Having been trading stocks and alternatives in the capital markets expertly throughout the 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 etched 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 offering their stock market projections in newsletters. Each charged US$ 10,000 for their viewpoints. One trader was so curious to know their views that he invested all of his $20,000 savings to purchase both their viewpoints. His good friends were naturally excited about what the two masters needed to state about the stock market’s direction. When they asked their good friend, he was fuming mad. Confused, they asked their good friend about his anger. He said, ‘One said BULLISH and the other said BEARISH!'”. Option Trading in Your Spare Time is a ideal example.

The point of this illustration is that it was the trader who was wrong. In today’s stock and choice market, individuals can have various viewpoints of future market direction and still revenue. The differences lay in the stock choosing or alternatives strategy and in the mental attitude and discipline one uses in executing that strategy. I share here the basic stock and choice trading principles I follow. By holding these principles securely in your mind, they will guide you consistently to success. These principles will assist you decrease your risk and permit you to assess both what you are doing right and what you might be doing wrong. You might have read ideas comparable to these before. I and others use them because they work. And if you remember and assess these principles, your mind can use them to guide you in your stock and alternatives trading.

CONCEPT 1. SIMPLENESS IS MASTERY. When you feel that the stock and alternatives trading approach that you are following is too complicated even for simple understanding, it is probably not the best. In all elements of successful stock and alternatives trading, the most basic approaches often emerge victorious. In the heat of a trade, it is simple for our brains to become mentally overwhelmed. If we have a complex strategy, we can not keep up with the action. Simpler is much better.

CONCEPT 2. NOBODY IS OBJECTIVE ENOUGH. If you feel that you have absolute control over your feelings and can be objective in the heat of a stock or alternatives trade, you are either a dangerous species or you are an unskilled trader. No trader can be absolutely objective, specifically when market action is unusual or wildly unpredictable. Much like the best storm can still shake the nerves of the most skilled sailors, the best stock market storm can still unnerve and sink a trader very quickly. Therefore, one must strive to automate as many crucial elements 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 essential concept. The majority of 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 leave their gains too soon just to see the rate go up and up and up. Over time, their gains never ever cover their losses. This concept takes time to master properly. Reflect upon this concept and evaluate your previous stock and alternatives trades. If you have been undisciplined, you will see its reality.

CONCEPT 4. BE AFRAID TO LOSE MONEY. Are you like most newbies who can’t wait to jump right into the stock and alternatives market with your money intending to trade as soon as possible? On this point, I have found that most unprincipled traders are more scared of missing out on “the next huge trade” than they hesitate of losing money! The key here is STICK TO YOUR STRATEGY! Take stock and alternatives trades when your strategy signals to do so and avoid taking trades when the conditions are not fulfilled. Exit trades when your strategy states to do so and leave them alone when the exit conditions are not in place. The point here is to be scared to discard your money because you traded needlessly and without following your stock and alternatives strategy.

CONCEPT 5. YOUR NEXT TRADE COULD BE A LOSING TRADE. Do you absolutely think 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 typically occurs after that? It isn’t quite, is it? No matter how positive you might be when going into a trade, the stock and alternatives market has a method of doing the unanticipated. Constantly stick to your portfolio management system. Do not compound your expected wins because you might wind up compounding your very genuine losses.

CONCEPT 6. EVALUATE YOUR EMOTIONAL CAPACITY BEFORE INCREASING CAPITAL OUTLAY. You know by now how various paper trading and genuine stock and alternatives trading is, do not you? In the very same way, after you get used to trading genuine money consistently, you find it very various when you increase your capital by ten fold, do not you? What, then, is the distinction? The distinction remains in the emotional burden that comes with the possibility of losing a growing number of genuine money. This occurs when you cross from paper trading to genuine trading and also when you increase your capital after some successes. After a while, most traders realize their optimal capability in both dollars and emotion. Are you comfortable trading approximately a couple of thousand or 10s of thousands or hundreds of thousands? Know your capability before committing the funds.

CONCEPT 7. YOU ARE A NOVICE AT EVERY TRADE. Ever felt like a professional after a couple of wins and after that lose a lot on the next stock or alternatives trade? All specialists respect their next trade and go through all the correct actions of their stock or alternatives strategy before entry. Never ever deviate from your stock or alternatives strategy.

CONCEPT 8. YOU ARE YOUR FORMULA TO SUCCESS OR FAILURE. Ever followed a successful stock or alternatives strategy just to fail severely? You are the one who identifies whether a method is successful or fails. Your character and your discipline make or break the strategy that you use not vice versa. Like Robert Kiyosaki states, “The investor is the property or the liability, not the investment.”. Understanding yourself initially will result in eventual success.

CONCEPT 9. CONSISTENCY. Have you ever altered your mind about how to carry out a method? When you make changes day after day, you wind up catching nothing but the wind. Stock market fluctuations have more variables than can be mathematically developed. By following a proven strategy, we are assured that someone successful has stacked the chances in our favour.

When you evaluate both winning and losing trades, determine whether the entry, management, and exit fulfilled every requirements in the strategy and whether you have followed it exactly before changing anything. In conclusion … I hope these simple standards that have led my ship out of the harshest of seas and into the best harvests of my life will guide you too. Good Luck.