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Chasing

Entering well beyond your trigger because the move is already running and you cannot bear to miss it.

Chasing has a defining feature: the entry is worse than planned, so the stop is either far away or in the wrong place. Risk-reward collapses even if the direction is right, and the trade that works still pays badly.

The driver is anticipated-regret rather than analysis. The film of the move happening without you is more vivid than the equally likely version where you buy the high and get stopped.

The rule is mechanical: define a maximum distance beyond the trigger at which an entry is still valid, and skip everything past it. A missed move costs nothing. See fomo.

Related: fomo, anticipated-regret, chasing-losses, sending-it

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

The mood around a market cycleA price path rising to a peak and falling to a trough, labelled with the feelings usually attached to each stage of the round trip.PRICETIMEOPTIMISMEXCITEMENTEUPHORIAANXIETYDENIALPANICCAPITULATIONDESPONDENCYHOPEOPTIMISM RETURNSMAXIMUM FINANCIAL RISKMAXIMUM FINANCIAL OPPORTUNITY
The mood around a market cycle. The same price path labelled with the feelings that tend to travel with it, from optimism up to euphoria and down through panic to despondency. Confidence is highest where the most money is already committed and prices are highest.

Educational only, not advice. Spotted an error? Post in Site Feedback.