After 5+ years of running TradingTheTrend and working with thousands of traders, we've seen the same mistakes over and over. Beginners almost always make these. The good news is they're all fixable once you're aware of them.
Here are the 5 biggest mistakes and exactly how to avoid each one.
Buying cheap, far out-of-the-money options
This is the #1 beginner trap. You see a call option for $0.15 and think "it's so cheap, even if the stock moves a little bit I'll make a ton." The problem is that cheap options are cheap for a reason. They need a massive move in the stock to be worth anything. The probability of that happening is very low.
Buying a $0.15 option and watching it expire at $0.00 feels like "only" a small loss. But when you do it repeatedly, those small losses add up fast. And you're training yourself to gamble instead of trade.
Buy options that are near the money or slightly out of the money. Yes, they cost more. But they have a much higher probability of being profitable. A $3.00 option that goes to $6.00 is a 100% return. You don't need lottery tickets to make money trading options.
Not buying enough time
Beginners love weekly options because they're cheap. The problem is weeklies have aggressive time decay. If the stock doesn't move in your direction within a day or two, your option is already losing significant value just from the passage of time.
This creates a situation where you can be right about the direction and still lose money because the stock didn't move fast enough.
Give yourself at least 2-3 weeks on expirations. If you want to catch the whole move, buy even more time. Time is your friend. As long as your setup is still valid, having time on the contract means you can hold through normal pullbacks and let the trade work out instead of getting squeezed by theta.
No exit plan
You buy a call because it "looks good." The stock goes up 5% and you think "it could go higher." It pulls back. Now you're break even. It drops more. Now you're down 30%. You hold because you "know" it'll come back. It doesn't. You sell at a 70% loss.
This happens constantly. The root cause is having no plan before entering the trade.
Before every single trade, decide your profit target and your stop loss. Write them down. "I'm buying at $3.00. I'll take profit at $6.00. I'll cut it at $2.00." Then actually follow the plan. Having a system beats having feelings every single time.
Risking too much on one trade
You have $2,000 in your account. You find a trade you love. You put $1,500 on it. That's 75% of your account on one trade. If it works, you feel like a genius. If it doesn't, you've just blown your account and you're done.
The math is brutal. If you lose 75% of your account, you need a 300% return just to get back to where you started. That's almost impossible.
Never risk more than 1-5% of your account on a single trade. With a $2,000 account, that's $20-$100 per trade. Yes, the gains will be smaller. But you'll survive your losing streaks, and surviving is the prerequisite to eventually thriving. Read our full risk management rules for more on this.
Following signals without understanding them
You join a signal service. An alert comes in. You buy it without looking at the chart, without understanding the setup, without knowing why the trade was taken. When it goes against you, you have no idea whether to hold or cut it because you never understood the thesis in the first place.
Blindly copying trades makes you completely dependent on whoever is sending the signals. If they have a bad streak, you have a bad streak and you learned nothing.
Use signals as a learning tool, not a copy-paste machine. When an alert comes in, look at the chart. Read the reasoning if the service provides it (good ones do). Ask yourself "does this make sense to me?" Over time, you'll start recognizing the same patterns and setups on your own. That's the goal. Signals should make you a better trader, not a dependent one.
The common thread
Every mistake above comes from the same place: acting on impulse instead of following a process. Trading is a skill, not a casino. The traders who treat it like a business, with rules, plans, and discipline, are the ones who stick around.
The ones who gamble, chase, and wing it? They're the 90% who blow up their accounts and quit within a year.
The shortcut to avoiding these mistakes: Surround yourself with experienced traders who model the right behavior. When you see someone with a 5+ year track record making disciplined entries, managing risk properly, and explaining their reasoning on every trade, those habits rub off on you. That's what our community is built around.
Learn from experienced traders, not from expensive mistakes
Join our free Discord and see how disciplined trading actually looks in practice.
Join Free Discord →