Thu, September 19, 2019

San Fransisco Effect

Have you ever experienced being in a trade that went in your favor, then back to entry, then back above your last high price, back to below your entry and then up again above your last price, and then on the 1st downtick, you exited the trade and missed the move?

San Fransisco Effect

Expectations people have in life...

  • The sun will rise
  • At noon, the sun will be over head
  • When the weather is below freezing, it will snow
  • When the moon is full and overhead, it will be bright
  • When the water is hot enough it will boil
San Fransisco Effect Sunrise

Follow this thought.

  • You live on a hill in San Fransisco.
  • When you start the car and put it in drive, you expect the car will go forward. but what if it does not do what you expected?
San Fransisco car on road
  • 1st arrow -Start the car and it goes up the hill.
  • 2nd arrow - After a few feet, it starts to come back down to where you started.
  • At the time of 2nd arrow - Fear sets in.
  • 3rd arrow, car goes above 2nd arrow, you are happy and content.
  • 4th arrow, car drops down, but does not go below the 1st arrow. Huge eyes, fear it may go back to where you started and you bail our of the car.
  • 5th arrow, the car takes off and you missed the ride.
San Fransisco Up and down

Does this sound like your trading?

  • What would it be like if you had a different thought process to train your mind?
  • Let's say we change the car to a boat? And the boat is shipping out to sea? Lets call the sea a long position. We already know that waves will be moving to shore and the boat will hit resistance. The boat may be pushed back as it makes its move out to sea. But it will eventually get there.
  • This logic is how the markets move. Most people bail on bar #4 and miss the move.
San Fransisco Up and down moves
  • This chart looks exactly like the chart above with the car.

Watch Real-Time Example

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