Having been trading stocks and options in the capital markets expertly throughout the years,I have seen many ups and downs.
I have seen paupers end up being millionaires over night …
And
I have seen millionaires become paupers over night …
One story informed to me by my coach is still etched in my mind:
“Once,there were 2 Wall Street stock market multi-millionaires. Both were incredibly successful and chose to share their insights with others by selling their stock market projections 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 cost savings to purchase both their viewpoints. His good friends were naturally excited about what the two masters had to state about the stock exchange`s instructions. When they asked their pal,he was fuming mad. Baffled,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,people can have various viewpoints of future market direction and still revenue. The differences lay in the stock picking or choices technique and in the mental attitude and discipline one utilizes in executing that strategy.
I share here the standard stock and choice trading principles I follow. By holding these concepts strongly in your mind,they will guide you consistently to profitability. These principles will assist you decrease your threat and permit you to evaluate both what you are doing right and what you might be doing wrong.
You might have checked out ideas comparable to these prior to. I and others utilize them because they work. And if you remember and review these concepts,your mind can utilize them to guide you in your stock and alternatives trading.
CONCEPT 1.
SIMPLENESS IS MASTERY.
Wendy Kirkland
I picked this up from -,When you feel that the stock and choices trading technique that you are following is too complicated even for easy understanding,it is probably not the best.
In all elements of successful stock and choices trading,the easiest methods often emerge victorious. In the heat of a trade,it is easy for our brains to become mentally overloaded. If we have a complex method,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 feelings and can be unbiased in the heat of a stock or choices trade,you are either a dangerous types or you are an inexperienced trader.
No trader can be definitely unbiased,particularly when market action is unusual or hugely erratic. Similar to the ideal storm can still shake the nerves of the most skilled sailors,the best stock exchange storm can still unnerve and sink a trader extremely rapidly. Therefore,one must strive to automate as many critical aspects of your method 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 crucial concept.
A lot of stock and choices traders do the opposite …
They hold on to their losses way too long and view their equity sink and sink and sink,or they leave their gains prematurely just to see the price increase and up and up. Over time,their gains never cover their losses.
This principle takes time to master properly. Reflect upon this concept and evaluate your past stock and choices trades. If you have been unrestrained,you will see its reality.
PRINCIPLE 4.
HESITATE TO LOSE MONEY.
Are you like a lot of beginners who can`t wait to jump right into the stock and choices market with your money wanting to trade as soon as possible?
On this point,I have discovered that the majority of unprincipled traders are more afraid of losing out on “the next big trade” than they are afraid of losing cash! The key here is STAY WITH YOUR TECHNIQUE! Take stock and alternatives trades when your technique signals to do so and avoid taking trades when the conditions are not fulfilled. Exit trades when your strategy says to do so and leave them alone when the exit conditions are not in place.
The point here is to be scared to throw away your cash because you traded unnecessarily and without following your stock and options method.
CONCEPT 5.
YOUR NEXT TRADE COULD BE A LOSING TRADE.
Do you absolutely believe that your next stock or choices trade is going to be such a big winner that you break your own finance guidelines and put in whatever you have? Do you remember what generally happens after that? It isn`t quite,is it?
No matter how positive you might be when entering a trade,the stock and alternatives market has a way of doing the unforeseen. Therefore,constantly stay with your portfolio management system. Do not intensify your anticipated wins because you may end up compounding your really real losses.
CONCEPT 6.
GAUGE YOUR PSYCHOLOGICAL CAPACITY PRIOR TO INCREASING CAPITAL OUTLAY.
You know by now how various paper trading and real stock and options trading is,do not you?
In the very same way,after you get used to trading real money consistently,you find it incredibly different when you increase your capital by ten fold,do not you?
What,then,is the distinction? The difference remains in the emotional concern that comes with the possibility of losing more and more real cash. This takes place when you cross from paper trading to genuine trading and also when you increase your capital after some successes.
After a while,many traders realize their maximum 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 NEWBIE AT EVERY TRADE.
Ever felt like an expert after a few wins and after that lose a lot on the next stock or options trade?
Overconfidence and the false sense of invincibility based upon past wins is a dish for disaster. All professionals appreciate their next trade and go through all the proper actions of their stock or choices technique before entry. Deal with every trade as the first trade you have actually ever made in your life. Never deviate from your stock or options strategy. Never ever.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed an effective stock or choices strategy just to fail terribly?
You are the one who identifies whether a technique prospers or stops working. Your character and your discipline make or break the method that you utilize not vice versa. Like Robert Kiyosaki states,”The investor is the asset or the liability,not the investment.”
Comprehending yourself initially will cause ultimate success.
CONCEPT 9.
CONSISTENCY.
Have you ever altered your mind about how to implement a strategy? When you make changes day after day,you wind up capturing nothing but the wind.
Stock exchange variations have more variables than can be mathematically created. By following a tested method,we are assured that somebody effective has actually stacked the chances in our favour. When you review both winning and losing trades,determine whether the entry,management,and exit satisfied every criteria in the strategy and whether you have followed it precisely before changing anything.
In conclusion …
I hope these simple guidelines that have led my ship out of the harshest of seas and into the best harvests of my life will guide you too. Best of luck.