|Autodidact Polymath Polyglot|
Investing is much more than making money. There is a side of investing that is internal, a wish to be right and to be right when many others are wrong. What is this worth to you? It most certainly is not worth risking your capital, but is it worth it risking a small portion of your capital? The answer to this question is partially mathematical and partially psychological, as you say. It is very important to realize that the risk tolerance threshold is very different for different traders or investors. Some would never ever do it, some would do it under some circumstances, others live to do this kind of thing. Everyone is different and therefore every trading strategy and every system to manage personal assets is also different in some degree or the other.
I guess the best I can say about your final paragraph: "It makes sense to add that computing a mathematical expectation of profit and loss, illustrated in the previous paragraph is not the only reason explaining behaviors of investors and traders. Negative mathematical expectation for Mega Millions Lottery is insufficient to explain why the majority of people throws their individual dollars." Very true, the answer to this question is not mathematical in the least, it is individual and internal. Every individual trader and or investor will have a different answer (at least in some degree).
1st degree connection1st
CEO Founder Blockchain Technology at SapsiNet SRL Crypto to Fiat Exchange
SapsiNet SRL Crypto to Fiat Exchange ATA
Ilfov County, Romania 500+
(JJP editorial comment , Aurel Ispas, excellently articulated
1) the Key aspect of trading and investing,
it is partially based on hard math and partly and the psychological make up of the investor or the programmer of the algorithmic trading system...
2) every trading and investing strategy and system to manage personal assets is also different for every individual in some degree or another. Further, this extents to the management committee's and the CFO and CEO of every company, every endowment fund, every foundation, every sovereign wealth fund, every government and even every central bank. There is no such thing as pure hard mathematical proofs that exist where there is human input anywhere in the decision chain or In my opinion any human input in the creation of the Deep Learning and Artificial Intelligence systems that are designing themselves.... deep in the DNA of machine learning, deep learning and Artificial Intelligence created systems there are are certain psychological inputs and predilections of the builders of the legacy systems..... which mean that human input Maslow's levels of need and the basic binary pendulum of Greed and Fear are going to be with us on the road to the Singularity....JJP)
Maslow's hierarchy of needs is a theory in psychology proposed by Abraham Maslow in his 1943 paper "A Theory of Human Motivation" in Psychological Review.Maslow subsequently extended the idea to include his observations of humans' innate curiosity.
Maslow's hierarchy of needs - Wikipedia