Stock Options Trading Millionaire Principles
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July 17, 2023
Stock Options Trading Millionaire Concepts
Having actually been trading stocks and options in the capital markets professionally throughout the years, I have seen numerous ups and downs.
I have seen paupers end up being millionaires overnight …
And
I have actually seen millionaires become paupers overnight …
One story told to me by my mentor is still etched in my mind:
"Once, there were 2 Wall Street stock exchange multi-millionaires. Both were very successful and decided to share their insights with others by selling their stock market forecasts 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 purchase both their opinions. His good friends were naturally delighted about what the two masters needed to state about the stock exchange`s direction. When they asked their buddy, he was fuming mad. Confused, they asked their friend about his anger. He stated, `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, people can have various viewpoints of future market direction and still revenue. The differences lay in the stock picking or alternatives strategy and in the mental attitude and discipline one utilizes in executing that technique.
I share here the basic stock and choice trading concepts I follow. By holding these concepts securely in your mind, they will guide you consistently to profitability. These concepts will help you decrease your danger and allow you to assess both what you are doing right and what you may be doing wrong.
You may have read concepts comparable to these prior to. I and others utilize them because they work. And if you remember and review these principles, your mind can use them to guide you in your stock and alternatives trading.
PRINCIPLE 1.
SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked up this trick from Wendy Kirkland Trading, When you feel that the stock and options trading method that you are following is too intricate even for basic understanding, it is probably not the very best.
In all elements of successful stock and options trading, the simplest methods often emerge victorious. In the heat of a trade, it is easy for our brains to become emotionally overwhelmed. If we have a complex strategy, we can not keep up with the action. Simpler is better.
PRINCIPLE 2.
NO ONE IS OBJECTIVE ENOUGH.
If you feel that you have absolute control over your emotions and can be unbiased in the heat of a stock or choices trade, you are either an unsafe species or you are an unskilled trader.
No trader can be absolutely objective, particularly when market action is unusual or wildly irregular. Just like the perfect storm can still shake the nerves of the most experienced sailors, the best stock market storm can still unnerve and sink a trader very quickly. Therefore, one need to endeavor to automate as numerous crucial aspects of your technique as possible, particularly your profit-taking and stop-loss points.
CONCEPT 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 leave their gains too soon only to see the cost go up and up and up. Gradually, their gains never cover their losses.
This concept takes time to master correctly. Reflect upon this concept and evaluate your past stock and options trades. If you have been unrestrained, you will see its fact.
CONCEPT 4.
BE AFRAID TO LOSE CASH.
Are you like the majority of novices who can`t wait to jump right into the stock and options market with your money hoping to trade as soon as possible?
On this point, I have discovered that the majority of unprincipled traders are more scared of losing out on "the next huge trade" than they are afraid of losing cash! The secret here is STICK TO YOUR TECHNIQUE! Take stock and choices trades when your method signals to do so and prevent taking trades when the conditions are not met. 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 afraid to throw away your money due to the fact that you traded needlessly and without following your stock and choices technique.
PRINCIPLE 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you absolutely believe that your next stock or options trade is going to be such a huge winner that you break your own finance rules and put in everything you have? Do you remember what typically happens after that? It isn`t pretty, is it?
No matter how positive you may be when entering a trade, the stock and options market has a method of doing the unexpected. Therefore, constantly stick to your portfolio management system. Do not compound your anticipated wins due to the fact that you may wind up compounding your extremely real losses.
CONCEPT 6.
GAUGE YOUR EMOTIONAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.
You understand by now how various paper trading and genuine stock and choices trading is, do not you?
In the very same way, after you get used to trading genuine cash consistently, you find it very different 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 a growing number of 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, the majority of traders recognize their optimal capability in both dollars and emotion. Are you comfortable trading approximately a couple of thousand or tens of thousands or hundreds of thousands? Know your capacity prior to dedicating the funds.
CONCEPT 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever seemed like an expert after a couple of wins and after that 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 correct steps of their stock or options method prior to entry. Deal with every trade as the very first trade you have ever made in your life. Never differ your stock or choices strategy. Never.
PRINCIPLE 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or options method only to fail badly?
You are the one who figures out whether a strategy prospers or stops working. Your personality and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki states, "The financier is the property or the liability, not the investment."
Understanding yourself initially will cause ultimate success.
PRINCIPLE 9.
CONSISTENCY.
Have you ever altered your mind about how to carry out 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 developed. By following a tested strategy, we are assured 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 satisfied every requirements in the technique and whether you have followed it specifically prior to changing anything.
In conclusion …
I hope these simple guidelines that have led my ship of the harshest of seas and into the very best harvests of my life will assist you too. Best of luck.
