In simple terms
To chase is to pursue a move that is already in progress. Price rises or falls, and the trader enters late because they believe there is still room to run. It describes a reaction to the screen, not a standalone strategy.
How to recognize it
An unplanned entry after several impulsive candles, a headline, or a viral post is often chasing. The stop may now have to sit farther away while the target is closer, so the risk/reward worsens. The move can continue and still reward the trade, but a lucky outcome does not turn an improvised entry into a repeatable process.
Limits and links
Define the price, structure, or condition that activates an entry before the market gets there. If the signal has passed, skipping it is a valid decision. Chasing is closely tied to FOMO and can feed tilt.
Sources
- Investopedia, “Fear of Missing Out (FOMO)” — links FOMO with impulsive buying decisions.
- CME Group, “Building a Trade Plan” — recommends pre-defined entry, exit, and risk rules.