Emotion Control

Another great article by Dr. Steenbarger on position sizing and emotional control:

http://traderfeed.blogspot.com/2009/05/risk-management-in-trading-and.html


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Sometimes the risk manager/coach will even have to take you out of the game for a while. This preserves mental capital as well as trading capital: the idea is to trade your smallest and your least when you're trading at your worst.


The independent trader has no dedicated risk manager and so has to rely on hard and fast loss limits, position sizing, and "time out" rules to regulate the psychological risks of trading. Mentally rehearsing these rules as part of pre-market preparation and post-market journaling helps cement them as habit patterns.

A lesson I've learned over many years of coaching and work as a trading psychologist is that poor trading practices can inflict considerable psychological damage. You can't sustain emotional self control if you don't have firm controls over how you trade."