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Denise Shull - Market Mind Games, book review


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Denise Shull - Market Mind Games, book review

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This thread is to discuss her book:

Denise Shull - Market Mind Games



https://www.amazon.com/Market-Mind-Games-Psychology-Investing/dp/0071756221/ref=sr_1_1?ie=UTF8&qid=1327092101&sr=8-1

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I'm looking forward to the book.

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I got the ebook from kobo today. Looking forward to reading it over the weekend.

Although having just read the prologue I am bit concerned that she refers to "The Black Swan" by Nassim Taleb as a foundation(?) for her own views. I strongly disagreed with the philosophy presented in "The Black Swan". It is utter pig swill. So I hope Denise did not draw too much inspiration from it :-)

By the way use "survey25" at kobobooks.com to get 25% off a single purchase. I think that code expires end of Jan.

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Traderji View Post
Although having just read the prologue I am bit concerned that she refers to "The Black Swan" by Nassim Taleb as a foundation(?) for her own views. I strongly disagreed with the philosophy presented in "The Black Swan". It is utter pig swill.

Interesting, first time I can recall hearing something bad about The Black Swan.

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all for the open exchange of ideas in a professional if not scholarly manner and there we go the first poster calling Nic Taleb pig swill...so much for that. I will not waste my time. I know Taleb from his Chicago days and while I would not call us buddies, his work is to be respected. That is not to say agreed with on every point or level but to refer to him in a derogatory way is the hallmark of a fool. But that is okay as I am in the business of transferring the assets of fools into my account every day. God may bless the fool but I'm still working on suffering them with grace...I don't have the time to waste.

So, the dialog will stay above the line or it will go without any interest from me. For the record I used "fool" as a general term meaning that it does not refer to any individual or futures.io (formerly BMT) member....but it does refer to people that talk foolishness about a recognized authority.

A statement like, I do not agree might be a little more reasonable, right?

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wldman View Post
A statement like, I do not agree might be a little more reasonable, right?

What irony.. you are angry at me for calling someone else a fool & being unreasonable and then you respond by calling me a fool. You can't claim the moral high ground and fling mud at the same time :-)

Anyway this is not a thread about The Black Swan so I will restrain myself to the topic on hand.

I am on page 42 of the book and as I feared it heavily draws upon the same line of thinking as The Black Swan. Most likely I won't read it further. So here are my thoughts about it so far (Disclaimer - I am highly critical so stop reading this post now if you plan to read the book and want no prior external bias)

While reading this book, I kept thinking "this is absurd". Time and again the author makes completely baseless assertions which form shaky foundations. If I went through everything wrong this post would be larger than the book itself so I will try to be concise.

On page 25 the author talks about (to paraphrase)

If there was "e=mc(2)" type formula to predict the markets then wouldn't they (the smart people PhDs) have found it by now?

This is nonsense. First of all why exactly should they have found it by now? On what basis does the author claim this? It would be like scientists saying if there was a unified theory of everything then shouldn't someone have found it by now?

It is a classic straw-man argument that the author makes here. She takes the scenario to it's most absurd conclusion , ie the market is deterministic and hence there should exist a neat equation to explain every movement in price and shouldn't someone have found this formula by now therefore the market is not deterministic it is random. Duh we already knew that. Every trader knows through bitter experience that the markets are random.

The author contradicts herself a few times. For example the author gives a personal anecdote about a trader she knew who made the mistake of going long the Friday before the 1987 market crash. The lesson she offers from it - even though there was practically no chance of the market crashing in 87 the trader still should not have gone long because anything can happen. Yet a few pages later on page 35 she says everything in the future is uncertain except the Earth turning & the sun rising. It is just absurd. You can't claim everything is unpredictable on the one hand only to qualify the same statement a few pages later when you need to make another point and the first version of the statement does not suit you any longer. It's all very fast and loose.

The gist of the book so far is that nothing is absolutely certain. Unpredictable / unexpected events can and do happen . The author keeps hammering this point as if she has unique insight which no one else has. By the very definition of the word unpredictable means that "Not able to be predicted". The author presents anecdotal evidence and events like 9/11, lehman bros, bear sterns GFC etc as proof that anything can happen. But we know that already. The author seems to want to claim credit for concepts with which any student of statistics or investing ought to be already thoroughly familiar.

I am going to pass on this book because I am not sure if there are any rewards further down the road.

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everyone enjoy the book for whatever value you might find.

Trade well, be well.

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On page 25 the author talks about how (to paraphrase) if there was "e=mc(2)" type formula to predict the markets then wouldn't they (the smart people PhDs) have found it by now? This is nonsense. First of all why exactly should they have found it by now? On what basis does the author claim this? It would be like scientists saying if there was a unified theory of everything then shouldn't someone have found it by now?

It is a classic straw-man argument that the author makes here. She takes the scenario to it's most absurd conclusion , ie the market is deterministic and hence there should exist a neat equation to explain every movement in price and shouldn't someone have found this formula by now therefore the market is not deterministic it is random. Duh we already knew that. Every trader knows through bitter experience that the markets are random.

Thanks for the review. It seems that this is just another qualitative-focused trading book.

First of all, I just want to make clear that I have not read the book, nor do I intend to. Personally, I find most of psychology to be pseudoscience. It falls in-between philosophy and neuroscience, which, in my opinion, both does a better job of describing the human psyche.

The argument of market randomness is far too big to get into now, but I don't think you can claim that "Every trader knows through bitter experience that the markets are random.". The markets may very well be deterministic, but chaotic.

Just because there isn't a formula that predicts the markets, doesn't mean that there aren't algorithms that extract money from them.

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Lornz View Post
Thanks for the review. It seems that this is just another qualitative-focused trading book.

First of all, I just want to make clear that I have not read the book, nor do I intend to. Personally, I find most of psychology to be pseudoscience. It falls in-between philosophy and neuroscience, which, in my opinion, both does a better job of describing the human psyche.
....

I sometimes have similar difficulties with psychology and often find that all the concepts do a better job at explaining people around me as opposed to my inner cog wheels, but that also can help when trading.
I personally find the book offers some interesting insights into the fields of philosophy(rather less) and neuroscience(rather more)...having to admit that I just started it.

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Lornz View Post
The argument of market randomness is far too big to get into now, but I don't think you can claim that "Every trader knows through bitter experience that the markets are random.". The markets may very well be deterministic, but chaotic.

Just because there isn't a formula that predicts the markets, doesn't mean that there aren't algorithms that extract money from them.


By randomness I refer to unforeseen events. Some of the events which have affected my investments / trades - earthquake in Japan, China suddenly announcing the reduction in the amount of rare earths it will export, almost the entire executive team of a mid-cap mining company killed in a plane crash in Africa (very tragic incident), a way better than expected jobs report, a European politician talking his/her mouth off in front of the press.... all these events are unpredictable and influence the market. My point is that the author is not making any ground breaking revelations, we have all been there before.

And I agree with you, while there isn't a equation which describes the market, it is quite possible to extract money from it.

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Well seeing as it seems that nearly no one is this thread has read the book, I figured I would drop my .02 on it.

This book really has NOTHING to do with the black swan, she only uses it for the basis that markets cannot be forecast, (anyone who says they can do otherwise is either delusional or lying). And when dealing with uncontrollable risk, try as you might, your logic ends up in the backseat. From there she builds an argument that most of the decisions we make while trading are based off underlying context. Anywhere from the color of the bars on your chart, to the way your mother treated you while you were growing.

The purpose of this seems to be to help you eradicate many of the trades that when looked at in retrospect, maybe you shouldn't have taken.

who knows if it works, but this week im 6/7 in my trades, and I feel more calm and collected than ever before.

I paid $30 for it from barnes and noble and I feel it was money well spent. But the book is like $17 on amazon, for that price its definitely worth the read.

But one thing I can say is, this (trading) is a very risky business. Weather you think something is right, or wrong, works or doesn't work, you darn well better know the argument. (know your enemy and all that)

P.S. Algos are only as smart as the people programming them, their only real benefit is HFT. But hey will never be greater than human instinct, and the human brains ability to adapt to new situations is F*@$ing outstanding! Computer predicting human emotions and instinct is some skylab mess.

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Well seeing as it seems that nearly no one is this thread has read the book, I figured I would drop my .02 on it.

This book really has NOTHING to do with the black swan, she only uses it for the basis that markets cannot be forecast, (anyone who says they can do otherwise is either delusional or lying). And when dealing with uncontrollable risk, try as you might, your logic ends up in the backseat. From there she builds an argument that most of the decisions we make while trading are based off underlying context. Anywhere from the color of the bars on your chart, to the way your mother treated you while you were growing.

The purpose of this seems to be to help you eradicate many of the trades that when looked at in retrospect, maybe you shouldn't have taken.

who knows if it works, but this week im 6/7 in my trades, and I feel more calm and collected than ever before.

I paid $30 for it from barnes and noble and I feel it was money well spent. But the book is like $17 on amazon, for that price its definitely worth the read.

But one thing I can say is, this (trading) is a very risky business. Weather you think something is right, or wrong, works or doesn't work, you darn well better know the argument. (know your enemy and all that)

P.S. Algos are only as smart as the people programming them, their only real benefit is HFT. But hey will never be greater than human instinct, and the human brains ability to adapt to new situations is F*@$ing outstanding! Computer predicting human emotions and instinct is some skylab mess.


I read it too ....wasn't the best book I ever read but is worth reading for sure...I recommend it

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Ha! I had to laugh at @Lornz post - My friend, this is the mother of all "qualitative books"! For me personally that, in and of itself, is not an insult. However, I am neither completely praiseworthy nor condemning of the book's style or arguments.

First, the arguments - Denise's main thesis is that because markets are ultimately uncertain, human brains (lornz, we'll make an exception for you ) will react to the uncertainty by (like it or not) attempting to use judgment. She presents research which argues that humans cannot form judgments without emotion - we cannot, in fact, make decisions without emotion. Because of this, when we interact with the markets, we are using judgment - we are making a decision using our emotions (in addition to reason). Her main point is that, given this situation, we should be focusing quite a bit of energy and awareness on exactly what our emotional background is and how it is affecting our decisions. She distinguishes between immediate emotion (say from recent losses or recent wins) and those emotions stemming from our developmental and genetic (nuture and nature) patterning - i.e., our past relationships with Authority, Competition, and Self-Worth. Her discussion is limited beyond presenting this thesis - for instance, she gives few, if any, practical methods or examples of the latter type of emotions.

Second, the book - The voice of the book is tentative. I think Denise has some good things to say. Unfortunately I think she presents them tentatively - one gets the feeling she is writing self-consciously. She seems to be trying to defend and justify her views to an excessive degree - rather than stating them confidently and backing them up effectively. I am reading Ari Kiev's great book "the psychology of risk" and his voice is confident and direct - I don't find this to be the case with Denise's book.

If there is any discretionary element to your trading (my view is that this includes the ability to turn on and off an algorithmic system or tweak it), then I think the ideas in this book are relevant. However, I think you can get most of the meat of it from her many free, online webinars (see mirus futures and traderkingdom websites).

Hope that helps!

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She presents research which argues that humans cannot form judgments without emotion - we cannot, in fact, make decisions without emotion. Because of this, when we interact with the markets, we are using judgment - we are making a decision using our emotions (in addition to reason). Her main point is that, given this situation, we should be focusing quite a bit of energy and awareness on exactly what our emotional background is and how it is affecting our decisions.

This was the key learning from Denise's book for me. That is:
  1. All decisions are made with emotion whether you like it or not, or whether you believe it or not.
  2. In situations of uncertainty where there is never enough information (such as trading markets), we are required to make judgements.
  3. In such situations the emotions that are in play come from the subconscious, and you may not be aware they are having an impact on your judgement.
In these cases you should not try to control your emotions, but rather monitor and listen to your emotions and add them in as data - a confluence factor if you will - to your trading judgement/decision. So any trading system that has discretionary elements must (becasue of the way the human brain works) use the trader's emotion as input data before a decision can be made.

The challenge then is to understand where your emotions are at and to make sure you understand them and are using them effectively.

I thought it was a good book as it pulled together some important elements of trading psychology in a way that I have not seen before. I recomend it.

Also, for the record, Taleb's two works: "Fooled By Randomness" and "The Black Swan" were, for my money, excellent. They should be required reading.

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Anyone Familiar with Denise Work other than her book?
her workshops or courses?

Thanks

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There's a New York Times article 11/11/13 titled "For Better Performance, Hedge Funds Seek the Inner Trader" which discusses Shull and others. Do a google search for the title to get the link.

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RobertMiami View Post
There's a New York Times article 11/11/13 titled "For Better Performance, Hedge Funds Seek the Inner Trader" which discusses Shull and others. Do a google search for the title to get the link.

There you go just posted it on my twitter @Gussj

https://dealbook.nytimes.com/2013/11/11/for-better-performance-hedge-funds-seek-the-inner-trader/?smid=tw-share&_r=3

Enjoy

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Guss View Post
Anyone Familiar with Denise Work other than her book?
her workshops or courses?

Thanks

Hi, did you take her course or workshop?

or anybody else ?

thanks.

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Anna K View Post
Hi, did you take her course or workshop?

or anybody else ?

thanks.

Nop

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Anna K View Post
Hi, did you take her course or workshop?

or anybody else ?

thanks.

Hi Anna,

Wow. I am late to this discussion.
I didn't take Denise Shull's workshop, but I know Ben Lichtenstein of Trader's Audio did, and claimed that it was beneficial.
Denise has a unique voice, which I felt really did not come through clearly in this book, yet the message does get across. Below is my Amazon Review of her book.


Also she has several free webinars she gives throughout the year with a lot of good information on trading psychology. Hope this helps.

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