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

I have actually seen paupers end up being millionaires overnight …

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 market multi-millionaires. Both were incredibly effective and chose to share their insights with others by offering their stock market forecasts in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to understand their views that he spent all of his $20,000 savings to purchase both their viewpoints. His buddies were naturally excited about what the two masters had to state about the stock exchange`s instructions. When they asked their good friend, he was fuming mad. Confused, they asked their good friend about his anger. He stated, `One stated 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 alternative market, individuals can have different opinions of future market instructions and still revenue. The distinctions lay in the stock picking or alternatives technique and in the mental attitude and discipline one utilizes in executing that strategy.

I share here the fundamental stock and option trading concepts I follow. By holding these principles securely in your mind, they will direct you consistently to success. These principles will assist you reduce your risk and allow you to evaluate both what you are doing right and what you may be doing wrong.

You might have checked out ideas similar to these prior to. I and others utilize them since they work. And if you remember and assess these principles, your mind can utilize them to assist you in your stock and choices trading.

PRINCIPLE 1.

SIMPLICITY IS PROFICIENCY.
Wendy Kirkland
I learned this from Option Trading Spare Time by Wendy Kirkland, When you feel that the stock and options trading method that you are following is too complicated even for easy understanding, it is probably not the very best.

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

CONCEPT 2.

NOBODY IS GOAL ENOUGH.

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

No trader can be definitely unbiased, specifically when market action is uncommon or extremely unpredictable. Much like the ideal storm can still shake the nerves of the most experienced sailors, the ideal stock exchange storm can still unnerve and sink a trader really quickly. Therefore, one need to strive to automate as lots of critical aspects of your strategy as possible, specifically 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 choices traders do the opposite …

They hold on to their losses way too long and watch their equity sink and sink and sink, or they get out of their gains too soon only to see the cost go up and up and up. With time, their gains never cover their losses.

This concept requires time to master effectively. Reflect upon this principle and review your previous stock and choices trades. If you have been undisciplined, you will see its truth.

PRINCIPLE 4.

BE AFRAID TO LOSE CASH.

Are you like the majority of newbies who can`t wait to leap right into the stock and options market with your money wishing to trade as soon as possible?

On this point, I have actually discovered that many unprincipled traders are more afraid of missing out on “the next big trade” than they are afraid of losing cash! The key here is STAY WITH YOUR STRATEGY! Take stock and alternatives trades when your method 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 scared to get rid of your cash because you traded unnecessarily and without following your stock and choices strategy.

CONCEPT 5.

YOUR NEXT TRADE COULD BE A LOSING TRADE.

Do you absolutely believe that your next stock or alternatives trade is going to be such a huge winner that you break your own money management guidelines and put in whatever you have? Do you remember what usually occurs after that? It isn`t pretty, is it?

No matter how confident you may be when getting in a trade, the stock and choices market has a method of doing the unforeseen. For that reason, always adhere to your portfolio management system. Do not compound your awaited wins since you might end up intensifying your extremely real losses.

PRINCIPLE 6.

EVALUATE YOUR PSYCHOLOGICAL CAPABILITY PRIOR TO INCREASING CAPITAL OUTLAY.

You understand by now how various paper trading and genuine stock and options trading is, don`t you?

In the very same method, after you get used to trading genuine money regularly, you discover it exceptionally different when you increase your capital by ten fold, do not you?

What, then, is the difference? The difference is in the psychological burden that includes the possibility of losing a growing number of genuine money. This takes place when you cross from paper trading to genuine trading and likewise when you increase your capital after some successes.

After a while, the majority of traders recognize their optimal capacity in both dollars and emotion. Are you comfortable trading approximately a few thousand or 10s of thousands or hundreds of thousands? Know your capacity prior to devoting the funds.

CONCEPT 7.

YOU ARE A BEGINNER AT EVERY TRADE.

Ever felt like a specialist 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 disaster. All experts respect their next trade and go through all the proper steps of their stock or options strategy before entry. Deal with every trade as the very first trade you have ever made in your life. Never ever differ your stock or alternatives technique. Never.

CONCEPT 8.

YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.

Ever followed a successful stock or alternatives method just to fail badly?

You are the one who determines whether a method succeeds or fails. Your personality and your discipline make or break the technique that you use not vice versa. Like Robert Kiyosaki says, “The investor is the property or the liability, not the investment.”

Understanding yourself initially will cause ultimate success.

CONCEPT 9.

CONSISTENCY.

Have you ever changed your mind about how to carry out a technique? 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 created. By following a proven strategy, we are guaranteed that somebody effective has stacked the chances in our favour. When you review both winning and losing trades, figure out whether the entry, management, and exit satisfied every requirements in the strategy and whether you have followed it precisely prior to altering anything.

In conclusion …

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