I have an old video called "Successful Flyfishing Strategies" that I took out of the closet and re-watched a few days ago. In the video Gary LaFontaine made what I think is a very important observation. While holding a small trout, he said that if you cup your palm so as not to touch the fish’s lateral line, the fish will lie still in the your hand and will not wiggle around. I think this is a very important observation since so often I’ve seen anglers (myself included) squeeze the fish harder because it is wiggling so much. Naturally, the harder you squeeze the fish, more of the protective slime is removed from the fish and the greater the chance of harming the fish. I can’t say that I’ve been smart enough to remember this tip, but I will try my best to make it a habit from now on.
He doesn't go into detail as to why it works. However, he makes the assertion that a trout held in this manner will lay there until it expires. The several smaller trout he catches in the video all look like they are asleep in his hand; they just lay there life-less even though they were just caught.
This method definately works , as Ive been doing it for years for all trout that dont take 2 hands to handle. It really seems to almost paralyze the fish. Remember though to always wet your hands before touching the fish as well.