Simple Common Mistake Options Traders Do and Face Unwanted Losses and Lost Capitals

Finance - Stock Market - Trading- Mistakes

Common Mistake Of Options Traders

Option trading is not easy as it seems and how new trader or traders who are in the market see it. It is completely different than what you think so it is said that, Trade the market and not what you think , see outside So most of the new option trader makes mistakes around this sentence which means,

• Trader trade what they think
• Trader trade for what they want
• Trader trade what they listen about market, profit/loss and their possibilities.
• Trader trade what they see on social media.

So base on these below are list of simple mistake option trader do and face losses regularly and lost capital.

1. Option traders mistakes : Not attending full market since morning to afternoon

Option traders start their trading journey with this mistake and live it until they have face losses. Once you started facing losses you don’t understand it and in recovery mind you forgot to learn it. Most of the trader who starts option trading doesn’t attend market for full time since start to end. They just get up and look for opportunity from others and do trade, in that process they have earn profit but mostly face the losses and this is because of not knowing how market is, for all the time from morning to evening. Market is different every day and can change any time in whole day.so traders must know this before start option trading. You have to login to your computer at 9:00am to 3:30pm and see the market carefully and take notes. Then when you know basic things about market then you should see how trading works and how it is done in this market and then you should start learning it by your way. When you learn things then practise them with live market and then you should start live option trading slowly. Market is different for morning session, afternoon session and in end session when market is closes. Trader must know about and practise in all sessions to make your trading effective and profitable.

2. Option traders mistakes : copy others profit and hurry to trade

If traders start trading because of others then they go to trade options directly without any preparation and this is the place they make mistakes because when you trade directly then whatever result is you will get from that trade your unknown for it. So you keep trading on this mind set and planning and face losses and end with losing all your capital. You don’t know hot take position, how to use capital, how to manage risk and how to use stop loss just go and trade to make profit and this becomes your root mistake and never let you successfully make money in option trading. You do trades because of your friends or social media.

3. Option traders mistakes: not learning trading its things, take Notes

Trading is not simple thing like joke even experts face losses so then who you are in front of them. The biggest mistake is not learning market and option trading because trading depends on market and you don’t learn the roots then its guaranteed you face losses. First trader should have to learn market and how it works. Then trader should learn trading and how it work. What things you need to trade like:

• Broker and trading software and tools
• Charts and Technical analysis
• Risk management and stop loss Trade Planning, skills and strategies

When you learn and practise then you will be able to trade yourself to make money from options. Taking notes : not taking notes while reading, watching and learning things about trading because whatever you do in life taking notes is best stool makes you better in what you are learning and doing otherwise you as human being forgot it next day and can’t be effective in that. Trades needs to take note because market is not same and you are going trade in it. Think how much it is risky for you, do you understand? For example you can’t trade in nifty 50 like Nifty bank. So here taking notes from all kinds of learning tells you these small but effective things which will change your trading.

4. Option traders mistakes: Not doing live trading practise

When trader start option trading either they trade directly or learn but they don’t practise their trading with live market and makes small mistakes repeatedly and lose big money making opportunities and that why many traders fails to make profit even market is tradable and having opportunities because of practise. Practise makes you better every time you trade. You as an option trader need to move fast otherwise you lose opportunities because market is different and this is advantage of trading means you can trade in different market conditions like it go up or down doesn’t matter for you. You need to master the software, trading terminal, develop your skills, test new trading ideas and strategies so can be profitable most of time. So as trader and in it option trader you have do practise what you have learned with live market and don’t depends on limited things to make money in option.

5. Option traders mistakes: capital, lots, profit/loss and risk calculation

When traders directly starts option trading they just go with trading flow and lose money even option trading is not much hard. If you trade options directly or unknowingly then you use more capital than required, you buy multiple lots, you take more risk than calculated to make profit and this is how traders start losing money in options by facing losses either they may small or major once and at end lose all the trading capital. If you are new trader or facing losses in the option then first you have to use limited capital which required for one lot. You must start with one lot. Keep small profit margin and set stop loss according to your risk calculation. So this makes your trading controllable and effective. If you know this and control then profit in option is yours.

6. Option traders mistakes: aggressive trading, loss recovery, overtrading

Aggressive trading: Starting direction option trading makes option traders to face unnecessary and unwanted losses and the reaction or reflection of it they try to do aggressive trading and in that process they lock themself and face loses again and again so when they realise it this is not the proper way of trading till then their capital gets over. This is the bad thing for trader because when you realise something and not having capital to trade because you understood trading properly but can’t do it. Trader does aggressive trading to beat market and face major losses because of they don’t understand market is different and not in your control focus on what you control as a trader and not the market.

Over trading: this happens because trades trade in aggressive mind set and being aggressive is one of emotion of human feeling in this state they repeat an action without thinking to just get results so same thing happen in trading trader do trade in aggressive mode and face losses. Here you don’t know market is different and changes so trader find to trading position ever they are in loss because they are aggressive so they trade by thinking this is opportunity but actually market is changing and again they face losses over losses. Over trading doesn’t happen automatically it happens only because: to make more and more profit same time • To recover previously made losses by trader.

Immediate loss recovery: Loss happens in option trading because trader trade options directly here trader doesn’t understand basic thing, trading option is very risky and can kills your whole capital. Trader trade option directly and make losses and to recover that losses they trade again and again without thinking properly, without plan and without doing their trading and market analysis. So this becomes one of the primary big mistakes for option traders.

7. Option traders mistakes: analysis and planning of trading

Leaning is not that which you just read or see online implement it. It’s a systematic process and traders do opposite to it fool themselves to fail and makes this is reason of losses. First thing is not writing things on your book, not analysing things properly so this create blank places in your understanding about what you are watching, reading or learning. Means when trader do first trade they don’t see it carefully how it happened by your way or accidently, how they made the profit or loss, what was the trading method or strategy, how they did this trade is proper or just right because of markets direction. Next time these things come in trade and the make losses and couldn’t find reasons behind it.

So when trader trades these blank places comes in their live trading and they don’t understand what to do because this affects their sudden decision making ability and they take wrong decision and miss the advantages of opportunities. This happens but trades don’t understand this because they don’t do analysis of what they want to do and how to do it. Doing analysis makes them to find mistakes and correct them. This creates alertness in them when trade next time. Planning of trading is most important thing and most of trader don’t do this and fails to make consistence profit and faces losses. Trading is not like your wish or hobby suddenly you want to do it then do it. It needs proper planning from previous day as per the market condition. You trade market any time as you want trader should have do analysis and plan the trade and when market comes in that zone then you trade then and then only you will get profit and this process makes you effective trader. So do analysis about you, your trading. Plan it properly and then do it.

8. Option traders mistakes: taking 100% risk

Starting options directly means they are taking more than calculated risk and that is 100% and this is not good at beginning for new trader also who are trading option from some time because it can kills your whole capital and you can’t learn any single thing from this event. If you trade systematically then you will take risk by calculation and limit your loss and in that process you learn how to calculate risk and manage it and next time you are more alert and become effective when you trade. Even you have loss then also it’s in your limit and you learn practical things, to make option trading effective and this doesn’t kill your all capital.

9. Option traders mistakes: Comparison, sharing with others

Because of technology and internet things trader can see whatever is happening in market and outside the market on single screen and so trader see others are doing and how they are making in option, then at least once in your mind comes to copy them and if you do so then if you get result then new trader repeat it again and again to make money in option but they forgot you can’t trade option like that. All the people have friends and because of social media traders have connected to many group like about finance, stock market investment and trading and because of this connection they comes in trading. If your foundation is wrong then how you make progress in right direction thinks about. Traders get into things and try to know them directly without any background and fill their mind with incomplete information and here their loss journey begins

• Seeing others profit and start option trading.
• Copying other’s trading style and technique.
• Using same capital and taking same risks as others.
• Share, compare and discuss your trading related things and profit on social media groups

10. Option traders mistakes: setting big targets and profit margins

When trader trade option directly depending on others they just follow and do what other option traders are telling them in this process trader earn profit and this is not wrong but you are taking risk for which you are unknown and trading, in this you don’t learn anything and needs depends on others all time. You can’t learn how and where to take position. How to set profit margin How to calculate risk and how much should you take. So when trader start trading themself they take wrong position and set wrong profit margin with a big uncalculated risk and at end face losses. In all this they don’t understand how to trade this market themselves. When traders set wrong profit margin with wrong position then they needs to wait till target is hit and indirectly this becomes big risk and they face losses if market changes in that period. For successful profitable trading traders need to take position is at right time and place Set right profit margin with calculated risk and set stop loss and be alert if needed then change your stop loss and profit margin this can save you from loss. Traders need to change above things as per market direction because market changes otherwise loss is fix simple.