A trading plan is crucial for success. But what do you do when you miss your entry?
You had a plan but the stock moved too fast for you to get in…
So you keep moving up your buy limit price trying to catch a piece of the move…
Then before you know it, you buy at the top and the stock reverses on you.
You panic and sell for a loss and are left with a mountain of frustration…
Missing an entry can be equally as frustrating — but it’s better than chasing and taking a loss.
So here’s my tip for how to handle missed entries…
The Smarter Way to React to Missed Entries
Yesterday my plan for Bridger Aerospace Group Holdings, Inc. (NASDAQ: BAER) included an entry at $9.
But if you weren’t quick or you didn’t want to place an order in premarket — then you probably missed it.
So if $9 was my planned entry, does that mean any price above $9 is a potential entry?
No.
With my trade idea for BAER — if you missed it, you missed it. The stock went from $9 to almost $13 without a pullback.
And if you tried to chase it, you probably bought near the top and got caught in a down halt.
BAER chart: 1-day, 2-minute candle — courtesy of StocksToTrade.com
You can’t chase those kinds of moves and risk buying at the top … Especially when a stock starts halting.
So what can you do when a stock goes through your entry and spikes without you in it?
You reassess.
Consider how far the stock has gone past your entry.
Was it a big move and now it’s over? Or is there potential for more upside using a new entry and trade plan?
With a stock like BAER that spiked so high so fast and started halting, you wait for it to calm down. Wait for the afternoon and come back and see if it survived.
If you’re looking at a stock that blew through your entry by only 20 to 50 cents, you can give it time and see what happens…
With Timber Pharmaceuticals, Inc. (AMEX: TMBR) maybe you had a plan to buy the break above $3 but missed your entry because it moved so fast.
TMBR chart: 1-day, 2-minute candle — courtesy of StocksToTrade.com
If you chased, you were probably caught buying near the top.
But in the moment you don’t know what a stock will do … you feel like you’re going to miss something. So here’s what you do…
Sit back and give the stock time to play out.
Reassess and react to the price action and make a new plan. That’s how you can give yourself an edge.
In the case of TMBR, it topped out right near the Oracle resistance level. So your new plan might’ve included waiting for the stock to break the $3.28 high after its spike through $3.
Ideally the stock would have consolidated around the high and the Oracle level for a while, and then broke above the high for more potential upside. You could’ve used the low of that hypothetical consolidation as your new risk level.
If you have a plan and can stick to it, you give yourself better odds of success over time than if you start chasing stocks.
Trading’s all about constantly adapting to what the market, charts, and indicators are showing you.
Stay in tune with what’s happening in the markets with my Market Update videos. And be flexible and adaptable to what it’s showing you.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade