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Weekend gap anxiety

Distress from holding positions over a period when you cannot act, which is often a sizing problem wearing an emotional costume.

Markets close, risk does not. A position held over a weekend or a holiday carries the chance of reopening far from where it stopped, and no stop order protects against the distance travelled in a gap.

Most weekend anxiety is proportionate and informative: it means the position is larger than your tolerance for an unmanaged move. Answering it with reassurance is a mistake; answering it with size is not.

Decide a policy while flat. Either size positions so that a plausible gap is survivable, hedge or reduce into the close, or trade only intraday. A trader who cannot sleep is not going to execute well on Monday either.

Related: gap, mark-to-market-anxiety, position-sizing, tail-risk

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