Having actually been trading stocks and options in the capital markets expertly over the years,I have seen lots of ups and downs.
I have seen paupers end up being millionaires over night …
And
I have seen millionaires end up being paupers over night …
One story told to me by my coach is still engraved 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 offering their stock exchange forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to know their views that he spent all of his $20,000 cost savings to purchase both their viewpoints. His pals were naturally delighted about what the two masters had to say about the stock exchange’s direction. When they asked their friend,he was fuming mad. Baffled,they asked their friend 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,individuals can have different viewpoints of future market direction and still earnings. The distinctions lay in the stock selecting or options strategy and in the mental attitude and discipline one utilizes in implementing that strategy.-
I share here the standard stock and choice trading principles I follow. By holding these principles securely in your mind,they will guide you consistently to profitability. These principles will help you decrease your threat and enable 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. Due to the fact that they work,I and others use them. And if you show and memorize on these principles,your mind can use them to guide you in your stock and options trading.
CONCEPT 1.
SIMPLICITY IS MASTERY.
When you feel that the stock and options trading approach that you are following is too intricate even for easy understanding,it is probably not the very best.
In all aspects of successful stock and options trading,the simplest methods frequently emerge victorious. In the heat of a trade,it is easy for our brains to end up being mentally overloaded. We can not keep up with the action if we have a complex strategy. Easier is much better.
CONCEPT 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 options trade,you are either a dangerous types or you are an unskilled trader.
No trader can be definitely unbiased,especially when market action is wildly irregular or unusual. Much like the ideal storm can still shake the nerves of the most skilled sailors,the ideal stock exchange storm can still unnerve and sink a trader really rapidly. Therefore,one must strive to automate as lots of critical aspects of your strategy as possible,especially your profit-taking and stop-loss points.
CONCEPT 3.
HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most important principle.
A lot of stock and options traders do the opposite …
They hang on to their losses way too long and see their equity sink and sink and sink,or they get out of their gains prematurely only to see the price increase and up and up. With time,their gains never cover their losses.
This principle requires time to master appropriately. Contemplate this principle and evaluate your past stock and options trades. You will see its fact if you have been unrestrained.
CONCEPT 4.
HESITATE TO LOSE CASH.
Are you like most beginners who can’t wait to jump right into the stock and options market with your money wishing to trade as soon as possible?
On this point,I have found that most unprincipled traders are more afraid of missing out on “the next huge trade” than they are afraid of losing money! The key here is STAY WITH YOUR TECHNIQUE! Take stock and options trades when your strategy signals to do so and avoid taking trades when the conditions are not met. When your strategy says to do so and leave them alone when the exit conditions are not in place,exit trades.
The point here is to be afraid to get rid of your money since you traded unnecessarily and without following your stock and options strategy.
CONCEPT 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 huge 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 confident you may be when getting in a trade,the stock and options market has a way of doing the unanticipated. Constantly stick to your portfolio management system. Do not compound your awaited wins since you may wind up compounding your really genuine losses.
CONCEPT 6.
DETERMINE YOUR PSYCHOLOGICAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY.
You know by now how different paper trading and genuine stock and options trading is,do not you?
In the very same way,after you get utilized to trading genuine money consistently,you find it very different when you increase your capital by ten fold,do not you?
What,then,is the difference? The difference remains in the emotional concern that comes with the possibility of losing increasingly 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 feeling. Are you comfy trading approximately a couple of thousand or tens of thousands or numerous thousands? Know your capability prior to committing the funds.
CONCEPT 7.
YOU ARE An AMATEUR AT EVERY TRADE.
Ever felt like a professional after a couple of wins and after that lose a lot on the next stock or options trade?
Overconfidence and the incorrect sense of invincibility based on past wins is a recipe for disaster. All professionals appreciate their next trade and go through all the correct actions of their stock or options strategy prior to entry. Deal with every trade as the first trade you have ever made in your life. Never deviate from your stock or options strategy. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or options strategy only to fail terribly?
You are the one who identifies whether a strategy stops working or prospers. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki says,”The investor is the liability or the possession,not the investment.”.
Comprehending yourself first will cause eventual success.
CONCEPT 9.
CONSISTENCY.
Have you ever changed your mind about how to carry out a strategy? You end up capturing nothing but the wind when you make modifications day after day.
Stock exchange changes have more variables than can be mathematically formulated. By following a proven strategy,we are assured that someone successful has stacked the odds in our favour. When you evaluate both winning and losing trades,identify whether the entry,exit,and management met every criteria in the strategy and whether you have followed it precisely prior to altering 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 guide you too. Good Luck.
Show upon this principle and evaluate your past stock and options trades. Take stock and options trades when your strategy signals to do so and avoid taking trades when the conditions are not met. Do you definitely think that your next stock or options trade is going to be such a huge winner that you break your own money management rules and put in whatever you have? No matter how confident you may be when getting in a trade,the stock and options market has a way of doing the unanticipated. All professionals appreciate their next trade and go through all the correct actions of their stock or options strategy prior to entry.