Stock Option Trading Millionaire Concepts

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

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

And

I have seen millionaires become paupers over night …

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

"When, there were 2 Wall Street stock exchange multi-millionaires. Both were incredibly successful and decided to share their insights with others by offering their stock exchange projections in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to know their views that he spent all of his $20,000 savings to buy both their viewpoints. His pals were naturally thrilled about what the two masters needed to say about the stock exchange`s direction. When they asked their good friend, he was fuming mad. Confused, they asked their good friend about his anger. He said, `One said 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 choice market, individuals can have different viewpoints of future market direction and still earnings. The differences lay in the stock choosing or choices strategy and in the mental attitude and discipline one utilizes in carrying out that strategy.

I share here the fundamental stock and choice trading concepts I follow. By holding these principles firmly in your mind, they will guide you consistently to success. These concepts will help you decrease your risk and permit you to evaluate 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 use 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 Wendy Kirkland, When you feel that the stock and options trading approach that you are following is too complex even for easy understanding, it is probably not the best.

In all elements of successful stock and alternatives trading, the most basic techniques often emerge victorious. In the heat of a trade, it is simple for our brains to become emotionally overloaded. If we have a complex strategy, we can not stay up to date with the action. Simpler is much better.

CONCEPT 2.

NO ONE IS OBJECTIVE ENOUGH.

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

No trader can be definitely objective, particularly when market action is unusual or wildly irregular. 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 quickly. For that reason, one should endeavor to automate as numerous vital elements of your technique 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 essential concept.

The majority of stock and alternatives 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 prematurely just to see the rate increase and up and up. In time, their gains never cover their losses.

This concept takes some time to master effectively. Contemplate this concept and examine your past stock and options trades. If you have been undisciplined, you will see its fact.

CONCEPT 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 intending to trade as soon as possible?

On this point, I have discovered that a lot of unprincipled traders are more afraid of missing out on "the next huge trade" than they are afraid of losing cash! The secret here is STAY WITH YOUR STRATEGY! Take stock and alternatives trades when your strategy signals to do so and prevent taking trades when the conditions are not met. Exit trades when your method says 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 unnecessarily and without following your stock and choices technique.

PRINCIPLE 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you definitely think that your next stock or options trade is going to be such a big winner that you break your own money management guidelines and put in everything you have? Do you remember what typically takes place after that? It isn`t pretty, is it?

No matter how positive you might be when going into a trade, the stock and options market has a method 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 wind up compounding your very real losses.

CONCEPT 6.

GAUGE YOUR EMOTIONAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.

You know by now how different paper trading and genuine stock and alternatives trading is, don`t you?

In the very same way, after you get utilized to trading genuine money regularly, you find it incredibly different when you increase your capital by ten fold, don`t you?

What, then, is the difference? The difference is in the psychological problem that features the possibility of losing more and more genuine cash. This happens when you cross from paper trading to real trading and likewise when you increase your capital after some successes.

After a while, many traders realize their maximum capacity in both dollars and feeling. Are you comfortable trading as much as a few thousand or 10s of thousands or numerous thousands? Know your capability before devoting the funds.

CONCEPT 7.

YOU ARE A NOVICE AT EVERY TRADE.

Ever seemed like an expert 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 on past wins is a dish for catastrophe. All specialists appreciate their next trade and go through all the appropriate actions of their stock or options technique before entry. Treat every trade as the very first trade you have actually ever made in your life. Never differ your stock or options method. Never.

PRINCIPLE 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed an effective stock or options method only to fail terribly?

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

Comprehending yourself first will result in 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 exchange changes have more variables than can be mathematically created. By following a tested technique, we are ensured that someone effective has stacked the odds in our favour. When you review both winning and losing trades, determine whether the entry, management, and exit fulfilled every criteria in the method and whether you have actually followed it specifically before changing anything.

In conclusion …

I hope these basic guidelines that have actually led my ship out of the harshest of seas and into the best harvests of my life will guide you too. Best of luck.