Chasing Prices: Don't run after the train that has already left! 🚂
We often fall into this trap: we see a stock or currency whose price is skyrocketing, and we feel that we have missed the opportunity, so we rush to buy in hopes that it will continue to rise. This is called "Chasing Prices," and most of the time it ends with significant losses! 📉
Why is this wrong?
* You buy at the highest point: You are often buying after the price has reached its peak, just before it starts to correct or drop again.
* Increased risk: You are exposed to a huge loss if the price suddenly reverses direction after you have bought.
* Emotional decisions: You are acting based on "FOMO" (fear of missing out), not based on logical analysis.
What’s the solution?
* Patience: Trading requires patience. Wait for better entry points, after a price correction or retracement, or after confirming the trend.
* Analysis: Rely on technical and fundamental analysis to determine logical entry and exit points for your trade.
* Risk management: Always set a specific percentage of your capital for the trade so that if you lose, it doesn't affect you significantly.