Why Can’t I Stop Chasing Trades? (3 Steps to Break the Habit)
Why Can’t I Stop Chasing Trades?
One of the most common problems a new trader faces is the habit of chasing a trade…
Just recently, a new student of mine asked me a very common question, which was…
“Joe, why can’t I stop chasing trades?”
Chasing trades is a bad habit to get into for a new Trader, and the secret to breaking this bad habit boils down to (3) three simple steps…
- You have to understand how ‘rotation’ works in the markets
- You have to learn what a good entry looks like
- You have to know how many good trading opportunities you’ll get each day
Learn to master these three steps, and you’ll have no problem breaking the bad trading habit of chasing trades. I’ll show you how to overcome this bad habit in today’s video and this article…
Step 1: Understand “Rotation” to Stop Chasing Trades
Let’s start first by understanding how rotation works in the markets
The Market’s really only move in (2) two ways — they are either trending or range-bound.
If the market is trending, we expect price to rotate back and forth from the top to the bottom of a trend Channel.
If the market is ranging or range-bound, then we expect the market to rotate back and forth from the top to bottom of a trading range. Simple as that.
The first step in Breaking the Habit of chasing trades is to understand that your goal as a trader is to get into a trade near the beginning of this rotation process. (not the end).
You need to focus on entries near the beginning of this rotation is because that’s where the most professionals in the market are going to be entering their trades, which gives you higher odds of success. In other words, you’re trading with the “big/smart money” who move these markets around each day.
In addition, when you enter a trade at the beginning of the rotation you’re able to take a small amount of risk for a very large amount of reward which makes it easier for you to grow your account very quickly
If you break this rule, entering a trade towards the end of this rotation you are now getting into a trade when more experienced professionals are exiting their trades which makes it highly susceptible to a correction or pull back or even reversal. this kills your odds of success, which is why its harder to find winning trades when you enter late in the rotation
In addition to having a lower probability of success, when you enter the trade towards the end of a rotation your profit potential on that trade is significantly less and therefore it takes far more trades to make the money we all want to grow our account quickly.
Step 2: Know a Good Entry to Stop Chasing Trades
Now that you understand why rotation is so important and that we need to enter trades at the beginning of that rotation, The Next Step is to learn what a good entry looks like
In my experience, the most effective way to find a good entry is to look for opportunities to trap inexperienced traders on the wrong side of the market.
for example, if the market is a bullish Trend and I want to buy the low of a bull Channel at the beginning of the Market’s rotation I’ll look for sellers to be trapped in a short position around those low of a bull channel. once I see signs that sellers are trapped around the low, I look for ways to get long when they are exiting for a loss
This technique of looking for entries when other traders are stuck in a losing position is a highly effective catalyst that can shoot your trade quickly towards your first Target and allow you to ride the rest of the move without a lot of pain on the trade
How do I know when traders are trapped/stuck in a losing position?
In a trending market – follow the trend, looking for counter-trend traders to get stuck…
In a range market – look for breakout traders getting stuck…
Want to learn these setups? I teach them both in my free trading course on our website.
Step 3: How Many Good Trades Do We Get Each Day?
Now that you understand rotation and you know the most effective way to trigger a new entry, The Next Step to Breaking the Habit of chasing trades is to truly understand how frequent these opportunities occur each day.
In my experience most new traders chase trades because of FOMO. In other words, they don’t want to miss the move. They chase trades because they have a fear of missing the move!
An easy shortcut to removing that FOMO from your Trading is to truly understand how many of these reliable opportunities are going to set up each day.
For example, I know that (on any given trading day) my favorite markets will usually give me 3 to 6 opportunities to find a good entry at the beginning of rotation. that’s plenty of opportunity to grow my account Quickly, so there’s no need to chase trades and lose money.
One of the nice things about trading the futures markets (which is my focus here at schooloftrade.com) is the use of Leverage.
Leverage allows me to use a small amount of cash to earn a much bigger reward on each trade.
knowing this, I don’t have to force trades or chase trades because I know that only 2 to 3 good trades each day is enough to earn life-changing income.
Once you understand what a good trade looks like, you know that you’re going to get at least three to six of those every day, and you only need a couple of them to make great money it then becomes easy to break that bad habit of chasing trades.
And don’t forget – once you join our trade room as a member, ill be there to help hold you accountable to this plan so you can finally break the bad habit of chasing trades.
