options trading mistakes to avoid
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DESCRIPTIONhttp://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/ Options Trading Mistakes to Avoid Making money in options trading has to do with picking the right trades and avoiding several basic mistakes. We would like to offer up a handful of options trading mistakes to avoid. These include Limiting yourself to out of the money call options Working with a single all purpose options trading strategy Not having a clearly defined exit plan for all trades Changing your trading strategy in a moment of greed or panic Trading options on equities with poor liquidity Forgetting about dividends You can make money buying options and you can make money selling options. And you can lose everything with a couple of bad trades. Here are our thoughts on options trading mistakes to avoid. Options Trading Strategies There are many potentially profitable options trading strategies. There are two basic options trading mistakes to avoid in regard to trading strategies. One is that if you are working with a strategy appropriate for the situation stick with it. The other is that not all strategies are appropriate for all markets and all market conditions. Some traders only focus on buying calls on out of the money options. This can be very profitable when the underlying stock goes up substantially in price. Unfortunately, out of the money options are out of the money for a good reason. A lot of smart people have decided that the stock in question is going nowhere. There is a lot more opportunity in the options market than just looking for promising out of the money call contracts. In a very volatile market a popular strategy is a long straddle. The trader buys both a call and a put on the same stock with the same expiration date. The rationale is that if the market is very volatile it is bound to go up or down sufficiently to render a profit in one direction or the other. However, in a more normal market there is typically only one direction in which a stock is likely to go and in those cases one is simply wasting money on buying either the put or the call. This is one of the common sorts of options trading mistakes to avoid because it simply increases the overhead of trading that you have to surpass in order to gain a routine profit. Picking an Exit As You Enter Greed and fear are the eternal enemies of all traders. Two of the most common options trading mistakes to avoid are staying to long in a trade and losing a profit and getting out too late and absorbing big losses. When you go into a trade you should have a precise plan for getting out. If you will be happy with a thirty percent profit on your trading capital then get out of the trade when you have that. Likewise if you are willing to absorb a thirty percent loss and no more, get out before your loss gets worse. Otherwise fear and greed take over and there go your profits.
- 1.Options Trading Mistakesto AvoidBY: WWW.OP T IONS -TRADING-EDUCAT ION.COM
2. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Making money in options tradinghas to do with picking the righttrades and avoiding several basicmistakes. 3. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/We would like to offer up a handfulof options trading mistakes toavoid. These include 4. Before We ContinueClick the links below to get yourFREE training materials.Free Weekly Investing WebinarsDont miss these free training events!http://www.profitableinvestingtips.com/free-webinarForex Conspiracy ReportRead every word of this report!http://www.forexconspiracyreport.com 5. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Limiting yourself to out of themoney call options 6. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Working with a single all purposeoptions trading strategy 7. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Not having a clearly defined exitplan for all trades 8. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Changing your trading strategy in amoment of greed or panic 9. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Trading options on equities withpoor liquidity 10. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Forgetting about dividends 11. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/You can make money buyingoptions and you can make moneyselling options. 12. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/And you can lose everything with acouple of bad trades. Here are ourthoughts on options tradingmistakes to avoid. 13. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Options Trading Strategies 14. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/There are manypotentially profitable optionstrading strategies. There are twobasic options trading mistakes toavoid in regard to tradingstrategies. 15. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/One is that if you are working witha strategy appropriate for thesituation stick with it. 16. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/The other is that not all strategiesare appropriate for all markets andall market conditions. 17. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Some traders only focus on buyingcalls on out of the money options.This can be very profitable whenthe underlying stock goes upsubstantially in price. 18. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Unfortunately, out of the moneyoptions are out of the money for agood reason. A lot of smart peoplehave decided that the stock inquestion is going nowhere. 19. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/There is a lot more opportunity inthe options market than justlooking for promising out of themoney call contracts. 20. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/In a very volatile market a popularstrategy is a long straddle. Thetrader buys both a call and a put onthe same stock with the sameexpiration date. 21. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/The rationale is that if the market isvery volatile it is bound to go up ordown sufficiently to render a profitin one direction or the other. 22. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/However, in a more normal marketthere is typically only one directionin which a stock is likely to go andin those cases one is simply wastingmoney on buying either the put orthe call. 23. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/This is one of the common sorts ofoptions trading mistakes to avoidbecause it simply increases theoverhead of trading that you haveto surpass in order to gain a routineprofit. 24. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Picking an Exit As YouEnter 25. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Greed and fear are the eternalenemies of all traders. Two of themost common options tradingmistakes to avoid are staying tolong in a trade and losing a profitand getting out too late andabsorbing big losses. 26. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/When you go into a trade youshould have a precise plan forgetting out. If you will be happywith a thirty percent profit on yourtrading capital then get out of thetrade when you have that. 27. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Likewise if you are willing to absorba thirty percent loss and no more,get out before your loss gets worse.Otherwise fear and greed take overand there go your profits. 28. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Basic Options TradingMistakes to Avoid 29. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Do not get into a situation whereyou cannot get out of a trade. Thisis what happens when you tradeoptions with poor liquidity. Avoidthese situations at all costs. 30. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/And, remember that lots of stockspay dividends. The value of youroptions contract will changedramatically when the dividend hasbeen paid. 31. By:http://www.options-trading-education.com/24078/options-trading-mistakes-to-avoid/Remember to calculate dividendswhen trading stock options.