1. You dont have a plan that specifies chosen markets you are trade, entry into each specific option strategy, trade set up including strike price placement appropriate to your trading purpose and risk profile, and clearly defined and pre-planned exit strategy, a position sizing formula to ensure you spread your risk sufficiently.
2. Hold short options positions to expiry. If you are 80% up on a sold single leg trade then take it particularly in volatile markets, the risk is a retracement of the stock price and lose all your profit
3. Widen spreads for more dollar profit when increasing contracts traded at further OTM strikes would achieve the same dollar result with less risk of your trades becoming part of the action.
4. Overtrade...more than 4-5 positions in a fast moving market may be difficut to manage well
5. Partly exit from multiple contract options trades e.g. 30% of contracts when 25% profit, 30% when 50% profit etc etc..this destroys position sizing formulae and is not congruent with "let your profits run" and puts potential profit at risk should stock turn around..AN EXIT IS AN EXIT
6. Trade outside your circle of competence..if you dont understand a strategy..FULLY...then you should not trade it irrespective of what recommendations you receive..learn it first..then test it then of course trade it.
7. No formal review system with some form of trading journal or diary. This is fundamental in determining whether you have a system problem or a YOU problem if you are getting less than happy results
8. Add extra indicators to your entry component of your plan if you are not getting the results you expect..their is little evidence that there is anything better than a simple plan..the results you are achieving are much more likely to be due to YOU..become an honest trader, your bank balance will love ya!!
9. Short cut your education..short cuts in learning will result in big cuts in profits..if you are interested in obtaining an excellent options education to serve you well for a lifetime feel free to email me personally at mike@horizonprofessional.com and we can discuss how you may get this. Irrespective of who you work with..work with someone.
10. Use all of you capital ALL of the time...sometimes your money is working better for you waiting for the right opportunity rather than 'forcing it' seeing entries that arent entries at all
AND here is a bonus one I was reminded of today by one of our clients....
11. Be unrealistic about your expectations..there are many 'providers' of services out there promising massive returns every time..returns are there for the taking but if you overstretch your expectations you are not likely to make good decisions NOR achieve your trading aims. Find the return that is 'right' for how you trade then and work hard to make is sustainable.
Take care and be profitable
Mike
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