A Time to Chase ?

[webercom]

As a short term trend trader… Do you ever chase the market?
The impulse to chase a sharply moving market stems from the “fear of loosing out” ( my thanks to Mark Douglas ). These impulse entries have got me into a lot of trouble and have lead me to eventually make my trading rules.
In spite of this I feel there are times when it is sensible to chase the market. Times when we are likely or hope to see a big move before a pullback. Times when the market is humming, volumes are high, ticks are staying above ± 600 and gut says get in now.
Do you ever chase the market and if so under what conditions ?

[DbPhoenix]

Originally Posted by webercom As a short term trend trader… Do you ever chase the market? The impulse to chase a sharply moving market stems from the “fear of loosing out” ( my thanks to Mark Douglas ). These impulse entries have got me into a lot of trouble and have lead me to eventually make my trading rules. In spite of this I feel there are times when it is sensible to chase the market. Times when we are likely or hope to see a big move before a pullback. Times when the market is humming, volumes are high, ticks are staying above ± 600 and gut says get in now. Do you ever chase the market and if so under what conditions ?

You are correct that the origins of the impulse stem from the fear of "losing" out. You then note that you developed trading rules to prevent you from following this impulse.

You then use words and phrases such as "in spite of", "feel", "hope", "gut says", asking in other words for permission to set aside your rules and go ahead and follow the impulses you're working to eradicate.

So, the one-word answer is: "don't".

[brownsfan019]

Originally Posted by webercom As a short term trend trader… Do you ever chase the market? The impulse to chase a sharply moving market stems from the “fear of loosing out” ( my thanks to Mark Douglas ). These impulse entries have got me into a lot of trouble and have lead me to eventually make my trading rules.

You answered your own question.

Do not chase unless you feel like getting terrible fills that create even larger losses than what was planned.

[jonbig04]

IMO anytime you feel like you are afraid you are going to miss something, recognize that emotion and put it in its place. If necessary ask yourself before each trade whether you are under that state of mind or not.

[bathrobe]

Originally Posted by brownsfan019 You answered your own question. Do not chase unless you feel like getting terrible fills that create even larger losses than what was planned.

Well stated BF, wait for the pullback. If it doesn't come and you miss the move at least you did not lose money.

[brownsfan019]

I would also suggest that instead of worrying about whether to chase or not, figure out WHY you are missing your ideal entries and then fix it so that chasing is a non-issue. I realize that's easier said than done but I would focus on working your entries better to minimize or eliminate a chasing issue.

[Head2k]

It depends what you mean by chasing. As well as you developed your rules which prevent you from late, not optimal entries (that is impulsive chasing), you can develop rules for entering on breakouts. A breakout is a late entry, too. But if you have rules which tell you under which conditions it is worth to buy high and sell low, then you might find it profitable.

[jonbig04]

Great point Head, I was going to mention it as well. To me a chase entry is when you deviate from your plan because you're afraid you've missed or are going to miss something. Late entries on breakouts, providing they are planned and part of your rules, can do well. IMO they are two different things.

[webercom]

Thank you all for your valuable input. I agree that Impulse Trading or Chasing the market is to be avoided. However, IMO there are times when chasing the market (not emotional) is practical.
To give an example,
When the market breaks out of a consolidation one can wait for a pullback to say the 8 ema or if the breakout is strong enough “chase it” with a limit order a few ticks behind price or go in with a market order. I have seen breakouts runaway without looking at the 8 ema for a large part of the move. If we can quantify what constitutes a “strong” breakout, we could add another line to the Entry Rule:
Enter on a pullback to the 8 ema or
Enter Now! without hesitation if ( n = strong breakout )
At the moment a “strong” breakout is a gut feel and I can’t put that into my trading plan.
Strong breakouts are usually fast unless we know upfront what to lookout for, what to anticipate won’t recognize them in time.
I just wondered how other traders handled fast strong moving markets
“Do you ever chase the market and if so under what conditions ?”