We know that we don’t know. No matter what information you have, no matter what you are doing, you can be wrong. I have a friend who has amassed a fortune in excess of $100 million.
He taught me two basic lessons:
First, if you never bet your lifestyle, from a trading standpoint, nothing bad will ever happen to you.
Second, if you know what the worst possible outcome is, it gives you tremendous freedom.
The truth is that, while you can’t quantify reward, you can quantify risk.