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Market Mind Games: A Radical Psychology of Investing, Trading and Risk
Seize the advantage in every trade using your greatest asset—“psychological capital”!
When it comes to investing, we're usually taught to “conquer” our emotions. Denise Shull sees it in reverse: We need to use our emotions.
Combining her expertise in neuroscience with her extensive trading experience, Shull seeks to help you improve your decision making by navigating the shifting relationships among reason, analysis, emotion, and intuition. This is your “psychological capital”—and it's the key to making decisions calmly and rationally during the heat of trading.
Market Mind Games explains the basics of neuroscience in language you understand, which is the first tool you need to manage the emotional ups and downs of the trading. It then provides you with a rock-solid trading system designed to take full advantage of your emotional assets.
290 pages, Kindle Edition
First published December 9, 2011
168 people are currently reading
1510 people want to read
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June 12, 2019
This book will change the way you think about trading and markets. After reading this book, it feels like the author is in my head and knows exactly the steps needed to make significant improvements in my trading. I couldn't put the book down and have tons of notes and action items with steps to take my trading to the next level.
I'll update the review after I have done the necessary work that the author recommends, but this is the first book I've read in a while with a significant amount of actionable information in it and I can't wait to get started applying it.
I'll update the review after I have done the necessary work that the author recommends, but this is the first book I've read in a while with a significant amount of actionable information in it and I can't wait to get started applying it.
August 22, 2018
Denise Shull is a neuroscientist and former trader. Given her background, I was expecting an truly powerful and insightful book. I did learn from the book, but it did not live up to expectations. Her premise is spot-on: All decisions involve emotions as much as you'd like to divorce yourself from emotions in making trading decisions. This is simply not possible. If this is so, then thoroughly understanding your emotions....and even using them to your advantage in decision making....will make you a better trader. So far, so good. Great start. But then the practical applications simply fell well short for me. Plus the writing style did not hold my interest. Her attempt to weave a fictional story into her non-fiction work (like the totally engaging The Goal by Eli Goldratt) fell completely flat....it was neither entertaining or insightful.
November 20, 2024
This book does quite package when it comes to emotional intelligence. Also, it's effective especially when it comes to marketing when it comes to buying products and services from companies and how do they implement many different strategies and tactics based on your emotional responses that are almost always subconscious to you for you to be able to purchase their product or service. This book emphasizes your need and importance to be able to look out for your emotions especially to name it and identifying it for you to be able to overcome your biases to have a much more manageable and beneficial way of handling your financial situations.
(but i kinda already know that)
(Also this book would've been better if it is just a long article and not a full fledged book)
(but i kinda already know that)
(Also this book would've been better if it is just a long article and not a full fledged book)
May 30, 2020
Humans make markets and the human mind plays games—both on other human minds and on itself.
Rating: 4/5
Intentionally resolve to evaluate the social/human context through which you analyze your data, projections, or probabilities. Do this first for yourself as a risk management tool, i.e., what are the emotional and social pressures playing on you, and second as a strategy tool for understanding market action.
Reality points to a very big gap between where the numbers leave off and exceptional performance begins!
Ninety years and incalculable amounts of measuring power later does not change the fact that the only thing about the future that we can be sure of is the turning of the Earth and the attendant sunrises and sunsets. We know nothing else for sure other than time will march on.
No matter how you analyze a market or a trade, no matter what your timeframe, the only “thing” you are ever trying to deduce is if other market players will value the asset in question differently in the future.
We go about making our market decisions based on facts we try to find but, in the end, they don’t tell us what we want and need to know. Facts can never be more than clues in a puzzle. We, if we are going to consistently get it more right than wrong, need the explicit strategy of predicting people.
You make money by correctly predicting the opponent’s future perception—not “the facts”!
Price reflects perception, and perceptions can stem from almost innumerable combinations of factors.
Every single price at every single moment now and forever will be only a perception—nothing more and nothing less.
Solving the eternal puzzle of markets depends entirely on your ability to fluidly wield the sword of numbers as a language and not as a law.
Counterintuitively, we deal with uncertainty faster than we deal with arithmetic! Could this be because the vast majority of what we deal with is actually uncertain even though we typically forget that in reality we don’t ever know what will happen tomorrow.
Evidently, the visual cortex needs the context of emotional meaning to turn shapes, colors, etc. into anything identifiable.
An emotion alone never lost a dime!
We all know that the traders who make money year in and year out (and there are plenty of them out there) always work the game in this order anyway—manage risk first, seize opportunity second.
...do not make any decision you don’t have to when you lack physical energy. In other words, don’t trade when you are tired—you will lose money
Never forget, everyone wants to sack you! Don’t give away an edge you can completely control.
Feel what you feel—as much as you can feel it.
Get used to admitting to yourself (and if possible to someone you can trust) what you are feeling. Instead of trying to overcome or intellectualize a feeling (saying to yourself, “stop doing that”), say I feel like x, y, or z. Just let it be and don’t judge it.
Simply put, the more conscious of it you are, and the sooner you get conscious of it, the more you can use this knowledge first as risk management and eventually as a tool for reading others in the marketplace. Whether they know it or not, they live on this spectrum too.
Don’t be afraid to put it into words. In fact, reams of research out of the psychoanalytic traditions and now even decision science indicate that putting feelings into words, does indeed provide a great benefit. Putting feelings into words not only reduces anxiety but verbalization can actually allow us to work more effectively on a thinking level.
Given that 100% of the game relies on your good judgment, why wouldn’t you create the advantage of being well rested? Sleep is an edge.
Everyone spends all their time searching for what everyone else doesn’t know, when a lot more money can be made searching for what others are about to know.
If you want psychological leverage, you need to elevate this introspective analysis to a priority even higher than knowing what the market is doing at any given moment.
A Very Basic, Very Powerful Psychological Leverage Plan
Let me boil the basic plan down to a cheat sheet:
1. Create physical energy.
2. Read other people.
3. Get the risk management edge through knowing yourself and how you feel (your emotional contexts) operating at any given moment.
4. Get the strategy edge by using that knowledge of yourself to understand others (their emotional contexts), which they most likely will act out (since they aren’t doing #3).
5. Know when to push it because you have emotional capital and psychological leverage.
6. Know when not to push it because you are acting out of an emotional context fueled by the past, be it the immediate past or the distant fractal past.
You certainly don’t want to try to make any given amount every day. You could do it for a week or so as long as you knew it was a training wheels exercise but, overall, the idea makes me crazy because it sets anyone who follows it up for failure.
But see here is the rub—you are tricking yourself. The multifractal and simple fractal self-perceptions and expectations are being acted on.
But we tend to like what has defended us in the past. Defense mechanisms, the roots of not knowing, worked for us as children. They kept us mentally safe and motivated. If something goes wrong when you are little and you literally have no power, it makes you feel as if you do (have power) to say “oh, it is my fault.” Think about it; if it is your fault then it lies within your purview to do something about it. This is actually called the narcissistic defense.
In adulthood, these explanations and expectations hold us back. They function more like keeping a caterpillar from becoming a butterfly. A silk cocoon seems to have its advantages but, really, how does it compare to the free flight of a butterfly?
If a feeling feels urgent, if it feels compelling, suspect it as impulse.
In a new world where feelings and emotions count, step one turns out to be quite different than you would think. Ironically, the most helpful thing to do when you have blown it is to feel bad! It won’t kill you, it won’t even cause you to throw up (most of the time), but it will put your body in synch with your mind and your mind in synch with reality.
I can guarantee you that a psychological set-up exists in your trading that makes you feel like you felt when you were a child. It is all there. The simple and early fractals were there before you got to high school. They may become re-mixed somewhat and events from your teenage years may exacerbate them, but the roots go deep.
Whatever self-perception, set of beliefs and expectations, and explanations you came up with for your rightful place in the world, chances are the negative or limiting ones are just the narcissistic view of a child who, if they can jury-rig something into being their fault, gains a false sense of control over the situation.
Think you are not susceptible to your own ego? Think there are guys out there who don’t know a thing about how they really feel and yet are billionaires? There may be, although I would argue they know themselves better than their press agents ever let on. The other thing they certainly know is that markets are at their core only human games, not mathematical ones. They know this even if they spend all their time developing algorithms to stalk the cadence of the market’s language. The numbers represent the playing cards and winning is way more about the mind games of playing poker, hands down, than anything else.
Spend half of your time working on yourself and you will make more progress than if you spent all of that time trying to figure out the next great unknown piece of information.
Rating: 4/5
Intentionally resolve to evaluate the social/human context through which you analyze your data, projections, or probabilities. Do this first for yourself as a risk management tool, i.e., what are the emotional and social pressures playing on you, and second as a strategy tool for understanding market action.
Reality points to a very big gap between where the numbers leave off and exceptional performance begins!
Ninety years and incalculable amounts of measuring power later does not change the fact that the only thing about the future that we can be sure of is the turning of the Earth and the attendant sunrises and sunsets. We know nothing else for sure other than time will march on.
No matter how you analyze a market or a trade, no matter what your timeframe, the only “thing” you are ever trying to deduce is if other market players will value the asset in question differently in the future.
We go about making our market decisions based on facts we try to find but, in the end, they don’t tell us what we want and need to know. Facts can never be more than clues in a puzzle. We, if we are going to consistently get it more right than wrong, need the explicit strategy of predicting people.
You make money by correctly predicting the opponent’s future perception—not “the facts”!
Price reflects perception, and perceptions can stem from almost innumerable combinations of factors.
Every single price at every single moment now and forever will be only a perception—nothing more and nothing less.
Solving the eternal puzzle of markets depends entirely on your ability to fluidly wield the sword of numbers as a language and not as a law.
Counterintuitively, we deal with uncertainty faster than we deal with arithmetic! Could this be because the vast majority of what we deal with is actually uncertain even though we typically forget that in reality we don’t ever know what will happen tomorrow.
Evidently, the visual cortex needs the context of emotional meaning to turn shapes, colors, etc. into anything identifiable.
An emotion alone never lost a dime!
We all know that the traders who make money year in and year out (and there are plenty of them out there) always work the game in this order anyway—manage risk first, seize opportunity second.
...do not make any decision you don’t have to when you lack physical energy. In other words, don’t trade when you are tired—you will lose money
Never forget, everyone wants to sack you! Don’t give away an edge you can completely control.
Feel what you feel—as much as you can feel it.
Get used to admitting to yourself (and if possible to someone you can trust) what you are feeling. Instead of trying to overcome or intellectualize a feeling (saying to yourself, “stop doing that”), say I feel like x, y, or z. Just let it be and don’t judge it.
Simply put, the more conscious of it you are, and the sooner you get conscious of it, the more you can use this knowledge first as risk management and eventually as a tool for reading others in the marketplace. Whether they know it or not, they live on this spectrum too.
Don’t be afraid to put it into words. In fact, reams of research out of the psychoanalytic traditions and now even decision science indicate that putting feelings into words, does indeed provide a great benefit. Putting feelings into words not only reduces anxiety but verbalization can actually allow us to work more effectively on a thinking level.
Given that 100% of the game relies on your good judgment, why wouldn’t you create the advantage of being well rested? Sleep is an edge.
Everyone spends all their time searching for what everyone else doesn’t know, when a lot more money can be made searching for what others are about to know.
If you want psychological leverage, you need to elevate this introspective analysis to a priority even higher than knowing what the market is doing at any given moment.
A Very Basic, Very Powerful Psychological Leverage Plan
Let me boil the basic plan down to a cheat sheet:
1. Create physical energy.
2. Read other people.
3. Get the risk management edge through knowing yourself and how you feel (your emotional contexts) operating at any given moment.
4. Get the strategy edge by using that knowledge of yourself to understand others (their emotional contexts), which they most likely will act out (since they aren’t doing #3).
5. Know when to push it because you have emotional capital and psychological leverage.
6. Know when not to push it because you are acting out of an emotional context fueled by the past, be it the immediate past or the distant fractal past.
You certainly don’t want to try to make any given amount every day. You could do it for a week or so as long as you knew it was a training wheels exercise but, overall, the idea makes me crazy because it sets anyone who follows it up for failure.
But see here is the rub—you are tricking yourself. The multifractal and simple fractal self-perceptions and expectations are being acted on.
But we tend to like what has defended us in the past. Defense mechanisms, the roots of not knowing, worked for us as children. They kept us mentally safe and motivated. If something goes wrong when you are little and you literally have no power, it makes you feel as if you do (have power) to say “oh, it is my fault.” Think about it; if it is your fault then it lies within your purview to do something about it. This is actually called the narcissistic defense.
In adulthood, these explanations and expectations hold us back. They function more like keeping a caterpillar from becoming a butterfly. A silk cocoon seems to have its advantages but, really, how does it compare to the free flight of a butterfly?
If a feeling feels urgent, if it feels compelling, suspect it as impulse.
In a new world where feelings and emotions count, step one turns out to be quite different than you would think. Ironically, the most helpful thing to do when you have blown it is to feel bad! It won’t kill you, it won’t even cause you to throw up (most of the time), but it will put your body in synch with your mind and your mind in synch with reality.
I can guarantee you that a psychological set-up exists in your trading that makes you feel like you felt when you were a child. It is all there. The simple and early fractals were there before you got to high school. They may become re-mixed somewhat and events from your teenage years may exacerbate them, but the roots go deep.
Whatever self-perception, set of beliefs and expectations, and explanations you came up with for your rightful place in the world, chances are the negative or limiting ones are just the narcissistic view of a child who, if they can jury-rig something into being their fault, gains a false sense of control over the situation.
Think you are not susceptible to your own ego? Think there are guys out there who don’t know a thing about how they really feel and yet are billionaires? There may be, although I would argue they know themselves better than their press agents ever let on. The other thing they certainly know is that markets are at their core only human games, not mathematical ones. They know this even if they spend all their time developing algorithms to stalk the cadence of the market’s language. The numbers represent the playing cards and winning is way more about the mind games of playing poker, hands down, than anything else.
Spend half of your time working on yourself and you will make more progress than if you spent all of that time trying to figure out the next great unknown piece of information.
November 20, 2024
"Market Mind Games: A Radical Psychology of Investing, Trading, and Risk" by Denise Shull explores the pivotal role emotions and psychology play in making financial decisions. This groundbreaking book challenges the traditional reliance on numbers, charts, and models, arguing that mastering your emotional landscape is as crucial as understanding market data. By integrating emotional intelligence and psychological resilience, Shull provides traders and investors with the tools needed to make smarter, more confident decisions in high-pressure situations.
Financial markets are often viewed through the lens of logic, data, and predictive models. However, Shull highlights a critical oversight: emotions and perceptions significantly influence decision-making. Data alone cannot account for the unpredictable nature of markets, as evidenced by events like the 2008 financial meltdown. While models provide a sense of control, they can fail catastrophically when markets behave unexpectedly. In these moments, traders’ emotions and instincts become essential. Shull emphasizes that emotions are not distractions but valuable signals. Fear, confidence, and intuition often reveal truths that data may obscure. Recognizing and responding to these emotional cues can give traders an edge, especially in volatile and uncertain markets. By balancing data with an awareness of emotional and psychological patterns, traders can navigate complexity with sharper insight.
Markets are not just data-driven but profoundly shaped by human perception and behavior. Traders often misinterpret their position in the market due to biases or emotional misjudgments, leading to costly errors. Shull advises traders to look beyond numbers and focus on understanding how participants interpret and react to market movements. This perspective aligns with John Maynard Keynes’s analogy of markets as beauty contests, where success lies in predicting others’ preferences rather than one’s own. Even algorithmic strategies are ultimately based on assumptions about human behavior. By recognizing the emotional and social dynamics of trading, traders can develop a more nuanced market vision and anticipate trends with greater accuracy.
Shull underscores the importance of emotional intelligence in trading. Success often depends on managing psychological capital—your physical, mental, and emotional energy. A lack of sleep, poor diet, or unaddressed stress can cloud judgment, leading to impulsive decisions and increased risk. Simple practices like maintaining good physical health can bolster emotional resilience and improve decision-making. Rather than suppressing emotions, traders should treat them as data points. Fear, frustration, or overconfidence can skew judgment if left unchecked. Recognizing these emotions helps traders pause, reset, and make more rational choices. Emotional intelligence also enhances a trader’s ability to interpret broader market behavior, offering a competitive edge in predicting others’ actions.
Regret is a powerful force in trading, often influencing decisions more than traders realize. Whether it’s the fear of missing out (FOMO) or the pain of watching profits vanish, regret can cloud judgment and lead to suboptimal choices. Shull introduces the concept of regret theory, which acknowledges that traders’ decisions are often driven by the anticipation of future regret. Accepting the inevitability of regret allows traders to approach decisions more rationally. Instead of chasing perfection, they can focus on making balanced choices that align with their overall strategy. By understanding and managing regret, traders can reduce emotional stress and enhance their performance.
Successful portfolio management requires more than technical expertise; it demands psychological leverage. This involves maintaining mental and emotional clarity in the face of market volatility. Physical well-being—through adequate sleep, nutrition, and exercise—plays a vital role in sustaining the energy needed for sound decision-making. In addition to self-awareness, traders must anticipate how others will react to market events. Understanding the emotional and psychological patterns of other market participants provides valuable insights into price movements and trends. This holistic approach enables traders to stay ahead of the curve, making informed decisions that outpace those based solely on data.
Shull delves into the concept of fractal-emotional contexts—unconscious emotional patterns shaped by early life experiences that influence trading behavior. By recognizing and addressing these patterns, traders can overcome psychological barriers that hinder their performance. Techniques like journaling thoughts during trades and reflecting on emotional triggers can reveal connections between personal history and current decision-making. Shull encourages traders to fully experience their emotions rather than suppressing them. This practice helps diffuse their power, enabling clearer and more balanced actions. Overcoming resistance to introspection is key to breaking self-sabotaging habits and rebuilding confidence. By addressing these deep-rooted issues, traders can approach the market with greater clarity, resilience, and success.
The central message of "Market Mind Games" is that emotional mastery is as essential to trading success as technical skill. Denise Shull teaches that understanding your psychological state, managing regret, and leveraging emotional intelligence are critical for navigating the complexities of financial markets. By combining emotional awareness with traditional market analysis, traders can make more informed decisions, reduce stress, and achieve sustained success in an unpredictable and often volatile environment.
Financial markets are often viewed through the lens of logic, data, and predictive models. However, Shull highlights a critical oversight: emotions and perceptions significantly influence decision-making. Data alone cannot account for the unpredictable nature of markets, as evidenced by events like the 2008 financial meltdown. While models provide a sense of control, they can fail catastrophically when markets behave unexpectedly. In these moments, traders’ emotions and instincts become essential. Shull emphasizes that emotions are not distractions but valuable signals. Fear, confidence, and intuition often reveal truths that data may obscure. Recognizing and responding to these emotional cues can give traders an edge, especially in volatile and uncertain markets. By balancing data with an awareness of emotional and psychological patterns, traders can navigate complexity with sharper insight.
Markets are not just data-driven but profoundly shaped by human perception and behavior. Traders often misinterpret their position in the market due to biases or emotional misjudgments, leading to costly errors. Shull advises traders to look beyond numbers and focus on understanding how participants interpret and react to market movements. This perspective aligns with John Maynard Keynes’s analogy of markets as beauty contests, where success lies in predicting others’ preferences rather than one’s own. Even algorithmic strategies are ultimately based on assumptions about human behavior. By recognizing the emotional and social dynamics of trading, traders can develop a more nuanced market vision and anticipate trends with greater accuracy.
Shull underscores the importance of emotional intelligence in trading. Success often depends on managing psychological capital—your physical, mental, and emotional energy. A lack of sleep, poor diet, or unaddressed stress can cloud judgment, leading to impulsive decisions and increased risk. Simple practices like maintaining good physical health can bolster emotional resilience and improve decision-making. Rather than suppressing emotions, traders should treat them as data points. Fear, frustration, or overconfidence can skew judgment if left unchecked. Recognizing these emotions helps traders pause, reset, and make more rational choices. Emotional intelligence also enhances a trader’s ability to interpret broader market behavior, offering a competitive edge in predicting others’ actions.
Regret is a powerful force in trading, often influencing decisions more than traders realize. Whether it’s the fear of missing out (FOMO) or the pain of watching profits vanish, regret can cloud judgment and lead to suboptimal choices. Shull introduces the concept of regret theory, which acknowledges that traders’ decisions are often driven by the anticipation of future regret. Accepting the inevitability of regret allows traders to approach decisions more rationally. Instead of chasing perfection, they can focus on making balanced choices that align with their overall strategy. By understanding and managing regret, traders can reduce emotional stress and enhance their performance.
Successful portfolio management requires more than technical expertise; it demands psychological leverage. This involves maintaining mental and emotional clarity in the face of market volatility. Physical well-being—through adequate sleep, nutrition, and exercise—plays a vital role in sustaining the energy needed for sound decision-making. In addition to self-awareness, traders must anticipate how others will react to market events. Understanding the emotional and psychological patterns of other market participants provides valuable insights into price movements and trends. This holistic approach enables traders to stay ahead of the curve, making informed decisions that outpace those based solely on data.
Shull delves into the concept of fractal-emotional contexts—unconscious emotional patterns shaped by early life experiences that influence trading behavior. By recognizing and addressing these patterns, traders can overcome psychological barriers that hinder their performance. Techniques like journaling thoughts during trades and reflecting on emotional triggers can reveal connections between personal history and current decision-making. Shull encourages traders to fully experience their emotions rather than suppressing them. This practice helps diffuse their power, enabling clearer and more balanced actions. Overcoming resistance to introspection is key to breaking self-sabotaging habits and rebuilding confidence. By addressing these deep-rooted issues, traders can approach the market with greater clarity, resilience, and success.
The central message of "Market Mind Games" is that emotional mastery is as essential to trading success as technical skill. Denise Shull teaches that understanding your psychological state, managing regret, and leveraging emotional intelligence are critical for navigating the complexities of financial markets. By combining emotional awareness with traditional market analysis, traders can make more informed decisions, reduce stress, and achieve sustained success in an unpredictable and often volatile environment.
August 24, 2015
helpful and insightful book for discretionary traders to seek an edge in the market.
January 10, 2019
There was useful information here about paying attention to your feeling and emotions.
December 7, 2020
Best trading book of all time.
March 13, 2021
I have been spending a lot of time thinking about 'decision-making' and the role our emotions and subconscious plays in influencing our conscious thinking and analysis. This book has some great core ideas about the role of emotion and the subconscious in our decision making, but overall is poorly written.
Our core, underlying beliefs shape our decisions and our emotions mediate confidence and influence how we perceive information and risks.
Emotions (and physical feelings like hunger and fatigue) should be seen not only as a factor of influence but as also as a data source. They give us information about our subconscious beliefs and desires, and how our analysis might be swayed. Understanding this - your emotional context - is important for improving decision making. One study found that people who feel their own emotions more intensely have higher decision making performance.
Building on this, she argues that the emotions we express are recurrent and the result of innate and learned responses (from early life) to our environment. Similar situations react with our emotional context to create similar decisions and outcomes which is why many people feel like similar things happen to them. To avoid falling into repetitive emotional reactions we need to understand the source of this 'fractal emotional context' - an emotional context playing out over different time frames and scales of life events - by examining our past traumas and relationships.
In the end we should create an inward looking process to make us aware of our feelings and emotions and their likely source. We need to understand where we sit on the fear-confidence spectrum and embrace that uncertainty exists. The lessons are the same as old trading wisdom teaches, such as understanding your ego and letting go of it, as well as tips superforecasters give about being weary of your cognitive biases. I will be adopting her recommendation to create a process for examining feelings and emotions.
Markets at their core are about the changing expectations of humans, influenced by emotion and beliefs. It doesn't matter if investments are made on a discretionary or algorithmic basis because there are always human beliefs behind these models. Understanding the source and changes of our beliefs and emotions and those of others can only improve our performance. In fact, some research has found that traders with greater scores on 'theory of mind tests' are better able to predict price changes.
All of these ideas are described through a narrative involving a trader learning about the emotional context through lectures given by the author. He then tries to use her ideas to start a fund. While I agree with and like her ideas, I really do not like this format. The story was not very exciting, there was too much repetition, poorly worded sentences and many mistakes. This could have been written with more impact if it was condensed to the key ideas, supported through more anecdotes from clients.
After reading this book, 'The behavioural investor', 'Superforecasting' and other work on thinking and decision making I am starting to believe that cognitive biases, ego and emotion are all just the result of a few underlying factors in the brain. We learn models/beliefs about the world that we use to maintain our wellbeing (above all else) and secondly to increase our prosperity. Ego is simply the brain's ability to protect its beliefs from changing because beliefs are necessary to determine behaviours. In that sense ego is important for us to live life without questioning things constantly or being gripped by inaction. Emotions and feelings are the feedback systems to guide us toward different behaviours, models and beliefs to serve the ultimate goal of survival and prosperity. This is likely not the best way to think about this but its a good starting place for me while I continue to learn about this fascinating topic!
Our core, underlying beliefs shape our decisions and our emotions mediate confidence and influence how we perceive information and risks.
Emotions (and physical feelings like hunger and fatigue) should be seen not only as a factor of influence but as also as a data source. They give us information about our subconscious beliefs and desires, and how our analysis might be swayed. Understanding this - your emotional context - is important for improving decision making. One study found that people who feel their own emotions more intensely have higher decision making performance.
Building on this, she argues that the emotions we express are recurrent and the result of innate and learned responses (from early life) to our environment. Similar situations react with our emotional context to create similar decisions and outcomes which is why many people feel like similar things happen to them. To avoid falling into repetitive emotional reactions we need to understand the source of this 'fractal emotional context' - an emotional context playing out over different time frames and scales of life events - by examining our past traumas and relationships.
In the end we should create an inward looking process to make us aware of our feelings and emotions and their likely source. We need to understand where we sit on the fear-confidence spectrum and embrace that uncertainty exists. The lessons are the same as old trading wisdom teaches, such as understanding your ego and letting go of it, as well as tips superforecasters give about being weary of your cognitive biases. I will be adopting her recommendation to create a process for examining feelings and emotions.
Markets at their core are about the changing expectations of humans, influenced by emotion and beliefs. It doesn't matter if investments are made on a discretionary or algorithmic basis because there are always human beliefs behind these models. Understanding the source and changes of our beliefs and emotions and those of others can only improve our performance. In fact, some research has found that traders with greater scores on 'theory of mind tests' are better able to predict price changes.
All of these ideas are described through a narrative involving a trader learning about the emotional context through lectures given by the author. He then tries to use her ideas to start a fund. While I agree with and like her ideas, I really do not like this format. The story was not very exciting, there was too much repetition, poorly worded sentences and many mistakes. This could have been written with more impact if it was condensed to the key ideas, supported through more anecdotes from clients.
After reading this book, 'The behavioural investor', 'Superforecasting' and other work on thinking and decision making I am starting to believe that cognitive biases, ego and emotion are all just the result of a few underlying factors in the brain. We learn models/beliefs about the world that we use to maintain our wellbeing (above all else) and secondly to increase our prosperity. Ego is simply the brain's ability to protect its beliefs from changing because beliefs are necessary to determine behaviours. In that sense ego is important for us to live life without questioning things constantly or being gripped by inaction. Emotions and feelings are the feedback systems to guide us toward different behaviours, models and beliefs to serve the ultimate goal of survival and prosperity. This is likely not the best way to think about this but its a good starting place for me while I continue to learn about this fascinating topic!
September 24, 2024
*Market Mind Games* by Denise Shull provides a fresh and deeply psychological perspective on trading and decision-making in financial markets. Unlike traditional books on trading strategies, Shull’s focus is on understanding and managing the emotional and psychological aspects of trading, making it stand out in the realm of finance literature.
Shull, a performance coach and neuroeconomics expert, argues that emotions aren't the enemy in trading, as many experts claim. Instead, she asserts that understanding and harnessing emotions can actually provide traders with a competitive edge. The book dives into the psychological complexities of risk, uncertainty, and fear, all of which are integral parts of trading.
Key to Shull’s approach is that traders must recognize, accept, and use their emotions rather than trying to suppress them. Through various psychological insights and real-world examples, she illustrates how traders can develop emotional intelligence to navigate the volatility and uncertainty of markets.
One of the book’s strongest points is its emphasis on understanding oneself. Shull teaches that self-awareness, emotional reflection, and integrating psychological insights into trading strategies can transform the way traders approach their decisions. Her blend of psychology and market experience provides practical tools to help traders better manage fear, overconfidence, and other emotions that can lead to poor decision-making.
While some may find the book dense, especially those unfamiliar with psychological theory, *Market Mind Games* is a unique and thought-provoking read for traders looking to improve their performance by tapping into the human side of markets.
July 23, 2020
Rarely do I have to work so hard to get through a book. The execution of this narrative is mind-boggling terrible. I understand what the author was attempting to do. It didn't work. She needed a better editor.
Putting that aside, the psychological science presented is mostly accurate, but cherry-picked to weave a brain and behavior story that is far more complicated. I should also note that some of the research presented has been found to be unreplicable (meaning, it's probably wrong).
Bottom line:
Yes, there is an incentive behind every action that can be explained in behavioral economic terms.
Yes, emotion can both get in the way of decision making, but can also facilitate clarity.
Yes, dynamics (the underlying narrative we tell ourselves) can facilitate poor decision-making.
Yes, people repeat behavior, even self-destructive behaviors because the outcomes are familiar.
There is nothing new provided within these pages; the author merely attempts to take psychological science and psychodynamic theory and link it to market-related decision making.
Putting that aside, the psychological science presented is mostly accurate, but cherry-picked to weave a brain and behavior story that is far more complicated. I should also note that some of the research presented has been found to be unreplicable (meaning, it's probably wrong).
Bottom line:
Yes, there is an incentive behind every action that can be explained in behavioral economic terms.
Yes, emotion can both get in the way of decision making, but can also facilitate clarity.
Yes, dynamics (the underlying narrative we tell ourselves) can facilitate poor decision-making.
Yes, people repeat behavior, even self-destructive behaviors because the outcomes are familiar.
There is nothing new provided within these pages; the author merely attempts to take psychological science and psychodynamic theory and link it to market-related decision making.
August 26, 2025
Looked forward to reading this book but I had a hard time staying engaged.
I picked up and dropped off the book 7-10 times over two months. The author's writing style seems to meander around using large words unnecessarily. I had a difficult time tracking her premise. The fictional characters were initially interesting but she kind of lost track of them as they appeared in some chapters and not others. What was the point of introducing them? It added to the confusion. When I finally gave up, I wonder if she was playing mind games with readers.
This is one of the worst books about the psychology of investing/trading I have read. It adds nothing to the field and she makes old information hard to digest. Disappointing.
I picked up and dropped off the book 7-10 times over two months. The author's writing style seems to meander around using large words unnecessarily. I had a difficult time tracking her premise. The fictional characters were initially interesting but she kind of lost track of them as they appeared in some chapters and not others. What was the point of introducing them? It added to the confusion. When I finally gave up, I wonder if she was playing mind games with readers.
This is one of the worst books about the psychology of investing/trading I have read. It adds nothing to the field and she makes old information hard to digest. Disappointing.
October 17, 2023
This book was a refreshingly new look at psychology and trading. So many books try and tell you to ignore your emotions, be more robotic and rule driven. Denise explains a better approach is to recognize the emotions as they crop up, accept them, embrace them and in some cases try and draw out even more emotion from them. Doing this helps your brain fully accept the emotion and allows you to move past it and process quicker, most likely because you let it run its course. She also delves into the topic of proper sleep, diet and exercise and how all play a part for proper decision making.
July 4, 2020
As someone who just recently got into the market and a lover of psychology, I saw this book as the perfect union between a new found interest and an old one. Although what I expected is different than what I received (storytelling style), it provided some truly illuminating content. One of the most intense journeys is understanding who we are and why we do what we do. This book has provided me with a little more context in my search for answers while using Wall Street principles to drive the more nuanced points home.
August 8, 2020
Okay. Just 2 things to get from this book -
1. Understand Ourselves
2. Accept the emotions you've and use your psychological leverage to understand the market emotions.
The book has been bragged to 254 pages, unnecessarily. Struggled a lot to finish it while skimming a lot of contents. Every other page has "Michael" mentioned in it. Lol.
I love books on finance and markets, but this has been straight up time consuming.
A book summary (if avaibale) should suffice for this.
Cheers!
Happy Reading!
1. Understand Ourselves
2. Accept the emotions you've and use your psychological leverage to understand the market emotions.
The book has been bragged to 254 pages, unnecessarily. Struggled a lot to finish it while skimming a lot of contents. Every other page has "Michael" mentioned in it. Lol.
I love books on finance and markets, but this has been straight up time consuming.
A book summary (if avaibale) should suffice for this.
Cheers!
Happy Reading!
November 20, 2024
Summary:
The mastering your emotions is as essential to trading success as understanding the data. While technical skills and market analysis are important, it’s your ability to recognize and manage your psychological state that often determines long-term performance. By developing emotional intelligence, learning to manage regret, and leveraging psychological capital, you can make more informed, confident decisions. Approaching trading with this mindset will enhance your market strategy while building the resilience needed to thrive in the face of uncertainty and volatility.
The mastering your emotions is as essential to trading success as understanding the data. While technical skills and market analysis are important, it’s your ability to recognize and manage your psychological state that often determines long-term performance. By developing emotional intelligence, learning to manage regret, and leveraging psychological capital, you can make more informed, confident decisions. Approaching trading with this mindset will enhance your market strategy while building the resilience needed to thrive in the face of uncertainty and volatility.
November 20, 2024
“mastering your emotions is as essential to trading success as understanding the data. While technical skills and market analysis are important, it’s your ability to recognize and manage your psychological state that often determines long-term performance. By developing emotional intelligence, learning to manage regret, and leveraging psychological capital, you can make more informed, confident decisions. Approaching trading with this mindset will enhance your market strategy while building the resilience needed to thrive in the face of uncertainty and volatility.”
This entire review has been hidden because of spoilers.
January 31, 2021
I never thought this book would help me so much in trading. No, there’s any technique or new fundamental analysis on it. But there a complete new way of thinking about markets by thinking about ourselves.
Lessons are very clear, and there’s a step by step guide for you to start to know... about yourself.
Author keeps trying to help you focus on yourself all the time, to help you understand the inner and deep reasons about your market decisions. I loved that!
Lessons are very clear, and there’s a step by step guide for you to start to know... about yourself.
Author keeps trying to help you focus on yourself all the time, to help you understand the inner and deep reasons about your market decisions. I loved that!
March 19, 2020
This is probably one of the better books I’ve read on trading simply because: 1) it wasn’t written by a man and 2) it talks about harnessing the power of your emotions, which is rare in the world of trading. It definitely set me on a better path with my trades. I was so tired of hearing “There are no emotions in trading.” It was getting exhausting.
September 5, 2022
I think Denise nailed it! Behind a huge drive for quantitative treatment in financial markets are human perceptions. Like it or not the game is played by humans! This book challenges us to dig deeper and see the world through a holistic lens. I’d recommend it to anyone who wants to be more self aware and make better decisions.
July 19, 2019
This book tells you exactly what condition you must be in before going into an emotional warfare that is the market, and this book helps me a lot in determining when should I do my market actions or just stay calm and recalculate my possible moves.
This entire review has been hidden because of spoilers.
August 11, 2020
Very interesting book about the emotional side of trading (not investing). The author was an ex-trader who now has a practice to help current traders overcome self-inflicted psychological obstacles that some trades bring into the game.
August 3, 2021
Good book that breaks down how our views of the market are colored by our own internal biases. It's a recurring theme but Shull approaches things in a new way that is interesting. The book is presented as a novel which makes it easier to read, albeit very cliched kinda corny.
June 15, 2022
Intersting
Well this is certainly interesting, Denise shull certainly knows what she is talking about. There's a massive amount of information in a single book. this isn't only good for a trader or investor but for a good psychology book
Well this is certainly interesting, Denise shull certainly knows what she is talking about. There's a massive amount of information in a single book. this isn't only good for a trader or investor but for a good psychology book
October 8, 2023
Great book on recognizing and acting on our feelings and emotions. Something I believe far too many of us fail at is getting in touch with our emotions and feelings - this dives into seeing the patterns that drive us to those emotions.
Read
December 7, 2024Aquinas had it right:
Affectus, qui passio est, desinit esse passio simulatque eius claram et distinctam formamus ideam.
Emotion, which is suffering, ceases to be suffering as soon as we form a clear and precise picture of it.
Affectus, qui passio est, desinit esse passio simulatque eius claram et distinctam formamus ideam.
Emotion, which is suffering, ceases to be suffering as soon as we form a clear and precise picture of it.
February 13, 2025
Great concept that intermediate & advanced traders will appreciate, but not beginners. Key flaw of the book is its dry tone, more like a research paper. But still deserves praise because the concept is actually amazing
December 30, 2017
Well worth it
July 20, 2019
But alas I am biased.... the spelling mistakes need fixed. Let it be known that we have asked McGraw-Hill multiple times...
This entire review has been hidden because of spoilers.
December 24, 2019
This books offers a different perspective on what affects our decision making with some psychology notes and an example of the financial market.
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