Connecting sentiment to strategy and risk

From context to sizing, diversification, and discipline.

Connecting sentiment to strategy and risk

| Concept | Explanation | |---|---| | Position size | Reduce exposure when uncertainty, volatility, or crowding is high. | | Diversification | Avoid several positions driven by the same narrative or macro factor. | | Liquidity | Crowded exits are more dangerous in thin markets. | | Event calendar | Know when earnings, policy decisions, unlocks, or data releases occur. | | Decision journal | Record expectations, sentiment evidence, and invalidation before acting. |

Module knowledge check

1. Why should sentiment indicators be separated into families?
2. What does bullish price with weak breadth imply?
3. How does a contrarian condition differ from reversal evidence?
4. Why should event timing affect position size?

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