Traders often struggle with missing a trade and getting in too late, also known as chasing.

Chasing a trade. We’ve all done it. We see the trade, nice huge candle, good volume and we jump in, excited about the upcoming opportunities. What always seems to happen? The dreaded pullback.

Almost immediately, right?

I mean, how did the market know YOU were going to get into the trade, just so it could reverse and you could get stopped out? Happened to me in the past more times than I would like to admit. If you can look at a stock and say to yourself, “I should have gotten in there, I should have gotten in there, and I totally should have gotten in there… you end up “shoulding all over yourself.”

If the thought “I am chasing this trade” pops into your mind, that’s exactly what you are doing. Wait, pause and see what happens next. There will always be a continuation pattern or a retracement coming up in the very near future.

PLAN THE TRADE
Planning the trade. Many companies will teach you to trade and react to a stock based on what it’s doing now. Well, that’s not exactly the best frame of mind. The market is always moving. How do you catch something that’s always moving?

Or better yet, how do you shoot a moving target? You don’t aim for where it’s at now; you aim for where it could go. If you look at a stock or chart and make a decision based on what it’s doing right now, you are just a few steps behind. The better trader will look at a stock and ask what will it do, or what could it do and write a plan for the future. Usually a good trader will have three plans. If stock XYZ does this, I will do this… if it does that, then I will do that… and if it does this, then I won’t do anything at all.

Remember, great traders find reasons not to take trades. If the stock does exactly what you want it to do, you must follow your plan! Failure to plan is planning to fail.

CONFIRMATION
What is confirmation? What does it look like? How do I know if a trade is confirmed? Simple. When there is literally nothing holding you back on the trade. Knowing what type of confirmation to look for, that’s what takes training. It will boil it down to what I teach as the 5 steps of confirmation. Support and resistance, candlesticks, chart patterns, moving averages and indicators (Stochastic, MACD, RSI, ADX, Bollinger Bands).

For example, you have a plan to take a trade bullish. If everything is pointing toward a bullish trade, then take it. If it’s not, then wait. Candlesticks, in my opinion, are the most important part of that confirmation process. Wicks are incredibly important as well, in showing the sentiment of the buyers and sellers and how they feel, about a specific stock.

COMMUNITY
Community. This is the easier part of trading. Find a good community of traders, a group of people who are positive, focused, determined and of course, actively trading. Post your trading plan for every trade you do. It’s called accountability. Have others critique your trade, your analysis, offer feedback and learn. If you want to test your skills as a trader, post your analysis for hundreds, or thousands to see. I bet you will make sure you have a pretty solid trading plan then.

VIRTUAL TRADING
Lastly, I suggest virtual trading for one year. Even if you have traded before in the past but you are still a break even trader, ingrain now the conditioning of a professional trader. Pretend in your heart of hearts that it is real money. Would you do the exact trade you are doing now, if it was with real money? This way, as a trader, you can learn from your mistakes and build some trading rules around specific scenarios. Physically write those rules down, learn from them and implement them into future trading plans.

By doing this, you will learn not only when to open a position but you will truly learn how to plan your trade and trade your plan.