Difficult for one person to wear two hats at the same time. It is best to delegate risk management to a third party, say your spouse:
1. Investment and trading are based on strong direction views and self-belief. Trader is an optimistic bunch in his/her ability to read the market.
2. Risk management by definition has no directional bias, but more of an assessment of second/third moment in statistical distribution and worst case scenario. Risk manager is the pessimistic type.
3. If primary investor/trader is concerned with risk management all the time, s/he can become self-doubting and hesitant / trigger-shy. Even when s/he is in a position, a self-doubting trader likely will be shaken out of a position by small market moves.
4. Without proper risk management, trader can become too overly complacent after a period of success and calm market, and places too much weights in his/her directional bias in placing a trade.
5. When money under management is small, one person probably can do both as it is easy to keep emotional distance. However once account gets large, risk management becomes crucial as we all have our overly stubburn and "banging head against the concrete wall in regret" moment.
Getting your partner on board however can result in a sometime rocky, journey. Yet it will surely pay off in the end. If nothing else, both parties will get a sense of accompishement as well as build camaradeire. I sure hope so :).
just my 2c
1. Investment and trading are based on strong direction views and self-belief. Trader is an optimistic bunch in his/her ability to read the market.
2. Risk management by definition has no directional bias, but more of an assessment of second/third moment in statistical distribution and worst case scenario. Risk manager is the pessimistic type.
3. If primary investor/trader is concerned with risk management all the time, s/he can become self-doubting and hesitant / trigger-shy. Even when s/he is in a position, a self-doubting trader likely will be shaken out of a position by small market moves.
4. Without proper risk management, trader can become too overly complacent after a period of success and calm market, and places too much weights in his/her directional bias in placing a trade.
5. When money under management is small, one person probably can do both as it is easy to keep emotional distance. However once account gets large, risk management becomes crucial as we all have our overly stubburn and "banging head against the concrete wall in regret" moment.
Getting your partner on board however can result in a sometime rocky, journey. Yet it will surely pay off in the end. If nothing else, both parties will get a sense of accompishement as well as build camaradeire. I sure hope so :).
just my 2c
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