Buying A Call
One of the more common mistakes that beginners make is with buying call options. Some might ask what is the big deal. It’s a safe place to be in. You can buy low and sell high. Many people do this. However, there is a downfall to this. The biggest being the money. Most people don’t make good money long-term by doing this. Many buy into the false premise that it will work. Most of the time it doesn’t. Don’t be fooled by this.
The other issue arises when your stock option doesn’t do anything. When it just sits there, you have no choice but to do the same. At the end of the day, you will end up losing money.
Not Having A Plan
This happens more then you know. There are any who claim they are really good at the market, and this might be so. However, some don’t know when to get out before the time expires. Not having a good exit strategy is the kiss of death in the trading world.
Don’t rely on your emotions. Don’t just have an exit plan for when things go downhill. Have one for everything. You need to have a plan for when things go good or bad. Planning ahead is the name of the game in the trading world.
Staying Liquid Is The Key
Some people make the choice to trade options which aren’t liquid. When you buy or sell liquid options, you won’t create major movement in the market. You won’t decrease your odds or devalue your earnings.
This is what happens when someone tries to re-compensate. The person puts more money down in order to get back the money they lost. This is a mistake that many make. It’s tempting to buy more and lower the cost later. If it looked good at 90, it’s going to work at 60.
If you face this situation then cut your losses. Walk away. It’s the same as gambling. There are those who don’t know when to just walk away. Never double up. If you lost money on the first few go-arounds, then just leave it. Some options are not worth buying or selling. If you want more tips with trading options, go online. You can also ask a professional for their input. They know better then anyone.