Trading Discipline Fails When Stress Rewrites Your Judgment

Seventeen traders on a City of London floor spat into test tubes twice a day for eight days. Eleven in the morning, four in the afternoon. Not the most glamorous research design ever approved.

What John Coates and Joe Herbert found, published in PNAS in 2008, was that a trader's cortisol tracked two things: the volatility of the market and the variance of his own results. The wilder it got, the higher the stress hormone climbed.

That part isn't shocking. The next study is the one that should change how you think about discipline.

For years I explained my own rule-breaking with the fuel-tank model. Willpower as a muscle that fatigues with use. Spend it on a hard day of work, and there's nothing left at 2 a.m. when BTC is 6% down and my stop is forty dollars away.

Comfortable story. Almost certainly wrong. In 2016, a preregistered replication...

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