Hello traders! This week I’d like to discuss a fault that nearly every trader has done at least once in the past – that is, chasing a trade. What is chasing a trade? It’s when you take a less than optimal entry, sometimes far away from your previously defined supply or demand levels.
Over the course of your trading career, there will be many trades that you miss – meaning that price has already left a good level to enter your position. This is an inevitable fact in trading! We can’t possible see or take every trade that exists. In numerous Lessons From the Pros newsletters, we have covered what constitutes a good level of supply and demand, so you should be well aware of what constitutes a good level, and that we prefer to take trades in these levels. But entering the trade is only one-third of the job as a trader. We also have to be aware of where our stop loss and profit target must go. In fact, we must know all three parts of the trade before we enter the trade! This is a very common mistake that new traders make – that is, entering a trade without having the entire trade planned out ahead of time.
So where do your stop loss and profit targets go? The very basics are that (in a long trade) your stop loss goes below the demand zone that you used to enter the trade, and your profit target is just under the previous supply level you are targeting. On… Continue Reading
