Denise Shull

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I am smart.

What this means to me:

This is not meant to be an egotistical post, but is a time to dive deeper into a point that Denise Shull made in Market Mind Games. When presenting her idea of fractal behavior, she says,

Since I have been consulting on Wall Street, I have yet to find someone who habitually fights trends that doesn’t ultimately reveal a very clear and specific reason that arises out of their personal and family history. The easiest ones are traders who can notice that they want to prove they are smart.

Knowing that one of the behaviors that can cause me problems is fighting a trend, this paragraph just leapt off the page at me when I read it.

As a child, I was tested and classified as a special education student. Not because of any difficulties, but because I qualified as gifted and talented. In 2nd grade I finished our math textbook a month or more before school ended. In 3rd grade, I went to the 4th grade classroom for reading. Eventually, I was accepted into a magnet school and surrounded by other “smart” people. We were very competitive, or at least some of us were. My weak spot was English, but in math, science, and even German, I was one of if not the top student in the class.

Both my parents were teachers, and my mother taught the lowest of the special education students that attended school. While never admonished for a “bad” grades or rewarded for “good” grades, I believe there was both encouragement and an unspoken expectation that since I could do much better than my mother’s students, I should do my best and earn the highest grades I could.

What this belief gets me into:

Being smart generally means I catch on to concepts quickly.
Trying to appear smart and educated.
A desire to improve myself.
A desire to present myself as a better trader than others.
It supports a competitive side of me that likes to win.
Connecting the dots of different ideas.
Relying on my intellect rather than being in touch with my emotions and feelings.

What this belief gets me out of:

Studying and preparing. I wish I still had the little sign I was given in elementary school that said “Genius is the ability to avoid hard work.”
Diving deeply into a task.
Giving proper weight and attention to my emotions and feelings.

Limitations of this belief:

It encourages me to present the best possible side of my trading. Being smart has meant getting in as close to the bottom as possible and out as close to the top if possible. After all, what could be smarter than selling at the absolute top or buying the bottom?

It has been closely connected to my trading results. My expectation has been that a smart trader makes trades that make money. Losses only appear smart if they keep me from losing a larger some of money. Relating being smart to monetary results instead of following trading rules is a real challenge. (There’s another belief that I am a creative person and don’t like rules hiding in there as well.)

If I understand a task intellectually very quickly, I may miss some of the important nuances and/or the impact it might have on my emotions.

Utility of this belief:

Believing I am smart encourages me to continue to grow and learn. I will fix mistakes and tackle new obstacles, always seeking to do better than my colleagues or my previous performance.


There is definitely a utility to being smart. The catch is in how it tries to manifest itself. Trying to be a smart trader by only having winning trades is actually not very smart. Being a trader who develops a clear system and follows clear trading rules is a smart trader. Keeping those ideas from getting confused is the real task here. In the trading context, a losing trade doesn’t make me dumb. It can make me smarter if I choose to see it as paying for information about the market.

Not all trades are winners, and no one can pick even most of the tops or bottoms. Lacking those skills, I can still be smart by trading a system that fits me and my personality.

Trying to do anything else is actually pretty stupid.

In Market Mind Games, Denise Shull makes the observation that emotions and feelings share characteristics with fractals. What happens in one context may repeat itself elsewhere and in a smaller or larger variation. Having been exposed to Ken Long’s regression line fractal framework for trading, I’m certainly used to thinking of a fractal nature of the market. Van Tharp’s says that “people do not trade the markets; they trade their beliefs about the markets.” My a-ha came when Denise Shull connected these two ideas to demonstrate that traders have fractal behaviors, especially as it pertains to feelings and emotions.

Denise Shull starts with research that demonstrates that actions require feelings. No action takes place without some sort of feeling or emotion connected to it. For trading to be a psychological game, the psychologies driving the market must come from the traders. I’ve known and understood for a long time that my feelings and emotions influence my trading results. What I don’t think I appreciated until Shull pointed it out was how there is a much deeper crossover between my behavior as a trader and my behavior in other areas. Here are some of my own fractal behaviors that I spotted as I came to understand her point.

I am a musician, and my main area of interest in music is improvisation. I create music as I go. There may be a chosen theme, structure, or intention, but my primary goals are to create a competent, coherent, colorful, and convincing piece. I’m not looking for perfection and am certainly not stuck with following a written score. In trading, I recognize this as my reluctance and difficulty to write out a formal trading plan with hard rules for entry and exit.

Here’s another example of my resistance to formal rules. As an undergraduate, it was possible to take Music Theory 4 before Music Theory 3. The two classes covered different material, so while they had a normal sequence, it was possible to take them in either order. Because the best professors were teaching them in the same semester, I wanted to take them both at the same time. It made sense to me, but the Theory department wouldn’t allow it. Rules prevented me from doing what I wanted.

Someone shared the following on a Facebook post, and I resonated so much with it that I now have it posted on my refrigerator:

When I started to look for it, it became easy to see how my improvisation mindset manifests in not only a resistance to rules in music, but in many other areas of my life. Including trading.

Having gleaned this insight from Denise Shull, I’ll be watching and looking for other behaviors from my daily and professional life that might influence my trading.