FOMO on the spike that already happened

[Fairman]

FOMO on the spike that already happened

A sharp move appears, and price runs ten pips in seconds. The scalper watching feels the urge to jump in, convinced the move will continue. Entry happens at the worst place: late, with a wide spread and a stop that is now far away.

The psychological trap is the feeling that something is being missed. But the opportunity was the early part of the move, and by the time the signal is clear to the eye, the risk-reward has deteriorated.

A concrete rule helps. If price has moved more than a set amount since the signal level, skip the trade. Define the amount in advance, tied to the target, such as no more than a quarter of the expected profit.

Also, define what counts as a valid setup. If the move did not come from a defined pattern, there is nothing to chase.

Missing a trade costs nothing. Chasing one costs the spread, the slippage, and often the stop.

Keep a log of missed trades and how they would have turned out. It tends to show that chasing performs worse than skipping.

How often does chasing a move produce a worse result than waiting for the next setup?