Trading seems like a purely intellectual activity, but it actually relies heavily on physiological processes. Research shows that consecutive sleep deprivation degrades cognitive function and risk assessment to a level equivalent to a 0.1% blood alcohol concentration (legally drunk).
Prefrontal Cortex Impairment
Fatigue and lack of sleep impair the "prefrontal cortex" (logical thinking) and amplify the "amygdala" (emotion and instinct). This leads to impulsive entries or delayed stop-losses that you would never normally make.
Practical Approach
Add "Did I get 6+ hours of sleep?" and "Is my physical condition good?" to your pre-trade checklist. On bad days, skipping trading or halving your position size is professional risk management.