It doesn’t seem all that relevant to me whether traders have a probability like that in their heads. Whether they have a low probability or are not thinking about it, they’re approximately leaving money on the table in a short-timelines world, which should be surprising. People have a large incentive to hunt for important probabilities they’re ignoring.
Of course, there are examples (cf. behavioral economics) of systemic biases in markets. But even within behavioral economics, it’s fairly commonly known that it’s hard to find ongoing, large-scale biases in financial markets.
It doesn’t seem all that relevant to me whether traders have a probability like that in their heads. Whether they have a low probability or are not thinking about it, they’re approximately leaving money on the table in a short-timelines world, which should be surprising. People have a large incentive to hunt for important probabilities they’re ignoring.
Of course, there are examples (cf. behavioral economics) of systemic biases in markets. But even within behavioral economics, it’s fairly commonly known that it’s hard to find ongoing, large-scale biases in financial markets.