Having been trading stocks and alternatives in the capital markets expertly over the years, I have seen lots of ups and downs.
I have seen paupers become millionaires overnight …
And
I have seen millionaires become paupers over night …
One story informed to me by my coach is still etched in my mind:
"When, there were 2 Wall Street stock exchange multi-millionaires. Both were incredibly effective and decided 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 good friends were naturally thrilled about what the two masters needed to state about the stock market`s direction. When they asked their good friend, he was fuming mad. Baffled, they asked their good friend about his anger. He stated, `One said 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 option market, people can have different viewpoints of future market direction and still profit. The differences lay in the stock choosing or alternatives technique and in the mental attitude and discipline one utilizes in executing that method.
I share here the fundamental stock and choice trading concepts I follow. By holding these principles strongly in your mind, they will direct you consistently to profitability. These concepts will assist you reduce your danger and enable you to evaluate both what you are doing right and what you might be doing wrong.
You may have read ideas comparable to these before. I and others use them because they work. And if you memorize and assess these concepts, your mind can utilize them to guide you in your stock and alternatives trading.
PRINCIPLE 1.
SIMPLICITY IS MASTERY.
Wendy Kirkland
I picked this up from https://store.stockcharts.com/products/companion-chartpack-for-wendy-kirklands-option-trading-in-your-spare-time, 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 best.
In all aspects of successful stock and choices trading, the most basic techniques typically emerge triumphant. In the heat of a trade, it is simple for our brains to become emotionally overwhelmed. If we have a complex technique, we can not keep up with the action. Easier is better.
CONCEPT 2.
NOBODY IS OBJECTIVE ENOUGH.
If you feel that you have outright control over your emotions 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 definitely objective, particularly when market action is uncommon or wildly erratic. 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 very rapidly. Therefore, one need to endeavor to automate as lots of 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.
Most stock and alternatives 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 too soon just to see the rate increase and up and up. With time, their gains never cover their losses.
This principle requires time to master properly. Contemplate this principle and examine your past stock and choices trades. If you have actually been unrestrained, you will see its reality.
PRINCIPLE 4.
BE AFRAID TO LOSE CASH.
Are you like the majority of novices who can`t wait to leap right into the stock and alternatives market with your money wanting to trade as soon as possible?
On this point, I have actually found that many unprincipled traders are more scared of losing out on "the next huge trade" than they are afraid of losing cash! The secret here is STAY WITH YOUR STRATEGY! Take stock and options trades when your technique signals to do so and prevent taking trades when the conditions are not fulfilled. Exit trades when your method states to do so and leave them alone when the exit conditions are not in place.
The point here is to be afraid to throw away your cash because you traded unnecessarily and without following your stock and alternatives technique.
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 rules and put in everything you have? Do you remember what usually happens after that? It isn`t quite, is it?
No matter how positive you might be when getting in a trade, the stock and alternatives market has a way of doing the unanticipated. Therefore, always stay with your portfolio management system. Do not compound your anticipated wins due to the fact that you might wind up compounding your really real losses.
CONCEPT 6.
GAUGE YOUR EMOTIONAL CAPABILITY BEFORE INCREASING CAPITAL OUTLAY.
You understand by now how different paper trading and genuine stock and alternatives trading is, don`t you?
In the very same way, after you get utilized to trading genuine cash consistently, you discover it exceptionally various when you increase your capital by 10 fold, do not you?
What, then, is the distinction? The difference remains in the psychological concern that features the possibility of losing increasingly more real cash. This occurs when you cross from paper trading to genuine trading and likewise when you increase your capital after some successes.
After a while, a lot of traders realize their maximum capacity in both dollars and feeling. Are you comfy trading approximately a couple of thousand or tens of thousands or hundreds of thousands? Know your capacity before dedicating the funds.
CONCEPT 7.
YOU ARE A NEWBIE AT EVERY TRADE.
Ever seemed like an expert after a few wins and then lose a lot on the next stock or alternatives trade?
Overconfidence and the false sense of invincibility based upon past wins is a recipe for disaster. All specialists respect their next trade and go through all the appropriate actions of their stock or options strategy prior to entry. Deal with every trade as the first trade you have actually ever made in your life. Never ever deviate from your stock or options strategy. Never.
CONCEPT 8.
YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE.
Ever followed a successful stock or alternatives strategy only to fail terribly?
You are the one who identifies whether a technique succeeds or stops working. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki states, "The investor is the possession or the liability, not the investment."
Understanding yourself first will result in ultimate success.
PRINCIPLE 9.
CONSISTENCY.
Have you ever altered your mind about how to carry out a strategy? When you make changes day after day, you end up catching nothing but the wind.
Stock market variations have more variables than can be mathematically formulated. By following a proven strategy, we are ensured that someone successful has stacked the chances in our favour. When you evaluate both winning and losing trades, identify whether the entry, management, and exit fulfilled every requirements in the technique and whether you have followed it exactly before altering anything.
In conclusion …
I hope these basic standards that have led my ship of the harshest of seas and into the best harvests of my life will direct you too. All the best.
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