How I Avoid Chasing Trades in the Forex Market
It’s not even 4:30 A.M., and I’m pretty sure there isn’t enough Earl Grey tea in all of Florida to get me going. But I promised myself I’d be up early, so here I am. As I scan the charts, I can see the USD/CHF is still on my radar, and the Canadian dollar is continuing its slide. My first thought, and my first warning to myself, is simple: don’t revenge trade.
It’s a powerful temptation. After you miss a big move or take a couple of losses, the urge to jump back in and “fix it” is immense. I’m telling you this as much as I’m telling myself. Just because the daily chart is dropping doesn’t mean I should force a trade. Any new setup I find on the 30, 60, or 180-minute charts has to stand on its own two feet. That’s the first rule of this .
The Anatomy of a High-Risk Trade
I spot a potential opportunity on the 240-minute chart, but it's a chart of the Aussie on the 60-minute timeframe that really catches my eye. It looks like a classic momentum setup—a sideways Wave, a triangle pattern, all the things we’ve talked about. By now, we’re on the same page, so I won’t spell out every detail.
But I’m not taking this trade. Not yet, anyway. And it’s the “why” that matters.
It’s not because the pattern is wrong or the MACD histogram isn’t confirming the move. The reasons are more subtle. First, the breakout is happening just below the 0.7400 level, a major psychological barrier. The initial move was only 18-20 pips below it, and this second-chance entry is just five or six pips away. Going long that close to major resistance is asking for trouble. It's just too risky.
When you're , especially in something as fast-paced as , a good entry makes everything easier. A bad one makes an already difficult game nearly impossible. In situations like this, you have a few choices. You can wait for the price to break through and trade at a level like 0.7405 for confirmation, or you can check the longer-term charts for a better opportunity.
Not All Setups Are Created Equal
The Swissy (USD/CHF) and the Euro (EUR/USD) are showing similar patterns this morning. The Swissy broke down on the 30-minute chart right above the 1.3200 level. Here, your options are to pass on the trade, set a sell stop at 1.3195 to confirm the break, or use the trend lines to play the breakdown.
The Euro, however, had a breakout around 4:00 A.M. that blew through multiple trend lines with MACD confirmation, all happening below the 1.1900 resistance. This one didn’t have the same “00” issue, making it a cleaner setup.
I’m showing you these three to make a point. They all offered a second chance to get in, but these “gifts” are often traps. A late entry has to be just as valid as the original one. If the market dynamics have changed or the initial profit targets have already been hit, you have to have the discipline to walk away. This is where you decide how much risk you’re willing to assume. Chasing a trade is the difference between stepping into the ring with an amateur and going up against a heavyweight. You might win both, but you know which one is more likely to leave you bruised.
Shifting from Chasing to Waiting
My goal has always been to give you the tools I use every day—trend lines, moving averages, MACD, and market psychology—so you can learn to make your own decisions. Successful isn’t about memorizing canned setups; it's about learning to think for yourself.
As 8:00 A.M. approaches, I see that the best moves for the morning have likely already happened. Chasing them now would be a mistake. So, I shift my focus. Instead of looking for breakouts, I start looking for pullbacks and bounces. I’m going to let the prices come to me.
I find a great example on the EUR/USD chart. The price is pulling back to a support level that lines up with both the Wave and the 0.500 Fibonacci level at 1.1868. This is a trade with multiple confirmations—a high-probability setup. My plan is straightforward: set a stop-loss just below the Wave and target 1.1882 and then 1.1896 for profits.
Simultaneously, the USD/CHF is bouncing off a resistance level just a few pips shy of its 0.500 Fibonacci level at 1.3192. It’s a strong entry point that positions me short just below the significant 1.3200 resistance. Just like clockwork, the follow-through happens right in the hot zone.
With those moves captured and most of the morning’s action behind us, it’s a perfect time to wrap up. After all, trading after noon on a Friday is rarely a good idea. The London market is closed, and the U.S. market is the only game in town. The week is done. Go enjoy it.
