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Options Trading

Top 10 Lists to Help Avoid Investing Mistakes

Options TradingTradeKing

In honor of David Letterman’s final show last week – I’mstill sentimental! – here’s a trading-themed riff on his top-10-list concept.Starting from #10, then:

10. Top 10 Investing Mistakes toAvoidstarts with a recent list by Eve Kaplan on USA Today. These mistakes are moreoriented towards investors who rely on traditional advisors, but many arerelevant to all traders.

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9. 3 Biggest Investing Myths byMotley Fool Staff. This post gathers the advice of 3 investing experts, warning youagainst assuming maximum risk always equates to maximum return; loving dividendstocks too indiscriminately; and assuming you can’t start investing because youdon’t have “enough” money.

8. The 10 Most PopularInvesting Excuses (And How to Talk Yourself Out of Them) by TradeKing Advisors CEORich Hagen. Making excuses to yourself is always a signal that you’re headedtowards a mistake (and on some level know it). Bookmark this one so you cantalk yourself down from the ledge.

7. 7 Investing Mistakes and Howto Avoid Them by Investopedia Staff. Buying stocks just because they’re cheap,over-trading and misusing margin…these are all excellent warnings againstcommon pitfalls.

6. 10 Mistakes Even Savvy StockInvestors Make by Forbes Staff. Forgetting to invest in value, getting too big for yourbritches, chasing yield…we’ve all been there, and most of us have gottenburned.

5. Cheap Options = LotteryTickets byTradeKing “Options Guy” Brian Overby. Okay, this is technically a departurefrom the list-of-lists concept. But this classic post does address a primemistake that many options traders indulge in to their cost: buying super-cheapoptions simply because they can afford to. Brian explains why, unfortunately,you usually get what you pay for with cheap options and suggests alternatestrategies that may produce better results.

4. 8 Biggest Mistakes InvestorsMake by Kiplinger’s Staff. This slideshow highlights many of the emotion-fueledmistakes we can make while investing, like freaking out at market drops orgetting swept up in bubbly euphoria. Keep cool, traders!

3. Top 10 Mistakes New OptionsTraders Make,also by TradeKing’s Brian Overby. This has become a classic among optionstraders, new and seasoned alike. If you trade options, do yourself a solid andcheck out this list.

2 and 1. Dispatches from the Trenches, Part 1 and Part 2. Yes, TradeKingers, the topspot is reserved for you. This two-part series gathers lessons learned fromTradeKing clients and includes many pearls of wisdom. Definitely worth a readover your next coffee break.

Here’s to bypassing investor mistakes – and to Dave L.’sretirement!

Be Good,

Don Montanaro

CEO, TradeKing Group

Follow Don on Twitter and hone your skills at TradeKing All-Stars. Youcan also follow TradeKing on Twitter, Facebook, Google+ or YouTube.

[image: top 10 gold winner by SamChurchill on Flickr]

Options involve riskand are not suitable for all investors. Click here to review the Characteristics and Risks ofStandardized Options brochure before you begin trading options. Optionsinvestors may lose the entire amount of their investment in a relatively shortperiod of time.

Multiple-leg options strategies involve additional risks and multiplecommissions, and may result in complex tax treatments. Please consult your taxadviser. Implied volatility represents the consensus of the marketplace as tothe future level of stock price volatility or the probability of reaching aspecific price point. The Greeks represent the consensus of the marketplace asto how the option will react to changes in certain variables associated withthe pricing of an option contract. There is no guarantee that the forecasts ofimplied volatility or the Greeks will be correct.

Trading has inherent risk due to systemresponse and access times that may vary due to market conditions, systemperformance, and other factors. An investor should understand these andadditional risks before trading.

Investments involve risk, losses may exceed theprincipal invested, and the past performance of a security, industry, sector,market, or financial product does not guarantee future results or returns.TradeKing provides self-directed investors with discount brokerage services,and does not make recommendations or offer investment, financial, legal or taxadvice. You alone are responsible for evaluating the merits and risksassociated with the use of TradeKing's systems, services or products. If youhave additional questions regarding your taxes, please visit or consult a tax professional. TradeKing isunable to provide any tax advice.

TradeKing is not affiliated with, does notsponsor, is not sponsored by, does not endorse, and is not endorsed by thecompanies mentioned above or any of their affiliated companies.

At the time of publication and in the precedingmonth, TradeKing and/or Donato Montanaro did not have ownership greater than 1%in any stocks mentioned; did not have any other actual, material conflict ofinterest known at the time of publication; have not received compensation froma public offering nor from investment banking services related to any companiesmentioned within the past 12 months, nor expect to receive any in the next 3months; nor engaged in market making in the securities mentioned.

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