Something I've really noticed during the last few months (and from time to time in the past) are the problems that my own expectations cause me when I'm trading, and probably in other areas of life. To expect is to open yourself to the unexpected! Crazy how stupidly simple that is isn't it.. without expectations, there is no unexpected and thus a huge chunk of trading pain is removed.
I remember reading "Fooled by Randomness" by Taleb in which he would call negative experiences in the markets, emotional "pangs". These I'm sure are very real, we've all suffered when we've lost, if you place enough attention on a price I'm sure it's possible to suffer a 'pang' on the loss of a single tic. It struck me that, these really only occur when something doesn't live up to your expectations.
Yet this is highly counter intuitive. How do you enter a trade or a bet without some form of expectation? The answer of course is from a probablistic mindset. You reduce decisions down to their probabilities of going one way or the other, then compare the implied odds in the market. That's easy to type, and not easy to do consistantly, whether you believe in it or not.
The above paragraph also suggests it's possible to gauge where the market will be at various times. Another expectation which is rarely perfect, since markets (and the events they are based upon) are random entities. Anyone / anything can destroy the position of the market in a blink... with this in mind, perhaps it's best we expect the unexpectable! That way we'll still be in the right frame of mind to act appropriately when it happens. And while we do that, do our level best to estimate those probabilities each time we enter a trade.
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