Share:

Things might get very frustrating when you miss a possible good trade setup in the market. Many traders that are new to the market think that they have missed a “once in a lifetime” opportunity and try to chase the trade and ultimately lose a huge amount of money. But the professional traders in the financial market consider a missed trade setup as a new possibility of getting into a much better trade once the market settles.

Most of the time, the price retraces back and gives a second chance to traders during trending market. Please note the below-mentioned points as this will give you a clear insight of when you can ride a missed trade in the market. The market conditions should be as follows:

1) Trending market

2) Price makes higher highs or lower lows

3) Ranging market

Let’s go through some examples and explain some high quality missed setups, and how you can re-enter the market.

1. Missing the entry in a trending market

AUDUSD

Figure: Missed bounce off the bearish trend line in the AUDUSD pair

From the above figure, you can clearly see that there was a nice selling opportunity at the bearish trend line. But if you face such scenario in the market then there is no need to worry – the market retraces back to a certain extent and gives a second chance to traders who missed the first opportunity. So, let’s see what happens next.

AUDUSD

Figure: Price retracing back and giving the traders a second chance to board on the missed trade

From the above figure, you can clearly see that the AUDUSDpair retraced back to the trend line resistance level and gave the traders a second chance to execute a short order in the market. To be precise, the second trade setup is much more reliable as it formed a nice “bearish pin bar” right at the trend line resistance level which was not the case during the first time. So there is nothing to worry if you have missed a trade in the market, all you need to do is to wait for the minor retracement of the price towards the support and resistance level before you execute the trade in the market.

If you missed a trade when the market exhibits any of the above mentioned three characteristics then chances are very high that you will be able to ride a missed trade in the market with much more reliable trade setups. But, when you trade the trend line in the market always have on mind that executing the trade at the third trendline retracement is a little bit aggressive. Professional traders love to trade the “third retracement” as the market proves the underlying trend, and offers the opportunity for a quick profit. Remember, if you missed the first retracement, then the second one will usually give you a much better opportunity.

2. Missing a trade setup when the market makes higher highs or lower lows

If the market doesn’t look like it is trending, you can still enter a missed trade. The key is to wait for the price to make a repeating pattern, like higher highs or lower lows. In the next chart, I will show you how such a trade setup looks like.

EURUSD

Figure: Missing trades when price makes higher highs

The EUR/USD pair didn’t trade in a trend when the missed opportunity for a long position occurred. The key for traders in this case is to be patient and wait for the price to retrace, eventually making a new higher high. With a new break-out of the red resistance zone, and additional testing of the resistance-turned-support, it’s time to enter the market. This setup is nicely followed with a long bullish candlestick, which confirms a possible new higher-high is to come. Let’s see what happened next.

EURUSD

Figure: Higher highs provide a good opportunity to re-enter the market

The market continued to make higher-highs after we entered the market. It made three new higher-highs before finally hitting a longer-term resistance line, which is a signal to exit the trade at this place. The trader would have made a nice profit by following these instructions, despite missing the initial trade.

3. Re-entering a trade in ranging markets

Ranging markets offer a load of opportunities to re-enter the market once a you’ve missed a trade setup. Generally, the strategy involves trading bounces off the rectangle, or support and resistance lines. The following chart shows a sideways-trading market with the missed first trade setup.

EURUSD

Figure: Missing a bounce in a ranging market gives new trading opportunities

The trader has missed the first setup (1), but there is nothing to worry about. Don’t jump in immediately, but wait for the price to reach the upper resistance line of the rectangle (2). With the next bearish candlestick confirming the bounce, it’s time to open a short position. The same opportunity appeared at number (3), where the pinbar candlestick touched the upper resistance line. Stick to the position until the price bounces to the lower support line (4), which made a false break-out signal. With the next bullish candlestick returning into the rectangle, and covering the prior two bearish candlesticks with its body, this is a strong signal to enter a long position. Again, at number (5), the price touched the upper resistance line with a pinbar candlestick – it’s time to close the long and open a short.

Conclusion

As can be seen from all of the charts, never chase a missed trade setup. In doing so, novice traders lose money in the long run. Instead, focus on the market signals that the price will send afterwards. Wait for pullbacks, trendline bounces, rectangle bounces, higher highs or lower lows. Trading the support and resistance will create new trade opportunities very soon. There is never a lack of volatility in the forex market, just be patient and the market will create the new perfect setup for you. You can also use the Fibonacci retracement tools or chart patterns to trade the missed trade with minor retracement of the price. But when you trade the market make sure that you follow proper risk management factors to reduce the risk exposure in trading.

This material is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Editors’ Picks

EUR/USD drops below 1.0550 ahead of PMIs, Powell

EUR/USD drops below 1.0550 ahead of PMIs, Powell

EUR/USD came under renewed bearish pressure and declined below 1.0550 during the European trading hours on Monday. The pair is weighed by a buoyant US Dollar amid higher US Treasury bond yields and a cautious mood. US ISM PMI and Powell's speech eyed.

EUR/USD News

GBP/USD struggles below 1.2200, awaits central banks' speakers

GBP/USD struggles below 1.2200, awaits central banks' speakers

GBP/USD turned south and retreated to the 1.2150 area after spending the Asian session in a tight range near 1.2200. The souring market mood, as reflected by declining US stock index futures, weighs on the pair as markets await US PMI data and comments from central bankers.

GBP/USD News

USD/JPY hits fresh 11-month highs, approaches key 150.00 level

USD/JPY hits fresh 11-month highs, approaches key 150.00 level

USD/JPY is extending gains toward 150.00, flirting with fresh 11-month highs in Asian trading on Monday. The pair is supported by the renewed upswing in the US Treasury bond yields and dovish BoJ commentary. However, Japanese FX intervention risks mount. 

USD/JPY News

Follow us on Telegram

Stay updated of all the news

Join Telegram

Editors’ Picks

EUR/USD drops below 1.0550 ahead of PMIs, Powell

EUR/USD drops below 1.0550 ahead of PMIs, Powell

EUR/USD came under renewed bearish pressure and declined below 1.0550 during the European trading hours on Monday. The pair is weighed by a buoyant US Dollar amid higher US Treasury bond yields and a cautious mood. US ISM PMI and Powell's speech eyed.

EUR/USD News

GBP/USD struggles below 1.2200, awaits central banks' speakers

GBP/USD struggles below 1.2200, awaits central banks' speakers

GBP/USD turned south and retreated to the 1.2150 area after spending the Asian session in a tight range near 1.2200. The souring market mood, as reflected by declining US stock index futures, weighs on the pair as markets await US PMI data and comments from central bankers.

GBP/USD News

Gold falls to fresh multi-month lows below $1,840

Gold falls to fresh multi-month lows below $1,840

Gold price turned south and dropped to its weakest level since early March below $1,840. The benchmark 10-year US Treasury bond yield turned positive on the day above 4.6% following Friday's correction, weighing on XAU/USD ahead of Fed Chairman Powell's speech.

Gold News

Week ahead: Fed speech and NFP likely to dictate crypto market moves this week

Week ahead: Fed speech and NFP likely to dictate crypto market moves this week

With the start of 2023’s fourth quarter, things are finally getting interesting in crypto. While the next 12 weeks are extremely important, let’s start by focusing on what to expect this week.

Read more

ISM Manufacturing PMI Preview: Worst for US factory activity could be over

ISM Manufacturing PMI Preview: Worst for US factory activity could be over

The ISM will publish the United States September Manufacturing PMI today. The index is expected to have ticked modestly higher to 47.7 from its previous monthly reading of 47.6. 

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology