Don't trade willy-nilly--have a strategy for profits

Why do traders get into certain stocks (or their options)? Well ... most of them don't have any idea. And when you don't have any idea why you're getting in, you've got no edge and, thus, no strategy for getting out with profits.

Stocks are volatile and move for a number of different reasons. They are also impersonal -- meaning, they really don't care if you own them or not. For the most part, stocks will be around for a long, long time and can typically be closed whenever you want, for some value.

Meanwhile, options expire and these trades either win, lose or break even on your investment. Even though you should be playing the options game with your "funny" money -- i.e., what you can afford to lose -- many traders forget that they're still playing with real cash.

Options are much more volatile than stocks, so a strategy is especially critical, especially in unpredictable markets where the trading landscape changes in the blink of an eye and profits can quickly become losses.