This is another of the seven deadly sins in trading, and it's a subset of FOMO.
This has probably happened to a lot of you in your trading career, it certainly has for me. It's very similar to FOMO where you abandon your trading plan, only this time you have a plan and just interrupt or overrule it ahead of time.
Say for example you're trading a simple pullback type system. The rules of your system are
- Identify a trend.
- Wait for a small pullback.
- Buy on a close above the pullback when the trend resumes.
- Place a stop below the entry candle (stupid, but it's only an example :-)
So here's what the chart looks like currently -
Your trading setup as defined by your system looks something like this -
The problem is... that white candle hasn't finished forming yet. It's an hourly chart and there's 10 minutes left to go. You can see the price getting higher and higher and you're missing out, the trend is clearly continuing and you're losing money... those FOMO demons are nibbling at your soul.... So you buy at the current price and walk away satisfied that you 'sneaked in' an order.
Naturally, this is what usually happens
It's a 'fakey brakey'. The price quickly reverses to the downside picking up all the sucker stops below the open, making the price plummet. You lost another trade.
If you had waited for the candle to close, then would it still have satisfied the requirements of your system ? did it close above the break in the direction of the trend ? Of course not.
Now I know that candle patterns are very subjective, after all it's only a snapshot in time of the prices quoted by your broker, and won't even look the same on other exchanges, but the point is if you have a system that makes you money, then you have to let it work !
Try to resist the temptation to 'second guess' your system, you must wait for patterns or indications to complete before making decisions. If it means that the signal is too late and you missed an opportunity to make some profit then so what ? The market will still be there tomorrow....
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Disclaimer : If you blindly act on the advice of strangers from the internet then you're an idiot and probably deserve to lose all your money. There's no fast track to success. Do your own research and make informed decisions based on all available evidence.