What does "Chasing long is risky" in an uptrend mean?

[iamnewuser911]

Price makes a "thrust" away from an area, then a dip might happen, retracement, also called higher bottom as it failed to go lower, so out of this retracement is cheaper place to get in as risk is less as you know where the lows are. Buying late expands your risk if you putting protected stops below the lows.

Buy as low as you can get in and sell as high as you can, risk is less when you know where the extremes are.

Getting "rich" is based on knowledge, but for trending intraday way to go until you have knowledge or developed patterns that test out well to go counter.

Shouldn't a candle need to close above the highs to signal uptrend? Or do you use close above/below the previous candle close to signal continuation?

 

[Handle123]

Shouldn't a candle need to close above the highs to signal uptrend? Or do you use close above/below the previous candle close to signal continuation?

In a perfect world, yes, but the small breaks for me is usually enough, add the H&S which for me is a very strong signal.

 

[Visaria]

You have to define yourself what trend means, where a trend began , where it confirms, where it ends and what you want to do with all this.

Understanding the trend is only one part of the puzzle. You have to think about where u want to enter (That is even if u do) and where u might set your risk point at and where u might add and how u gonna exit etc etc

 

[iamnewuser911]

In a perfect world, yes, but the small breaks for me is usually enough, add the H&S which for me is a very strong signal.

Here’s a similar chart? Where would you exit if you were long a reversal?

Do you break even the stops after take off?

 

[iamnewuser911]

You have to define yourself what trend means, where a trend began , where it confirms, where it ends and what you want to do with all this.

Understanding the trend is only one part of the puzzle. You have to think about where u want to enter (That is even if u do) and where u might set your risk point at and where u might add and how u gonna exit etc etc

I am trying to trade SR levels, then look for lower time frame breakout and enter on pullback. What you think?

 

[Visaria]

I would be looking at lower time frames for stop and where to add.

 

[Visaria]

Note that I would have had a number of unprofitable trades as well as a few profitable ones if I had been trading that chart.

 

[wrbtrader]

It's an uptrend, so what does this mean? Shouldn't a trend continue? So why is this risky?

Nearby resistance/support? But it has a high possibility to reach there no?

The phrase "chasing" has nothing to do if a trend should continue.

It's a phrase used when someone sees a trade signal (Long or Short) and misses the trade for whatever reason and then the price action develops into a trend.

The trader then has poor discipline and decides to enter a "late trade" into the direction of the trend with the assumption the trend will continue.

Simply, chasing has to do with poor discipline and those that do it will often say their trade was a chaser or they were just chasing the price action.

I myself do it it sometimes but I will reduce my risk via lowering my position size because the trade is at a higher risk. The reason for the higher risk is that the "late trader (the chaser) is a reaction by the trader to a prior trade signal that was missed and you must still respect the same profit targets from the missed trade and not the profit targets of the late trade.

I recommend just do simple statistical analysis to determine if your "chasing" does continue in the direction of trend so that you can determine the merits of "chasing". If your statistics shows that "chasing" has poor results....now you have the proof not to do it unless you enjoy losing money.

Yet, if the stats shows you that "chasing" works for you...I still recommend lowering your position size to better manage the increased risk of entering late trades because market conditions do change and chasing may then not be suitable.

Also, if you have a high percentage of trades that are chasers...try to figure out why you're missing trade entries and then fix that and/or learn the control that emotion (fear) of missing out on profits especially if you're not a profitable trader that does chasing.

 

[JSOP]

It's an uptrend, so what does this mean? Shouldn't a trend continue? So why is this risky?

Nearby resistance/support? But it has a high possibility to reach there no?

Because the uptrend can stop at anytime especially if it's near a previous resistance level. Chasing sometimes is required though to get into the market if the uptrend is really strong. If you don't chase, you are going to be left out when the uptrend takes off.

 

[murray t turtle]

Because the uptrend can stop at anytime especially if it's near a previous resistance level. Chasing sometimes is required though to get into the market if the uptrend is really strong. If you don't chase, you are going to be left out when the uptrend takes off.

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Good point JSOP+ really, every market is different.For example local silver cash, some dealers[chase] pay more than spot, derivatives price in a strong strong long[yearly ]uptrend BUT long downtrend, they pay less than spot+ derivatives price. NOT refering to bid ask-which is in any market.
On that Aussie dollar chart, i trade -invest US stocks, much more than that+ use yearly candlecharts; most stock bear markets last 3 years or less so i'm long usually after 3 years bear -NOT a prediction.I dont chase, but like JSOP notes;@ end of day, last hour have to get in, or out when signal is hit, so pay up for swing/position if have to ......
As far as as ''risky'' ;happens some times LOL, so i cut a loss after JNPR did not keep up trending UP [ monthly all data] past $244.44 area, 1990s+. Some tek stocks/QQQ are still strong,, so ''uptrend can still be a friend''