Problem One and Two
If you refered to my previous blog, I had the Heard mentality problem. Just like sometimes you are in an elevator and got off on the wrong floor because there were other who got off and u just automatically followed. This was a problem as I not only want to chase price but also had a problem with pullbacks. Once the candles start pulling back, instead of seeing it as a retracement I see it as the price is going the opposite direction and has turned and I want to follow it. It was hard to wait to trade in the opposite direction of a pullback for me. I even set limits but ended up all emotional over it
What I did was to create a visual movie. I picture the candles as a big herd of wild buffaloes ( like the ones I watch in animal planet ). When price stops going up I picture the entire big herd gathering at where the candle stopped and as price retraces, I picture a few rouge buffaloes breaking from the herd and heading in the opposite direction ( just like animal planet ). I expect the rouge buffaloes to run a certain distance , turn around and rejoin the herd to head up again. So now when there is a pullback, I do not have the tendency to follow as the main herd is still up there at the top and I look at the rouge ones to stop running in the opposite direction and look for signs that they are starting to turn back to rejoin the main big heard up there. So now, pullbacks are easier for me to trade as I expect it to reverse. However, if the pullback actually becomes a reversal, I will picture the big herd sitting on top to also turn and start to stampede in the opposite direction as the trend had changed . I make my emotions support the direction I want to trade by putting the main herd where I want.
I also use the herd to control the second problem of having an opinion if the price is too high or too low. If price profile is up, I picture the big herd up. This way I make my emotions support my plan to look for buy or sell. Reminds me of playing with toy soldiers when I was younger.