Denise Shull: To Succeed in a Bull Market, You Must Have Patience & Discipline
Denise discusses why it’s hard for investors to stick with their long-term view because the mind is designed to respond to uncertainty by creating its own version of certainty. This can cause people to make bad decisions, and to counteract this; you should put your thoughts and feelings into words. The trick is to find a strategy that works for you and determine the best way to stick with it.
A winning position feels similar to a drug-induced high, and this causes investors to want more of it. Investors will, therefore, rationalize why they should stay in a trade. Also, people may not expect feelings of disappointment at the top of a trade, and that can catch them off guard.
Markets have become increasingly difficult to trade since the 90s. Some of her clients can trade short-term and do well, but it’s a relatively rare skill that few people have. For most people, longer-term trading makes the most sense.
When she became a trader, she was able to leverage her fascination with psychology. What changed investing for her was The Market Profile approach that Jim Dalton uses, which is a way of looking at volume to price. This approach helps you to determine how many people are active in the market.
Learn to understand and treat your emotions as a data set. It is essential to know when your feelings are informational versus when they are emotional. That is the trick to identifying the correct strategy.
Time Stamp References:
0:40 – Psychology of trading and long-term views.
3:40 – Mistakes investors make.
7:00 – Difficulties today with short-term trading.
9:40 – Market Profile technique for evaluating a market.
12:00 – Learn to understand your emotions.
Talking Points From This Week’s Episode
• The role psychology plays in investing.
• Finding the right mental model for yourself.
• Why a good trade can feel much like a drug.
• Why longer-term trades make the most sense for many investors.
Denise Shull, MA, leverages her training in psychological science to solve the challenges of mental mistakes, confidence crises, and slumps in Olympic athletes, Wall Street traders, and corporate warriors. Denise is known for her uncanny effectiveness in coaching, training, and assessing for the X factor of human performance under pressure. Her clients include portfolio managers, traders, professional and Olympic athletes, and business innovators.
Ms. Shull’s Wall Street career began in 1994 at the Chicago Board Options Exchange. She traded for Electronic Trading Group and Schonfeld Securities before moving to NYC to run trading desks at Sharpe Capital and NYSE Floor Broker Bonfanti. She founded the risk decision consultancy, The ReThink Group, in 2003. Her 2012 book, Market Mind Games: A Radical Psychology of Investing, Trading, and Risk, has been described as the “best of its genre” and a “veritable Rosetta Stone of trading psychology.”
Shull holds a Master of Arts in neuropsychoanalysis (1995) from The University of Chicago.