the financial investment."

Understanding yourself first will lead to ultimate success.

CONCEPT 9.

CONSISTENCY.

Have you ever altered your mind about how to implement 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 created. By following a tested strategy, we are assured that someone successful has actually 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 technique and whether you have followed it exactly before changing anything.

In conclusion …

I hope these easy guidelines that have led my ship of the harshest of seas and into the best harvests of my life will assist you too. All the best.