Realistically, signals are only an analytical and
forecasting tool. They simply help traders develop and use their own trading
system, based on their own personal risk tolerance.
Running out of
patience in the middle of a pattern while waiting for confirmation of a trend
change.
Traders have to give patterns time to unfold before they
jump in. This requires discipline, and a solid understanding of the many ways patterns
can unfold.
Over-relying on indicators to precisely spot turning points.
Markets can stay overbought or oversold a lot longer than
traders think.
Flawed logic that a trend will remain until an event changes it.
This false assumption puts traders on the wrong side of the
market more times than not, especially at major turning points.
Buying options with
too little time left to expiration.
The as time moves closer to expiration, it begins to
accelerate and the chances of success diminish.
Flawed logic that
news events drive market trends.
The opposite is true in that economic, political and social
events lag market trends.
Buying puts or calls
that are way "out of the money," with no other complimentary transactions.
Unless your timing is absolutely perfect, which is extremely
unlikely, your chance of success is low.
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