The Expectations Effect

ProspectiveAny given day in in the world there is a car accident involving 4 people. In the accident 2 die and 2 survive. Depending on what our expectations are determines our reaction. If we have high expectations we expected everyone to survive. If we have low expectations, we expected no one to survive.

A person with high expectations is expecting too much. A person with low expectations expects too little. The same event creates two very different reactions, one positive and one negative. Almost every piece of news can be viewed as either  positive or negative, it just depends on our expectations.

These events and our expectations are what make the stock market go up and down. No matter what trading method we use, expectations determines the reaction of markets. If the market has low expectations a bottom pattern is more likely to form. If the market has high expectations, no matter how strong earnings are, the market expects more.

To learn more about the effect of expectations and to learn how to track and read the stock markets expectations, read The Art of Expectations available at right now.

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