Stock Option Trading Millionaire Principles Having actually been trading stocks and choices in the capital markets professionally throughout the years,I have actually seen lots of ups and downs. I have seen paupers end up being millionaires over night … And I have actually seen millionaires become paupers overnight … One story told to me by my mentor is still engraved in my mind: "Once,there were two Wall Street stock market multi-millionaires. Both were exceptionally successful and chose to share their insights with others by offering their stock market forecasts in newsletters. Each charged US$ 10,000 for their opinions. One trader was so curious to understand their views that he spent all of his $20,000 savings to buy both their opinions. His good friends were naturally excited about what the two masters had to say about the stock market`s direction. When they asked their friend,he was fuming mad. Baffled,they asked their buddy about his anger. He stated,`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 different opinions of future market direction and still earnings. The distinctions lay in the stock picking or options method and in the mental attitude and discipline one uses in carrying out that technique. I share here the fundamental stock and alternative trading principles I follow. By holding these concepts strongly in your mind,they will assist you consistently to profitability. These principles will help you reduce your risk and allow you to assess both what you are doing right and what you might be doing wrong. You may have checked out concepts similar to these prior to. I and others utilize them because they work. And if you memorize and review these principles,your mind can utilize them to guide you in your stock and alternatives trading. CONCEPT 1. SIMPLICITY IS MASTERY. 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 intricate even for basic understanding,it is most likely not the best. In all elements of effective stock and alternatives trading,the simplest approaches often emerge triumphant. In the heat of a trade,it is easy for our brains to end up being emotionally overwhelmed. If we have a complex technique,we can not stay up to date with the action. Simpler is better. CONCEPT 2. NOBODY 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 choices trade,you are either a hazardous types or you are an inexperienced trader. No trader can be absolutely unbiased,especially when market action is uncommon or extremely erratic. Much 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 really rapidly. Therefore,one must venture to automate as numerous critical aspects of your technique as possible,particularly your profit-taking and stop-loss points. CONCEPT 3. HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES. This is the most crucial 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 leave their gains too soon just to see the rate go up and up and up. Over time,their gains never cover their losses. This concept takes some time to master appropriately. Contemplate this concept and review your past stock and alternatives trades. If you have been undisciplined,you will see its reality. PRINCIPLE 4. HESITATE TO LOSE CASH. Are you like a lot of newbies who can`t wait to jump right into the stock and choices market with your cash wanting to trade as soon as possible? On this point,I have actually found that most unprincipled traders are more afraid of losing out on "the next big trade" than they are afraid of losing money! The secret here is STAY WITH YOUR TECHNIQUE! Take stock and alternatives trades when your method signals to do so and avoid 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 afraid to discard your money since you traded needlessly and without following your stock and alternatives strategy. PRINCIPLE 5. YOUR NEXT TRADE COULD BE A LOSING TRADE. Do you absolutely think that your next stock or choices 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 usually takes place after that? It isn`t quite,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 unanticipated. Therefore,constantly adhere to your portfolio management system. Do not compound your expected wins since you may wind up compounding your very real losses. PRINCIPLE 6. DETERMINE YOUR PSYCHOLOGICAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY. You know by now how different paper trading and genuine stock and alternatives trading is,do not you? In the very same way,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 distinction? The distinction remains in the emotional problem that includes the possibility of losing more and more real cash. This occurs when you cross from paper trading to genuine trading and also when you increase your capital after some successes. After a while,the majority of traders recognize their maximum capability in both dollars and feeling. Are you comfy trading approximately a couple of thousand or tens of thousands or numerous thousands? Know your capability before committing 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 false sense of invincibility based on past wins is a dish for disaster. All professionals respect their next trade and go through all the correct steps of their stock or alternatives method before entry. Deal with every trade as the very first trade you have ever made in your life. Never ever deviate from your stock or alternatives method. Never ever. CONCEPT 8. YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE. Ever followed an effective stock or alternatives technique just to fail badly? You are the one who identifies whether a strategy succeeds or fails. Your personality and your discipline make or break the method that you utilize not vice versa. Like Robert Kiyosaki states,"The investor is the property or the liability,not the investment." Understanding yourself initially will result in ultimate success. PRINCIPLE 9. CONSISTENCY. Have you ever changed your mind about how to implement a strategy? When you make changes day after day,you end up catching nothing but the wind. Stock exchange variations have more variables than can be mathematically developed. By following a tested strategy,we are ensured that someone successful has stacked the odds in our favour. When you examine both winning and losing trades,identify whether the entry,management,and exit satisfied every requirements in the method and whether you have followed it precisely before altering anything. In conclusion … I hope these simple standards that have actually led my ship of the harshest of seas and into the best harvests of my life will assist you too. Best of luck.