Episode #113: Denise Shull on Neuroeconomics, Using Your Feelings as Data & the Fractal Mind
Aug 10, 2023
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Denise Shull, an expert in understanding emotions in investment decision-making, discusses topics such as a lawsuit over the TV show Billions, the intersection of academia and trading psychology, the influence of past experiences on trading, and embracing fear for improved performance in professional teams like NASCAR pit crews.
Emotions play a significant role in shaping investment choices and recognizing their influence leads to more effective strategies.
Developing a Theory of Mind enables traders to read the intentions of other traders, providing valuable insights for decision-making.
Recognizing and reflecting on repeating patterns in behavior and emotions can help traders break free from cycles and improve outcomes.
Deep dives
The Power of Emotions in Investment Decision Making
Understanding the impact of emotions on investment decision making is crucial for successful investing. Emotions play a significant role in shaping our investment choices and can either hinder or enhance our decision-making process. Rethink's founder and CEO, Denise Schell, leverages her background in neuroscience and modern psychoanalysis to shed light on the importance of emotions in trading. By recognizing the influence of emotions, traders can better understand the mental challenges they face and make more informed decisions. Developing emotional intelligence and embracing emotions as valuable data points can lead to more effective and successful investing strategies.
Theory of Mind: Reading the Market and Other Traders
Theory of Mind refers to the ability to understand and attribute mental states to oneself and others, enabling traders to read the market and the intentions of other traders. By developing a keen awareness of the market's participants, traders can gain valuable insights into market dynamics and potential price movements. This skill allows for better decision-making and allows traders to anticipate the actions and behaviors of others. Recognizing and interpreting patterns in human behavior and market movements is crucial for successful trading and can provide a competitive edge in the markets.
Fractals: Repeating Patterns in Trading and the Mind
Fractals, which are repeating patterns found in nature, have parallels in both trading and the human mind. Traders often find themselves repeating certain behaviors, making similar mistakes, or experiencing familiar emotional responses despite different market conditions. This compulsion to repeat can be attributed to the patterns stored in our minds based on past experiences and expectations. Understanding and recognizing these fractal-like patterns can help traders break free from repetitive cycles and make better-informed decisions. By reflecting on these patterns and the emotions associated with them, traders can gain a deeper understanding of their own behaviors and improve their trading outcomes.
Navigating the Challenges of Trading
Trading is a challenging endeavor that often involves discomfort, uncertainty, and the constant need to manage risk. Traders must be prepared to face losses, missed opportunities, and the changing dynamics of the market. Embracing the reality that trading is rarely comfortable or straightforward can help traders develop a mindset that is better equipped to handle the complexities of the market. By setting realistic expectations and being open to learning from experiences, traders can cultivate resilience, adaptability, and the ability to make informed decisions in the face of adversity.
Finding a Personal Strategy in Trading
In this podcast episode, the importance of finding a personal strategy that makes sense to the individual trader is emphasized. The speaker shares their own experience of finding a strategy that aligned with their understanding of the market, using examples of different trading techniques. It is highlighted that there are various ways to play the trading game, and traders need to identify a strategy that resonates with them and makes the market understandable. The idea is to find lenses or a set of factors that provide clarity in interpreting the market and to stick with them.
The Value of Having a Plan and Remaining Flexible
Another key point discussed in the podcast is the importance of having a plan in trading, but also remaining flexible within the confines of that plan. The speaker draws parallels to athletes who need to be adaptable and improvise during a game. Traders, similarly, need to react and navigate based on the circumstances presented to them. It is emphasized that having a strategy and tactics is crucial, but so is the ability to react and adjust when necessary. The speaker also mentions the significance of risk management and learning to understand one's own feelings and doubts to make better decisions.
On the cutting edge of understanding the impact of emotions on investment decision-making. ReThink’s Founder and CEO, she leverages her background in neuroscience and modern psychoanalysis to solve the mental mysteries of successful investing, trading, competing, and leading teams. She is known for her uncanny effectiveness in resolving mental blocks and decision conundrums. An in-demand speaker, Shes keynoted for UBS, Credit Suisse, MIT’s Sloan Fellows, Harvard Business School, and the US Ski and Snowboard Association. Author of "Market Mind Games", Confessions of a Market Maker presents Denise Shull---------------------------------------------------------------------------------------------Denise on Twitter: https://twitter.com/DeniseKShull JJ on Twitter: https://twitter.com/vwaptrader1 Ray on Twitter: https://twitter.com/AllxDayxRayx---------------------------------------------------------------------------------------------Any listener of this podcast that has the skills to pass an evaluation can become a prop trader fully funded by either APEX Trader or Topstep Funding. Our own microefutures trading community has many members who are now fully funded; no need to trade with your own money; keep 90% of your profits. To learn more, visit our website at https://microefutures.com/
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