Emotion - emotions not good for trading

1) Can't make up the mind: Always thinking both sides, worrying too much, afraid of taking chances, perfectionist,

2) Follow the crow: Human beings are social beings. We don't want to be left behind/alone by the society, or look "strange" to other people. We want to stay with the crows, so we move when the crow moves, stop when the crows stop.

3) React to news/rumor: When the news is good we feel happy, when the news is bad we feel worried, and when the news is mixed we feel confused. Too sensitive.

4) Work more to earn more: Trading is never a sure thing. Working more or knowing more doesn't translate to earning more. Educated hard working professionals can be making less than "lucky fools" all the time.

5) It's too expensive: Just seeing the price alone is never enough. Fact is good things are expensive, expensive things can become more expensive. Vise versa, cheap things could lose value quicker.

Emotion - People is the Market

1) People are emotional creatures. We tend to belive that we are rational or at least somewhat rational. We always try to analyse material facts and come up with "reasons" for our decisions, but our actions proved that we were driven by our emotions all the time.

2) All human sciences are developed by studying the pass. We tend to belive that the near past will stays the same in the near future. That's why when the market is up we felt happy; when the market is down we felt sad.

3) The extend of 2) is that people believe that the history will repeat itself in the future. So we belive in "economy cycles", "market patterns", etc. However future outcomes are often unexpected or just completely random.

Conclusion: Any thing could happen in the market. The pass does not gurantee the future. If you know what people will do, you know what the market will do.

Emotion - Source of Greed & Fear

FEAR: Lost / Risk / Uncertainty / Pain / Insecure / Embarassment / Hardship

GREED: Reward / Winning / Ego / Profit / Freedom / Relaxation / Fame / Power

Strategy - Types of Trades

Group by hold period or trade frequency
1) Mega Trend
2) Momentum
3) Sculping
4) Day Trading
5) Buy & Hold / Stock purchase plan
6) Buy IPO

Group by market timing
1) Leading / before signals
2) Lagging / after signals
3) In sync / on signals

Group by pricing
1) Buy low sell high
2) Buy high sell higher
3) Buy before expansion, sell before compression

Group by reasoning
1) Foundamental Data
2) Speculation / News Play
3) Technical / Chart Reading
4) Emotional / Follow the crowd
5) Insider trading
6) Risk management (stop lose, cover short, option expired)
7) Diversifying / Stock rotation
8) Goveronment actions & policies
9) Academic studies / Software testing