(from the book "Way of the Turtle")
The term "expectation" is derived from Gambling Theory and answers the Question "What happens if I keep doing this?" in quantifiable terms.
+ve expectation games are those in which it is possible to Win
-ve expectation games are those in which over the long run a gambler will lose
Casino owners understand expectation very well. They know that games of chance in which the house has a +ve expectation (of even just a few %) can provide large sum of money over the course of multiple players and many days.
Casino owners do not care about the losses they incur because such losses only encourage their gambling clientele.
Traders should also view LOSSES in the same manner: they are the COST of doing business rather than an indication of a trading error or a bad decision.
The Turtles believed in the LT Success of Trading with +ve Expectation (Expectation was based on the average $ amount won per trade divided by the average amount Risked. That Risk is determined by the difference between the entry price and the stop loss price, multiplied by the size of the position itself).