This is the second interview in a multi-part series about The Women of StockTwits (previous articles are linked below). If you’d like to nominate an additional Woman of StockTwits, please do so in the comment section below.

Although some people believe men are from Mars and women are from Venus, professional traders live on a gender-blind planet governed by meritocracy. Professional trader and trading psychology expert Denise Shull is a perfect example that superior ideas rise to the top of the trading battlefield.

Denise has had an interesting path to her current role as CEO of trading psychology consultancy TraderPsyches Inc. Denise was kind enough to share her story about merging cross-disciplinary passions to enter the brains of traders.

Denise Shull

Damien Hoffman: Denise, How did you get started trading and running a trading psychology consultancy?

Denise: A friend who had traded on the floor of the Chicago Board Options Exchange (CBOE) and with whom I played volleyball kept telling me I would be a good trader. In fact, he tried to get me to buy a new kind of seat that was being offered on the Chicago Board of Trade (CBOT) in 1992. In 1994, as I was finishing my Master’s thesis from the University of Chicago, my friend was invited to trade at one of the first “upstairs” proprietary trading firms: Electronic Trading Group or ETG. He and his friends convinced me to help them keep track of their trades intraday. In exchange, they taught me to trade. I think it took about 45 days before I had my own account and was trading. I loved it and felt as if I had found the analytical/non-political world I was meant to be in.

At that point, my plans for a Ph.D. went by the wayside. I used the school money I had set aside to trade.  In late 1996, I was invited to move to NYC and open a day-trading desk within a large Nasdaq market-making firm. At the time, it seemed to be too good an offer to refuse. That was my first foray into coaching traders. But after a few years it became clear that it was impossible to run the desk and trade well – at least for me.

From 1998 until 2003 I was swing trading in my own account and dabbled in my Ph.D. at The Mid-Manhattan Institute for Psychoanalysis. That wasn’t enough to keep me busy. So I went back to trading full-time. In the process I met Linda Bradford Raschke’s partner Chris who suggested I combine the two [disciplines of psychology and trading] to write an article. That article inadvertently created a consulting business which is now Trader Psyches Inc.

A key person in that story is Gail Osten, formerly the Editor of SFO Magazine and the Director of Education at CME Group. She liked my article and asked me to write more. When she moved to CME Group she invited me to sit on a trading psychology panel with Dr. Brett Steenbarger and Dr. Doug Hirschhorn.  At that event, my then radical ideas about the functional role of feelings and emotions in trading were suddenly catapulted into a much bigger universe.

Damien: Do you have any female role models in the trading world?

Denise: No, not really. I grew up in a home where it came as a complete surprise to me that anyone ever looked at a woman’s accomplishments or abilities any differently than a man’s.  My grandmother chose to be a single mother in 1932. That decision permeated my father’s life and, in turn, mine. Ironically, my first boss told me that while he thought I had the best instincts he had ever seen, he previously didn’t think a woman could trade. I really liked this guy, so I just chalked it up to outdated cultural myths.

In reality, with the exception of a woman named Renee from the CBOE, I never knew any female traders early on. So I really have only three role models and they are all male: the guy who got me into the business Don; Dmitri Balyasny of Balyasny Capital Management (B.A.M) whom I had the privilege to sit next to for a year at Schonfeld; and, a guy named Chris who was once the all-time money leader in the S&P 100 options pit at the CBOE. Each, knowingly or unknowingly, taught me loads about reading markets.

Damien: What is your trading style and how has your experience with trading psychology influenced it?

Denise: Almost from the get-go, I was a momentum trader. My first firm ETG was very much about scalping, but I wanted to get the directional moves. This caused me to move to Schonfeld who was known in 1995 for being a momentum shop. To this day, that is still my style. I don’t see any reason to try to force a trade. I wait for a real move to happen and catch the second wave as there is almost always a second wave even if it doesn’t turn into a trend day.

A few years ago I finally learned to interpret a Market Profile chart through Tom Alexander of Alexander Trading. Once he translated for me, I never looked back. The Market Profile chart incorporates, at least for me, everything that is important about answering the real question we are all trying to answer which is, “Will you, Damien, pay a different price in the future?” On the psychological side and in the institutional world, I call this my Social Markets Hypothesis. I use it all the time. I compare different market players from different markets and I actively engage in what is called mentalizing to predict their behavior.

This is also a lot of what we teach in the Trade Psyches’ Psychological Capital E-learning course — and, if I am lucky, you will see covered by both Bloomberg Markets Magazine and in a 2010 book about what two London-based academics are now calling “Emotional Finance.”

There are things I appreciate now that I did not fully appreciate before I learned from coaching close to a 1000 traders. For example, traders learn to prefer shorting stocks because of the [psychological] rush that comes when a short trade works. The old saying, “The market takes the stairs up and the elevator down,” entices people to want short trades. In a long consolidation, which is so easy to see on a Market Profile chart, you can almost always bet on the market breaking upwards [short-squeezing] first because there are more stops sitting up there. Those stops act as mini-magnets pulling the prices up.

Most of all, my style and the lessons of Trader Psyches’ Advanced Trading Psychology are now all about focusing on the human behavior scenarios. The lines, bars, and other indicators are only meant to be a tool. However, many people unfortunately come to believe these tools are the answer to the puzzle of the markets. These traders soon learn markets are never certain. Rather, markets are likewise always uncertain and present uncertain probabilities.

Damien: Denise, thanks for sharing your inspiring story.

Denise: Thanks for asking.

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