"Market Has Life" - In Between Greed and Fear

Many says,

Price = Greed / Fear

So who decides it and why should you obey it?

Today I am not feeling to write much on Psychological strategy but to share some scenarios that might very close to you or even happened to you before.

"Morning 10.30am, the market as usual nothing much external effects lately. A guy logged into his trading account after hearing one of his friend's recommendation on counter X. The price is 0.855/0.860. He has no idea on the fundamental of this counter X and only thinking to buy for short term riding on the bullish market. So, he queued 0.855.

After 5 min, he saw this X counter rise to 0.860/0.865 and then 0.865/0.870. He immediately thought of buying it at 0.865 by queuing into 0.865 queue but not 0.870 because he has a gut feeling when a counter rises, it will retrace a little once awhile and he hopes to save $0.005 by queuing slight lower."

Human is weird, first he queued for 0.855 because he is not really interested on counter X. Then when counter X surges a little, he changed his mind and decided to queue for 0.865 which is 0.010 higher than his previous queue. Moreover. he even has the gut feeling the counter will retrace a little so that he could able to get 0.005 cheaper.

What action he (as a human) has made (aside not knowing fundamental) which is questionable?

1. He does not set a buying price, thus does not buying based on the value.
   Even if you are not fundamental sounded, you should have to plan how much to buy and how much gain in the end of the trading. If you aiming for 20% gain, should you buy at one queue higher? Self contradicting. If you think the price will dips, why should you buy then? After analysis that counter X has a target price about 20% gain why should you bother about 0.005? (There is an exceptional case for range trader which he/she has set a range for Buy and Sell. Therefore range trader only buy at that certain price he/she set for Buy and will sell when the price reaches the Sell price).
   
   
2. He is affected by the price surge.
   Does this action affected by greed? We can't deny we always lose to emotion. Even you are experienced trader, emotion sometimes haunts you especially the price is surging by second. Are you technical analyst? Are you fundamentalist? Are you based on gut feel? Nothing wrong here but does the price surge so important to chase? Imagine bus ran away 5 minutes ago and just because you want to catch the bus you take cab. There are a lot more counters in STI (not enough can go to KLSE).
   
   Short term/intraday trading - Hardest part if you do not stay close to the screen. Market depth would helps a little. Concentrate solely on counter X would be better. Price surge or dips is out of the scope here.
   
   Medium/Long term - 0.005 is nothing compared to your projected return. If 0.005 is so significant to you as a Medium/Long term player, you should be questioning yourself.
   
   
3. He still queue for the counter at 0.010 higher than previous queue price even he knew that the price might dips later.
   Another self contradicting. One side of the brain buys because he believes the price would surge. Another side wants it to dip another 0.005. Do you want it to surge or dip? If you are not confident, do you think you need more time?
   

The above actions are questionable but no correct or wrong on it because trading habits can be different. Therefore basic rule of trading is important to control your risk.

Anyway, there are really a lot counters in STI is under-researched. Dig then you will know.