The Wait, lesson 2: Freeze and chase, one fear with two faces
The trader who can't pull the trigger and the trader who jumps in late are often the same person, running from the same feeling.
There are two kinds of struggling trader, or so it seems.
The first freezes. They see the setup, want one more confirmation, then another, and by the time they’re sure the move is gone. The second chases. They watch a move leave without them, can’t stand it, and jump in near the top.
They look like opposites. Often they’re the same person, sometimes in the same week, because both are ways of escaping the same feeling: not knowing yet.
- The freezer tries to settle the question before acting, with more analysis.
- The chaser settles the question by acting, at any price.
Neither can sit in the middle, where the honest answer is “I don’t know, and I won’t until I take a defined risk and find out.”
From the journal
The trader in these notes spotted the pattern away from the screen first: going over a piece of work again and again before letting anyone see it, because the reaction couldn’t be known in advance. The same month, on the charts, the trader was chasing entries after moves had already run.
The journal’s conclusion was that these were not two problems. Both came from a way of working that demands certainty before acting. That demand can’t be met. How people react to your work, and what the market does after your entry, only become known by putting something out there.
Later, a review of six weeks of losing trades sorted each loss by type. About half of the money lost came from chases: entries made after a strong move, filled worse than intended, and losing straight away.
The loop that can’t close
Certainty-first thinking has a trap built in. You want to be sure before you act. But in a market, being sure is only possible afterwards. So the waiting never ends, until the pressure of missing out gets bigger than the fear of being wrong, and then you act all at once, late, at the worst price. Freeze, then chase. It’s one cycle.
The way out is not more confidence. It’s accepting that a stop is the price of finding out. You don’t need to know a trade will work. You need to know where you’re wrong and what it costs, and to pay that cost calmly when it comes.
What the research says
Intolerance of uncertainty. Psychologists have measured it since the 1990s (Freeston and colleagues, 1994), and Carleton’s 2016 review argued that fear of the unknown may sit underneath many other fears. It is best known for driving worry and checking: trying to think the doubt away.
It also drives rushing. Luhmann, Ishida and Hajcak (2011) gave people choices between a smaller reward soon and a larger one after an uncertain wait. The higher someone scored on intolerance of uncertainty, the more often they took the smaller, quicker payoff just to end the wait. Same trait, both faces.
Ambiguity aversion. Ellsberg (1961) showed that people prefer a bet with known odds to one with unknown odds, even when the unknown one is no worse. Markets offer almost nothing but unknown odds.
Most people who try don’t make it. Chague, De-Losso and Giovannetti studied every individual who began day trading Brazilian index futures from 2013 to 2015. Of those who kept at it for more than 300 days, 97% lost money. Behaviour, not information, is where most of that goes.
How to tell a chase
From the journal’s own checklist. If two or more are true, it was a chase:
- The entry came after a strong move had already happened.
- The fill was worse than the price you had in mind.
- The trade went against you straight away.
- You can’t say clearly why you got in.
- Right before, you felt you had to “get in now”.
Rules
- Write the trade before the trade: entry, stop and target, before price gets there. If price leaves without you, it wasn’t your trade.
- Decide in advance what “enough information” means: your setup’s checklist. When it’s met, act. No extra confirmation. When it isn’t, don’t.
- Missing a move is a cost you agreed to pay. It’s in the plan. It is not a loss.
Exercise
Take your last 20 trades and your last 20 setups you saw but didn’t take. Mark each one F (froze: saw it, didn’t take it, it worked), C (chased, by the checklist above) or P (planned: written before price got there). Count each letter. If F and C are both high, you’ve found the cycle.
The pointFreezing and chasing are one cycle, both escaping not knowing. A stop is the price of finding out.
Check yourself
The trader freezes on Monday waiting for one more confirmation, then chases a move on Thursday. What is going on?
- One fear of not knowing yet, showing two faces
- Two separate problems that need two separate fixes
- A swing in confidence that will even out with time
Answer
A. The freezer tries to settle the question with more analysis. The chaser settles it by acting at any price. Both run from the same feeling.
The trader wrote the trade down before the session. Price leaves the entry level without a fill. What do the rules say?
- Enter now at market so the planned idea isn’t wasted
- Count it as a loss and size up on the next setup to make up for it
- It wasn’t your trade, and missing it is a cost you agreed to pay
Answer
C. If price leaves without you, it wasn’t your trade. Missing a move is in the plan. It is not a loss.
What does the lesson offer as the way out of the freeze-and-chase loop?
- Building enough confidence before each entry that doubt goes away
- Know where you’re wrong and what it costs, and accept it
- Waiting for one more confirmation until the setup feels certain
Answer
B. In a market you can only be sure afterwards. You don’t need to know a trade will work. You need a defined risk, and a stop is the price of finding out.
Next: How a loss changes the math
Education only. Nothing here is advice about your account.