Having actually been trading stocks and options in the capital markets expertly for many years,I have seen many ups and downs.
I have seen paupers become millionaires over night …
And
I have seen millionaires become paupers over night …
One story informed to me by my mentor is still engraved in my mind:
” Once,there were two Wall Street stock market multi-millionaires. Both were very successful and decided to share their insights with others by selling their stock market projections in newsletters. His good friends were naturally thrilled about what the two masters had to state about the stock market’s instructions. Wendy Kirkland
The point of this illustration is that it was the trader who was wrong. In today’s stock and alternative market,individuals can have various viewpoints of future market instructions and still earnings. The differences lay in the stock choosing or options method and in the mental attitude and discipline one utilizes in executing that method.
I share here the standard stock and alternative trading concepts I follow. By holding these concepts securely in your mind,they will guide you regularly to profitability. These concepts will assist you reduce your threat and enable you to examine both what you are doing right and what you may be doing wrong.
You may have checked out concepts comparable to these prior to. I and others use them due to the fact that they work. And if you show and remember on these concepts,your mind can use them to guide you in your stock and options trading.
PRINCIPLE 1.
SIMPLICITY IS MASTERY.
When you feel that the stock and options trading method that you are following is too complicated even for simple understanding,it is most likely not the very best.
In all elements of successful stock and options trading,the easiest approaches typically emerge victorious. In the heat of a trade,it is simple for our brains to become emotionally overwhelmed. We can not keep up with the action if we have a complex method. Easier is much better.
PRINCIPLE 2.
NOBODY 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 an unsafe types or you are an inexperienced trader.
No trader can be absolutely unbiased,specifically when market action is wildly erratic or unusual. Much like the best storm can still shake the nerves of the most seasoned sailors,the best stock exchange storm can still unnerve and sink a trader very quickly. One should endeavor to automate as many important elements of your method as possible,specifically your profit-taking and stop-loss points.
PRINCIPLE 3.
HOLD ON TO YOUR GAINS AND CUT YOUR LOSSES.
This is the most crucial principle.
Many stock and options 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 price go up and up and up. Gradually,their gains never cover their losses.
This principle requires time to master correctly. Reflect upon this principle and review your previous stock and options trades. If you have been unrestrained,you will see its truth.
PRINCIPLE 4.
BE AFRAID TO LOSE MONEY.
Are you like a lot of beginners who can’t wait to leap right into the stock and options market with your cash hoping to trade as soon as possible?
Take stock and options trades when your method signals to do so and avoid taking trades when the conditions are not fulfilled. Exit trades when your method says to do so and leave them alone when the exit conditions are not in place.
Since you traded unnecessarily and without following your stock and options method,the point here is to be scared to toss away your cash.
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 big winner that you break your own finance rules and put in whatever you have? Do you remember what normally takes place after that? It isn’t pretty,is it?
No matter how positive you may be when going into a trade,the stock and options market has a way of doing the unexpected. Constantly stick to your portfolio management system. Do not intensify your awaited wins due to the fact that you may wind up intensifying your very real losses.
PRINCIPLE 6.
ASSESS YOUR PSYCHOLOGICAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.
You know by now how various paper trading and real stock and options trading is,don’t you?
In the very same method,after you get used to trading real cash regularly,you discover it very various when you increase your capital by 10 fold,don’t you?
What,then,is the difference? The difference is in the psychological problem that comes with the possibility of losing increasingly more real cash. 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,a lot of traders recognize their optimal capacity in both dollars and emotion. Are you comfortable trading as much as a few thousand or tens of thousands or hundreds of thousands? Know your capacity prior to committing the funds.
PRINCIPLE 7.
YOU ARE A NOVICE AT EVERY TRADE.
Ever seemed like an expert after a few wins and after that lose a lot on the next stock or options trade?
All specialists respect their next trade and go through all the appropriate steps of their stock or options method prior to entry. Never deviate from your stock or options method.
PRINCIPLE 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or options method only to fail severely?
You are the one who figures out whether a technique succeeds or fails. Your character and your discipline make or break the method that you use not vice versa. Like Robert Kiyosaki says,”The investor is the liability or the asset,not the investment.”.
Understanding yourself first will cause eventual success.
PRINCIPLE 9.
CONSISTENCY.
Have you ever altered your mind about how to carry out a technique? 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 method,we are assured that someone successful has actually stacked the odds in our favour. When you review both winning and losing trades,identify whether the exit,entry,and management fulfilled every requirements in the method and whether you have followed it specifically prior to changing anything.
In conclusion …
I hope these simple standards that have led my ship of the harshest of seas and into the very best harvests of my life will guide you too. Best of luck.
Reflect upon this principle and review your previous stock and options trades. Take stock and options trades when your method signals to do so and avoid taking trades when the conditions are not fulfilled. Do you absolutely believe that your next stock or options trade is going to be such a big winner that you break your own cash management rules and put in whatever you have? No matter how positive you may be when going into a trade,the stock and options market has a way of doing the unexpected. All specialists respect their next trade and go through all the appropriate steps of their stock or options method prior to entry.