Behavioural risk
The risk an investor creates for himself: stepping outside his own plan, trading on a headline, raising position sizes after a run of luck.
How to read the number
Unlike every other kind, the source sits inside rather than on the market, which is why rules written down in advance work against it better than any amount of analysis.
When the metric lies
In the results it is indistinguishable from market risk: a loss from a hasty sale looks like an unlucky price move. It shows up only when actual trades are compared with what the plan prescribed.
Also known as: self-inflicted risk