When a trader sees the market take off, then decides to place a trade, just because the market
moved a little bit in one direction or another he/she is chasing a trade thus buying into motion.
Never buy into motion. The reason is you see the motion, get excited, enter a position, and then
try to decide what the plan for the trade should be. You should already have a plan before you open
a position, know why you entered, know how you will exit the trade, what the long term direction of
the market is for the pair you are going to enter.
I really see this a lot when traders are trading the news. They see the market move by leaps and
bounds, they jump in the market then the market reverse on them. They get out at a loss enter a
trade going the other direction to find the market is now going in the original direction. They
get out at a loss once again. They once again get back into the market going the other direction to
see the market move against them again. When this happens they have experienced ‘being whip sawed’.
If you have your trading plan in effect before you trade then you will save money and have little
or no stress. Use signals to enter the market and be able to explain in your trading journal why
you entered the trade.