For the next interview in the StockTickr Interview Series (RSS feed), I spoke with Denise K. Shull, a trading coach and mentor at Talking Traders. Like many good coaches and traders, Denise has a background in psychology.
Read on for how that background in psychology got Denise where she is today, why “controlling your emotions” is probably a mistake, and what traders should be including in the trading journals, but aren’t.
StockTickr: Tell us a little about yourself, Denise.
Denise: I am Denise K. Shull, M.A., formerly of Cleveland and Chicago but now a time-tested New Yorker. I came here in 1996 to manage a desk of short-term traders within a market making firm. I planned on staying about two years but as fate would have it, I seem to now be “from” the East Coast.
I trade index futures full time and also offer my experience and education as it relates to the psychological realities of trading to other traders
StockTickr: How did you get started trading stocks?
Denise: Floor traders from the CBOE invited me to learn to trade at one of the first “upstairs” proprietary day trading firms in 1994. I was finishing my research for my thesis in “The Neuropsychology of Freud’s Repetition Compulsion” at the time. Going into an office was an interesting diversion from writing.
StockTickr: How did you get started coaching traders?
Denise: First, Chris Terry of LBR Group introduced me to the then editor of SFO magazine. Chris and I knew each other because we were neighbors in NY and we found out we both traded. I told him about my hobby in psychology and he told me I should write an article about it. After I started trading, I had dropped my education for years until I found the Mid-Manhattan Institute and began gingerly stepping into PhD work. It really was more a hobby than anything else. I had however always wanted to be a writer so I was thrilled at the idea.
A few years later and by the time that everyone was in a chat room during the trading day, I noticed the frustration people felt. I wanted to create an outlet for that so I was considering having a small discussion group in my apartment. I mentioned the idea to my broker, Mirus Futures, to see what they thought. Well…. I was asking for an opinion and I got a website and an introduction. They felt the service would be great for their clients and basically made the whole thing happen.
StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?
Denise: Traders in Chicago used to say “you have to blow out 3 times to make it.” Fortunately, I have managed to avoid that.
That is not to say that I have not made every mistake in the book.
I do in fact have one “trade” that I regret the most. Basically, I let my belief in the management of a company overshadow both what the chart and the fundamental results were telling me. The net of this story can be summarized in “light a match to a million.”
StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?
Denise: Learn how to process your emotions in real time. so that the emotion is not “acted out” in trade entries or exits.
StockTickr: What 3 books do you recommend traders read?
- Emotional Intelligence by Goleman
- When Genius Failed by Lowenstein
- Inside the House of Money by Drobny
StockTickr: What is the most common but easily correctable mistake you see traders make?
Denise: Ignoring how they feel in an effort to “control their emotions.”
StockTickr: Do you see record keeping as a critical part of trading?
Denise: Absolutely. P&L isn’t the answer. It does not give you enough information. You need a running log of what happened and why.
StockTickr: Are there ways traders can improve upon their trading journal/diaries?
Denise: Keep qualitative information about themselves. They are the machinery and they need to learn the patterns of how the machine operates.
StockTickr: How do you think the market has changed over the last several years? How have you adapted?
Denise: To tell you the truth, I don’t think it has changed all that much in the last several years. My first mentor told me “volatility begets non-volatility and non-volatility begets volatility” and that is still the truth. The average true range may not be what it was in the past but trending, chopping – they still happen in very similar ways.
StockTickr: Do you suggest backtesting and if not, how do you instill belief in your system?
Denise: Back testing can have value if you have the type of personality that is inclined to work with the technology of doing it.
I have never had that and many many successful traders I know have never back tested a thing. The first way you build confidence is to be very clear about what you are looking for. I ask traders to write out three trade set-ups with no more than three sentences each. They are amazed at what they have not thought about. If you can’t define it outside of market action, it is not going to become clear while you are watching the prices move!
Once you get your set up clearly defined (which is a plus for back testing) then trade it in simulation to see if it works. People will say simulation is worthless but like my friend Ray Deux at Ninja Trader says “If you can’t trade it in simulation, you are not going to be able to trade it in real time.” If you see that it works in simulation you know two things 1) that the system works and 2) that in an unemotional state, you have the skill to execute.
This then leaves the only challenge to be one of dealing with you as the machine.
StockTickr: What advice can you offer traders who are just starting out?
Denise: Find a mentor for a reasonable price. Find a trading educator that will teach you about the markets. Do not spend a fortune but find a person and source of education that resonates with you. Then STICK TO IT!
People make the mistake of going from educator to educator to system to system when what they need to do is find a few simple set-ups and learn to trade them. The biggest part of learning to trade them is learning to deal with the normal fear and frustration that the process will involve.
Organize your progress like you would learning a new sport or losing weight. Set small goals that can be accomplished. First learn your software. Second learn to beat the market, before costs, in simulation. Then move through the steps – covering commissions, covering software costs. Make yourself a spreadsheet and treat it as if it a franchise business that you bought into. It is going to take time to recoup and recover your costs and become profitable.
Be prepared for it to be harder and take longer than you ever imagined. Never forget however that in all the research done, hard work and perseverance prove to be the defining characteristics of those who succeed.
StockTickr: Thanks for taking the time for this, Denise.
Denise: Sure, Dave!
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Stay tuned – there are several interviews on the way. You can subscribe to these interviews via RSS feed.
- Tim Knight, Prophet.net
- Chris Perruna
- MC, PinoyTrader
- Joey Fundora, DowntownTrader
- Brian Schumacher
- Doug Hischhorn
- High Patterns Chart Group
- Zoomie, retired fighter pilot
- Trader Gav
- Will Fisher
- Tom C.
- Michelle B.
- Elliot Dole
- Jon Tait, the Fickle Trader
- Bill Rempel
- Roger Nusbaum
- Dave Johnson
- J.C., the NYSE Scalper
- Brian Shannon, AlphaTrends
- Jamie, Wall St. Warrior
- Howard Lindzon
- Kernan of TRADEthemove.com
- Richard Todd
- Andy Swan
- Steve Nison of Candlestick Charts
- Dan Mirkin, Trade-Ideas
- Bruce Brotnov
- Eric Cahoon
- Ugly from Uglychart.com
- Alan Farley
- Declan Fallon
- Smita Sadana
- Bill Cara
- Van K. Tharp – Free autographed copies of Van’s book still available! Get yours now!
- Brett Steenbarger
- Eyal Maoz
- Gary B. Smith, the Chartman
- Nusair Bawla (alibawla on StockTickr)
- Dave Landry, Swing Trader
- Jeff White, the Stock Bandit
Do you have suggestions for other traders you’d like to see an interview with? Let us know!