Hey traders,
The other day, I talked to you about one of the most frustrating parts: making mistakes.
And in nearly 40 years of trading, nobody has made more mistakes than I have.
Monday I gave you a list of some of the mistakes I’ve made in my trading career.
Today I want to go over one of those mistakes with a personal story — and more importantly, how you can avoid making the mistake yourself.
Mistake #6 – Don’t “sleepwalk” through your trades
Today I’m starting with Mistake #6 from my original list.
You might know that I love credit spreads and I hate debit spreads. It goes hand in hand with why I love selling options and more often than not, I hate buying them.
Well, a funny thing is on the Schwab platform, when you set up your trade as a credit spread… I like to put the order in on a limit of just the net credit.
Sometimes when you change that net credit on the Schwab platform, the platform will default back to a debit spread.
So I put in the amount of my limit and I guess I was in a little bit too much of a rush or maybe I wasn’t paying enough attention. In any case, it ended up getting executed as a debit spread.
Now, luckily, I went back and looked at the order after I placed it — sometimes I don’t even do that.
And that’s when I realized I had placed a debit spread instead of a credit spread!
Luckily it was only 5 minutes later and I closed the trade out — believe it or not, I had actually made a few cents.
After closing the wrong order, I went back in and entered it correctly.
Lessons Learned
What lessons can we take from my mistake? There are a few obvious ones:
- Pay Attention – You don’t want to sleep walk through your trades. Make sure you are paying attention and it something seems off, don’t place the trade!
- Check Your Trades – After you place your trade, go back and look at it. Make sure it’s doing what you expect it to do.
- Know Your Platform – Every platform is slightly different. It pays to known your platform inside and out so you never have to guess at what you’re doing. A lot of trading platforms have simulated trading or paper trading. I highly suggest you take advantage of that.
Stay tuned.
I’ll be back to cover some more of the common mistakes and the best ways you can avoid making them.
Trade well,
Jack Carter
P.S. Make no mistake: My #1 Defense stock is getting huge injections of government capital and I believe it could soon skyrocket. Click here to grab the ticker!
