The Wolf Of All Streets - Crypto Trading Tips From World-Renowned Performance Coach | Denise Shull, Real Life Wendy Rhoades

Episode Date: June 15, 2021

Crypto Trading Tips From World-Renowned Performance Coach | Denise Shull, Real Life Wendy Rhoades Summary: From athletes to hedge fund managers, professionals from every walk of life around the world have sought expert advice from Denise Shull. Following years of successful trading, Denise transitioned into a renowned performance and decision coach for determined minds looking to gain an edge on the competition and mitigate risk. In addition to her one-of-a-kind Shull Method, Denise also offers unique insight into the minds and emotions of crypto traders and investors, a perspective unseen by many of us. Perhaps most notably, the famous TV character "Wendy Rhoades" from the show "Billions" is based on Denise. In this episode Denise Shull explores: - Traders underperforming the market - The 80/20 investing rule - Psychoanalysis of trading - Managing your money vs. others’ money - The Shull Method - Countertrading the herd - Intrinsic value and human perception - Paralysis by analysis - Athletes vs. traders - The game of the market - Traits of a good trader --- Voyager:  This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 9.5% interest on top coins with no lockups and no limits.  Go to https://thewolfofallstreets.link/voyager and download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account. -- Matcha: Matcha is the easiest way to trade in DeFi. Matcha enables you to trade across all the major DEXs so you can be sure you’re getting better prices than going to a centralized exchange or Uniswap.   Connect your wallet and start today at https://thewolfofallstreets.link/matcha --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is brought to you by Voyager and Matcha. Stay tuned for more information on both later in this episode. What is up, everybody? I'm Scott Melker, and this is the Wolf of Wall Street's podcast. Today's guest is an expert decision maker. She's a renowned performance and decision coach for Wall Street, former securities trader and expert in neuropsychoanalysis, all things that absolutely fascinate me as a trader. Traders, portfolio managers, sports teams, and professional athletes have seeked out her unique show method to reduce stress,

achieve top performance, and reduce risk. It's my goal that by having her on, all the traders and investors that are listening, including myself, can better understand why we make the decisions that we do so that we can all improve on our trading, investing, and of course, decision-making. And I think maybe the coolest part of the whole thing is that she is the real life Wendy Rhodes from Billions. If you guys watch that show, the character is effectively based on her. Denise Schell, thank you so much for joining me today. Oh man, thanks for having me. Happy to be here. So before we get into the questions, once again, you're listening to the Wolf of Wall Street's podcast where twice a week I talk to your favorite personalities from the world

of Bitcoin, finance, trading, art, music, sports, politics, and psycho-neuro-analysis. Neuro-psycho-analysis. This podcast is powered by Blockworks. You can find out everything about them at blockworks.co, and you can find out everything you need to know about me at thewolfofallstreets.io. So now to get into what's important in today's episode. So I have a really tough decision every single morning at around 4am. Do I get out of bed and work or go back to sleep? Can you help me through this one? No one's ever asked me that right off the bat

before. I'm telling you, every morning it's like, is it time? Is it go time? So like what happens? Like what goes through your head? I'm just a very early riser and I have so much work to do every single day. I feel like that I need to get ahead of it, especially with children. You know, they're up at seven and then the next two hours of my life

is consumed with being a soccer mom and getting them off to school and breakfast and everything. So yeah. So basically you like getting up early. I do. I do. Then what's the conflict? I guess there's no real conflict. It just feels like, it feels like,

you know, there's the people who take the approach that the first things you do in the morning should be exercise, have a glass of water, meditate, read a book. Stop. I hate that stuff. Okay. So I don't do that. Well, first of all, I get up at four between 4 30 and 5 always been an early riser like since i went keto i sleep really well sometimes i wake up at four and i'm like okay you can't get up at four although the other day the guy that cuts my hair told me he gets up at 3 30 it made me feel so much better but literally i make the coffee feed the dog sit down check email. I do all the things

you're not supposed to do. Right. Like, and I don't know, I'm kind of productive. It seems like in totality, you know, those are the best hours of the day for me. I can get my mind sorted out. Like what's important. What are my meetings today? What's important stuff I need to focus on, you know, like? Because it's quieter because no one else is up. So don't feel guilty about that. Great. I feel good. I feel good. Okay. Great start for me then. So listen, we've read countless studies about the failure of traders, right? That traders rarely outperform the market, would have been better putting your money in an index fund and sitting on a beach. Up to 95% of traders fail, according to some studies. My hunch, obviously,

is that that's a lack of risk management, but more emotional control. But I'm curious as to your take on why so many traders underperform the market. I actually think the biggest reason is the bad advice about the psychology of it. So the fact that everyone's told to take the emotion out of it, control the emotion, create a plan, trade the plan, those things don't actually jive with what we know about how the human brain works. So you're always fighting yourself. And while it has some benefits, like you need to have some idea why you're trading. You do need to have a semblance of a plan

of like, what is your lens for the market? And how are you going to interpret the market through that lens consistently? You can't, if you could take the emotion out of it, you wouldn't make a decision like you have to have emotion to make a decision so it's really self-defeating to try so hard to take it out what you need to do is like sort out what's information and what's irrelevant in terms of your feelings so literally I mean on some, I've been trying to answer that question, like since the get go, you know, I, when I started training, there were some guys who really knew what the heck they were doing. And I'd sit with them and watch them read the tape. And I'd be like, how do you know? And they'd be like, can't you see what they're doing? And I'm, who's the they? It was all very, you know, and have the plan and take the emotion out of it and follow the probabilities. And then when I inadvertently

discovered you had to have emotion to make a decision, the brain's always predicting, you're particularly predicting how you're going to feel. I was like, wait a minute, like there's a whole different angle on this. So more people succeed than we know, right? There's a lot of like, you know, most of my clients are professional portfolio managers and the irony is some of them don't succeed anywhere near as well as people managing their own money on a percentage basis.

Now, of course, people managing their own money have a lot smaller accounts. So it's easier to have bigger percentages. But there are plenty of people who make a good living from the market. So there should be more. Like I always say, why isn't it the 80 20 rule like in other industries where 20% of the people, you know, do 80% of the work, make 80% of the money, whatever.

Like, why isn't it like that? I think at the end of the day, it's a misunderstanding of how our brain actually works and how it works vis-a-vis the market, as opposed to a sports or an athletic contest, because it's completely different. And how are they completely different? Because some would say that both are a zero-sum game. There's a winner, there's a loser. You're making a, we know it's not a binary decision, but a lot of people view it that way. You're making a decision buy, sell. So I'm curious how they're different. We can get into a whole argument about zero sum because I don't think- I don't think that trading is a zero sum game, by the way. I mean, the total value constantly changes. So how can it be a zero sum game?

Correct. And a thousand people can lose to one person. Yeah, yeah, yeah. So it doesn't it doesn't but just like okay the human brain versus the market it's completely uncertain like you have no idea what's going to happen next the game's never going to end if the ball goes backwards there's an opportunity or you know is the ball on the wrong side of the court like that's what that's a completely different problem than you know you know that you have to get the ball to here and there in a certain period of time and it's going to end and at the end there's going to be a complete score and then you know game over regroup start over and your main job as an athlete is to make something happen. And your main job in the market is to react to what's happening.

So from a, just a, like, you know, are we playing poker? Are we playing chess? You know, it's a different game. And it's a different problem for a human brain. Like, athlete, you know, turn on the gas, get a little bit more out of yourself and make it happen. Right. Totally makes sense. Every time a trader tries to do that, they lose more money. Yeah. You're forcing it. You're trying to force it. You know, you're trying to force it. Right. I mean, I've always found that as a trader, one of the hardest skills to acquire is the ability to just sit on your hands and do nothing.

It is, it is, it is. It's very provocative. The market's very provocative. Plus then there's all that advice. You have to take every trade. If you don't take every trade, if you're not in the market, you can't make money. There's all this stuff. No, you really only have to take the trades that really make sense to you and like really go with them. Yeah. I prefer to say, if I'm not in the market, I can't lose money. That's my, that's my, you know, rule number one, protect your capital rule. Number two, grow. It has always been sort of my approach. So that makes perfect sense. So can you talk about what the show method is, how you developed it? And so how somebody, you know, who comes to you can obviously at least get the basic understanding of what you're

teaching. So there's kind of three components. The first is this neuroscience that you have to have emotion to make a decision. And in reality, all of our perception and judgment, we are unconsciously or semi-consciously predicting a future feeling based on our past experience. Like right now, you and I are predicting that like this podcast will be interesting and people will find it interesting to listen to. And, you know, we'll be happy about that. Like we don't, we don't think about that, but that's really what got us sitting here. So helping people to realize these future feelings they're predicting. Two, so I have a background in all kinds of psychoanalysis, but ultimately in something called modern psychoanalysis, which is different than Freudian.

Now, the common tenet across psychoanalysis is that we are doing things based on what happened to us in the past. Well, that's the same as what the neuroscience says we're making predictions on. The difference in modern psychoanalysis is we are not going to hammer you on like, you know, you're doing this because, you know, your older brother beat you up or whatever. We're not going to do that. But we know what we're looking for. And we do know that we're trying to help a client see that maybe their predictions of the future really are more about what they experienced growing up than they are completely about the here and now and help people pull that apart through recognizing it and accepting it

like the irrelevant part the foreigners And then just acknowledging through the acknowledging of it, you're able to kind of disempower it and be more in the present. And then the third piece is I am actually like sort of business trained and I started at IBM and we did goals, objective strategies and tactics. And so we do some of that when people want to. And that's a weird combination of neuroscience, modern psychoanalysis, and like standard business. You know what you might get from a kind of a typical coach. It's interesting. There's the aspect, obviously, of psychoanalysis that you touched on, which is everything that happened to you in your

childhood, right? And that's, like you said, that's what you talk about. But I think I have to imagine there's also an everything that's happened to you in your childhood, right? And that's, like you said, that's what you talk about. But I think I have to imagine there's also an everything that's happened to you in the markets aspect of that. I can just say as a, you know, a Bitcoin or crypto trader, or being a part of that community, that there's definitely PTSD about 2018 when people are making decisions now, right? Okay. So I wonder how much does that factor into it when it's more something that just happened a couple of years ago to me in the market, as opposed to I had a bad relationship

with my grandfather or something. Yeah. Yeah. Right. By the way, you'd be surprised how many of my clients had bad relationships with their grandpa. And I'm not kidding. Like lately I've been like everybody it's like, it's their grandfather how did that but anyway um um so this phenomenon that human beings are predicting a future emotion based on their past experience does include like their past experience like i have a couple of professional portfolio managers who did well last year through march and then could not believe that the market was like doing what it was doing and did not do well the rest of the year and are have you know a mild form of ptsd over like they're just shocked and uncertain and unsure and uncomfortable based on what they did last year so i always think of it as layered you know there's kind of like the recent

past and then there's the further past and then the further past and it makes sense but it's always a matter of like like if you're traumatized by a previous trade what everyone tries to do is you know set it aside get over it put it behind you to use the baseball analogy or football analogy my husband always you know rub a little dirt in it like but that's actually doesn't work you got to process the previous loss in a in a grieving sort of way and what ends up rationalizing it like in your own head you understand it and then you can untangle it from your current decisions it's i mean it's the same way they would tell you to grieve for a lost spouse or something like that you can't you can't can't bury it you have to deal with it so that you can move on it makes perfect

sense otherwise you reenact it you create situations that give you the same feelings because your psyche is like, you're going to deal with these feelings. I don't care about anything else. I'm going to make you deal with these feelings. And if you don't, then you're never going to get better. And if you do, you are going to get better. So interesting that you touch on, obviously, March 2020 was the everything's dying, everything's

going to zero sort of mentality. And most people failed to react because I remember seeing that like only 13% of hedge funds were profitable in April, 2020 or something. And it was the largest rise the market had basically ever seen during that month of April and May. Because I guess there was just disbelief. It has to go down more. And that's probably what all of these people reacted to. I was one of those, by the way. I mean, it was, I mean, I had one client who literally in the middle of March said, I'm buying everything I can get my hands on. What? Why do you react like that? Because I don't, I don't react like that. And I was like, really? That's interesting. Tell me. He's like, this is going to, you know, the Fed's going to come in, they're going to, you know, flood the system with money, like this is total buying enough. But yeah, I did catch that trade. So I think that's so interesting.

So what kind of clients do you have? Are they across the breadth of experience? You obviously have the people who have had a negative experience and are trying to fix it, right? I've been good at this for so long. I had a bad year. I'm tainted. Do you have the people that are just incredible? And

it's just more like being the coach of the number one tennis player in the world and just keeping them on top of their game? Or is it usually someone who's. The guy I just mentioned is kind of like that. Yeah. No. And I've been working with him and his team for two years. They did an offsite, like in someone that recommended me as a speaker and then from that it was sort of like oh yeah this would be good let's do some coaching and in 19 we weren't able to be regular because he's always on the road traveling all over the world and then of course in 2020 stuck at home and so now we've got like a regular rhythm of coaching uh and I just like help him sort through like the positions he likes the best and

positions he likes the worst. And what is his intuition about it? And, you know, how to get his analyst to be better traders and think in terms of making money. But a lot of people are some version of either. I made a bad trade or I used to be great. And now this is really common. I used to be really great and now I'm not as great and I can't figure it out. Or I'm sometimes great.

And then I always make the same stupid mistake. And I can't stop myself. So help me stop. Right. Now, those groupingsings if you will i mean since i started doing this back and i think i had my first client in 2004 i mean i've seen variations on that from you know guys on the floor at the board of trade in Chicago, which is really like my first client to, you know, individual traders trading there, you know,

$35,000 account to individual traders trading their multimillion dollar account to traders at banks, to traders that to PMs that hedge funds to long only asset managers, but humans are humans. Right. Yeah. That makes perfect sense. Well, it's interesting. You talked about sort of the differences between trading other people's money and trading your own and how often the percentages look better when you're a retail trader, obviously you're not moving with maybe the same size.

And it's just sort of a completely different sport. In my opinion, I had a friend who was a professional poker player and he was incredible, but then he was backed by a hedge fund and was terrible because I think he said that, you know, he was the fear of losing someone else's money was very different than how comfortable he was with his own staff. Is that a normal phenomenon? Because I even totally comfortable losing my money. I would lose sleep if I was managing other people's and was in a position to lose it. It's a, it is an individual personality thing. I'm the same way as you. Like when I was managing desk, like I could only trade really well sometimes because I was trading their money. Like we have some sense of responsibility right there are people who trade other people's money better and it's not that those people are lacking in a sense of responsibility it just for some

reason which I had I can't actually completely articulate because I've never really set out to answer this question fully. But some people trade other people's money better and a lot of people don't. Yeah, that makes sense. So I'm curious, as crypto traders, we have this unique phenomenon that's 24-7, 365, never stops. How can you possibly trade a market that never closes and not get fatigued? And what sort of, I guess, tactics or tips would there be to be able to step away from a market like that? I think it's very, very difficult. And there's a reason that this market is so much harder to trade for a lot of people. Yeah, yeah, yeah. That's a really good question that actually I

hadn't thought so much about. But what comes to mind is when I used to trade in Chicago for Schoenfeld, I was a day trader. And we were only allowed to trade from 8.30 to 11 and 1.30 to 3. But two and a half hours we had to be. Why? Because the middle of the day was less vol and choppy the crypto market has to have some sort of speed and rhythm to it like i've only been well i've been investing in it i haven't been trading in it but i watch it and it's like okay it moves on the weekends yeah and at two o'clock in the morning when you're sleeping and wondering if your stop loss is gonna

fire yeah um so you know you go to las vegas and sit in the casino for 36 hours straight right but you not might not want to so it really then is incumbent upon the trader to figure out like some windows that maybe they're going to go well i suppose nobody in crypto is going to ever go flat but they're going to keep their investments and not be trading right because you really do need i mean it's like an athlete you can't play every day you know you need the recovery so your brain your brain needs recovery time as much as your body does so crypto tutors are going to have to figure out how to get that for themselves yeah i mean i've read studies where sleep deprivation is worse than drinking for driving depending on the levels and and the work the thing that's so bad about it

in training is that we misperceive the risk like you underplay the risk so this seems like a good trade like that's not too bad if i if i don't make money i won't lose very much money that's like a total sleep deprivation kind of thing to say, and usually never works out that way. So I'm curious then when somebody comes to you and they're market obsessed, you know, this is what I do. I trade, I look at charts 24, seven, three 65, not talking about myself, by the way, how, how, because I think actually over the years I got that fatigue. It was like, I'll just look at charts 15 minutes a day. And if I take a train, it's fine.

I'm curious, you know, how important is work life balance as a trader? Is there advantage to being obsessive and in the charts 24 seven, or is it more important that you turn your phone off, go to the gym and have dinner with your wife? Or does it depend on the person? I'm going to answer that question with one story. I used to coach in a firm called Graham Capital years and years and years ago. And their biggest trader, portfolio manager,

he'd gotten a lot more capital and just couldn't quite put it to work. And he would tell me, you know, I'm walking into the office from the parking lot and I know what the S&Ps are going to do and the bonds are going to do and what the big stocks are going to do. It's totally clear in my mind how i should be positioned for the day and then i sit down and i start looking at my bloomberg and i start looking at the charts and i get confused like people do analysis not exactly analysis paralysis but they think if they do more analysis they're going to get more clarity. Never. It always muddles it. The more factors you add, the more possibilities you have. So I tell people, walk away

and think about what do you think your markets are going to be doing when you're playing with your kid or when or when you're working out just ask yourself what are they doing once someone went to stay media exercise when i was day trading uh to walk into the kitchen and get a cup of coffee and and then as i came back five minutes i give myself five minutes and ask and say where are the s&ps it was astonishing really yeah i mean if you watch a market what you don't realize is happening is that you're absorbing the speeds and the rhythms and you're absorbing the pattern even if you can't necessarily articulate it like you're picking up on it and so you don And so you're not cognizant of how much your unconscious is absorbed.

I bet you could do that with Bitcoin. Sure, sure. All day long. Yeah. If you've been paying any attention to me or have been following me for any length of time, then you know I absolutely love Voyager. Every single time someone tweets me or asks me,

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check them out. I'm telling you, it will save you so much money and is such a superior experience. Do it now. I find that staring at price action and the more you zoom in, the more confusing it gets sort of as you touched on because you start to you're willing yourself to see something you're only looking because you're looking for something. And if you're hunting for something that's not there, you're just going to find something to convince yourself. Right. So I think that I've always believed that, you know, zoom out, just be with the trend. And, but that's hard when you're a day trader, obviously, if you're scalping on a, you know, on a five minute chart, you can't do that. But if you have the patience and the, and you can, you know know your capital can chill for a month then uh i think you could do that

you'd just be surprised like whenever you first learn about something you have to do it consciously explicitly step by step the more you learn about it the more those previously linear step by step you know those things become part of your visceral intelligence, which because they go to your body. Right. And so sitting back and going, what's my like gut, heart, chest, thorax telling me? Listen. Yeah. Yeah. But then you never, that's the hardest part is to listen, right? They always say your first instinct is often your best, but it's very hard not to just act on that first instinct. Well, that's what my parking lot guy was saying. He knew what he was in the parking lot. It was

when he started looking at the data, he got all confused. Yeah. I used to have a rule. I had a big problem with revenge trading. So I think that that was probably my biggest issue, especially, you know, like I need to get this money back now and I need to do it on this asset, even though there's a million other assets I could trade and the money will be exactly the same. So I had to set a rule for myself that if I closed a trade on a certain asset, I wasn't allowed to look at the chart for 24 hours of that specific asset. Yeah. I mean, people need to, you know, that's like managing yourself. Like I don't bake the keto chocolate chip cookies too much. Cause they may be keto,

but I'll still eat like 20 of them. Like just don't buy the mix and don't bake them except once in a while. Like, you know, there are things we can all do to kind of help ourselves avoid the temptation of something that's a lot. Yeah. And actually doing it as a whole different story. It goes back to what you said at the very beginning, which is like everybody we hear trade your plan. I say this all the time. So it's not critical. You know, you should know your exits when you enter. We should know exactly where your stop loss is, your take profits. Why do people always change that plan in between? So few people can just let it happen. Well, because one reason is

because the brain's wired to react to uncertainty. So the more, ironically, the thing that can help people get better at trading a plan is tolerating the uncertainty, the inherent uncertainty. I hate this. I'm uncomfortable with one. No guy would say I'm uncomfortable with this. And he knows what I'm saying. Like, you know, more like I effing hate this. Like, right. Like, but what you're dealing with is the feelings, the uncertainty gives you, if you verbalize those, you'll be able to stick with your plan better. But what's happening is

that uncertainty, not knowing is so uncomfortable that doing something so true, alleviates that for a moment or a minute or whatever. And that's the guy you're talking about. And that's the guy you're talking about who makes the same mistake every single time, even knowing that he makes that same mistake, which could be moving your stop loss because, oh, it's about to go the other way. I just know it. I'm just gonna move it down a little more. Right. That's one of the most common things I hear is people, no matter how many times they set a stop loss, they just can't keep it there when it's about to hit so what they need to do is recognize that feature feeling they're predicting of being upset embarrassed whatever it

is you know if their stop loss gets hit so they get that feeling out in the open and look at it and go okay like that is what i'm really feeling worried about being embarrassed or worried about telling whatever then they have a chance you know it's like a martial arts kind of thing you're actually dealing with the supposed enemy it's not really your enemy but it's been made to be that feeling has been made to be your enemy so it is kind of effectively so so do you think that a lot of that is some inherent desire to be right? Right. Because I feel like,

I feel like one of the biggest problems for traders is that or people, so you just can't stand being wrong. So like you take a bigger loss because you don't want to be wrong. And I think we all know that rationally profit comes from actually accepting being wrong quickly. Well, quite a few people are afraid of being wrong. And quite a few people need to be right.

If you analyze that at all, it has like zip, not enough thing to do with your trading. It all, that, if people have an actual like repetitive destructive desire to be right it's always about proving themselves to somebody and if they realize that and can articulate those feelings, they can start to untangle that need to prove themselves to somebody from what's actually happening in the market. Some people,

some people really have like severe forms of that and other people don't like a lot of my professionals. I mean, maybe if this is like like that's one of the biggest things they don't have that so much I mean they're smart you know most of them are like got master's degrees and this that or the other from some impressive university and they're intelligent very intelligent people they're used to being right but they you know either through their training well basically they've learned that it's you you know, it's like more like baseball. You're only going to hit, you know, if you're lucky.

30% of the time. Right. You know, they've internalized that. So they don't have to worry about being wrong. They're just like worried about like, how am I going to be right? Like, then I feel that same threat of being wrong. Like a lot of. That makes sense.

Are there traits that you consistently see that make someone a good or bad trader no there are a zillion ways to do this like figure out what makes sense to you and what you like what speed and rhythm and what markets and what method of analysis makes it make sense to you there's not a physics to it like there is to golf or surfing or what i like to a sport where you know there's not it's a global poker game and you can slip in and slip out but does that mean that anyone could do it in theory if they untangled themselves and understood it? Or is it still something? It does. So not like sports. Yeah, yeah.

Right, right. So there's a, you know, there's some brain research that shows that the people who are using their people prediction skills, called theory of mind, are at short-term price action. I will tell you that like the really great portfolio managers that I have the, you know, really honor to work with, like they think of it in terms of what are other groups of people in the market, do we? Of course, it's all that matters. That's a natural skill. We all have that. We couldn't drive our car down the highway if we weren't naturally predicting, you know, is that guy about to pull over in front of us? So true. way if we weren't naturally predicting you know is that guy about to pull over in front of us so true but people don't know like back to you ask at the beginning you know like why so if you

people make it they don't know that they need to focus on that and they don't know that they need to use their feelings and emotions to find the information in them as well as to figure out how to avert the irrelevant feelings and emotions they They're trying to do it through some probabilistic approach, which is not completely irrelevant. It's just like a clue. Right. That's so interesting because if one of the qualities that makes you a good trader is being able to predict what other people are thinking, then I think there's probably another step to that, which is then to not think that way yourself and be able to counter trade that obvious emotion or thought pattern. Right? Because like, yeah,

we all know that when the herd is all saying, hey, price is going to this place and this is what's going to happen, that it rarely happens. Well, it is like, like you know is this the time to go with the crowd or is this the time to fade the crowd that's the that's the constant question right you know i mean i at schoenfeld i was taught to trade momentum which was like with the crowd go with the crowd but we would occasionally occasionally pay the crowd. But that's even understanding that you're trading the crowd, right? Like that. So you still need to write, you still need to absolutely be able to predict that human behavior, which is at the core, I guess.

So when you were trading, what were the strategies that you were using when you were actively day trading? Were you a technical analyst? Were you looking at fundamentals? What kind of indicators were you using? Well, when I started out, I started in the shop where there was a little bit of everybody. And the guy that ran the shop was like definitely of value, you know, by the by the falling knives. And there were a lot of scalpers in there. But I left and went to Schoenfeld because they were trading momentum. And the way that they were

doing it was constantly keep track of industry groups. this on an intraday basis, in which industry, so we had this terminal that sat at the end of this, I mean, this was 1995, that would show how the industry groups were performing in comparison to one another. And you could start to see, like, during the middle of the day, when we weren't trading, maybe, you know, the oil stocks were starting to tip up, tick up or the drug stocks. And then basically we were like all in on buying. And then Schoenfeld had an overnight group that did the same thing. So I, I probably figured out, wait a minute, the day traders are selling to the overnight traders and vice versa. But then later, I joined the Chicago Board of Trade and was trading futures and used market profile,

which is volume at a price over time. And I love market profile because I thought it was the purest chart view of what other people are doing. You can see at this price level, there was this much volume. So that tells you that. And if it's the can see at this price level, there was this much volume. So that tells you that, you know, and if it's the highest volume at a price, that tells you there's that many more people who care about that price. Right. It's a really useful thing to know. Right. I always say that even when you're looking at a chart, all you're looking for is what humans are doing at

any given price. I mean, that's literally all a chart is, is a visualization of human emotion or decision-making. Yeah, exactly. I was just telling, actually, I was on an interview right before I talked to you, and I was explaining that to the interviewer, like that I have some clients who they do all their fundamental analysis and financial models and stuff, but some of them do at the end of the day, look at a chart. Because why? It's a reflection of what other people are doing and prices that are important. So true. So I know that you touched on it before you kind of brushed past it, but you said, I mean, I'm more of kind of an investor in the crypto market, not really trading, whatever. So talk to me about your Bitcoin story. When did

you hear about it? What is your involvement? What do you think about that? I mean, I heard about it years and years and years ago and I was like, okay, that's kind of crazy. That was my first time. It is. And then I had somebody was running a desk at a big bank, big global bank. And he left and went and started a crypto trading hedge fund and was killing it like this was like from 17 maybe so I was like okay there must be something to this um and then I watched the you know the the move to 20 grand and then move back off of it and I thought using my momentum hat I was like you know what when it gets back to 20 grand I'll buy it which is crazy to most people right like but i was like it's i think it's got to go above 20 to prove that it's really going somewhere yeah so when it looked like it was going to the truth is when it looked like it was going to break

through 20 whenever that was last year we put mechanisms in place to start buying it and then subsequent to that and i've paid a little bit more attention. I had clients, you know, professional portfolio managers who are all over it. And so now I'm just a believer that it's a, what's the word I want? Like, that it's going to be some sort of like fundamental change in the way finance works sooner or later i don't know how long it's going to take but i also say there's enough people that believe that that like i just got done talking to the other interview i mean markets are driven by beliefs so in a way like nothing else matters everything's driven by beliefs yeah perception is reality if people

believe something it basically is true um you know is it going to be messy like i have this one portfolio manager well he's actually c, meaning he has a bunch of portfolio management. He, you know, and he's got like tens of billions of dollars under management. He and I agree that like, it's gonna be rocky, you know, and governments are gonna try to regulate it. And this was even before we were having this conversation, it was at 55. Government's gonna try to regulate it and you know,

stuff's gonna happen, but like it's to survive and thrive. There'll be lots of static and angst and whatnot. But I mean, if I were trading, if I still could actively trade, would I trade it? I might, because it's got volatility. And that's what Trader wants, volatility. I think it's a trader's dream yeah right well i will tell you if you could talk to my former bank guy he would say it's a trader's dream i can guarantee you that yeah because you need if you're gonna trade you need

something that moves so i mean do you believe that the future of it then has got it's gone from a speculative trading asset to a meaningful asset that should eventually probably be a part of everyone's portfolio and may start to really take a slice out of the grander market. The train has left the station. Right. It has the Lindy effect, right? I mean, it's been around long enough. It's survived enough attacks. It's survived enough, you know, 80% retracements plus. Yeah. And actually, you know, I've been thinking lately, you know, if it just becomes the asset that moves, you know, and has these huge swings,

people get a nerd to that. In other words, it becomes just normal. You know, when I would be back when I i was trading there were certain stocks that were crazy volatile like you know so you had to you had to take into account like what's called average true range you know how much does this thing move in a time period and when it's within that average true range, don't freak out about it. So now granted we're developing that at this stage of crypto, you can't turn this spick at all.

Hmm, I definitely agree. There's too many believers. Basically there's too many believers. Right. And I mean, like i have a portfolio manager who he sold a house and the buyer said can i pay you in bitcoin and he was like sure and so they're like going through the process for the guy to pay for his house in bitcoin you know any medium of exchange anything is only the fact that people believe it has value nothing more nothing less i mean i have diamond rings on you know they have some value but the value is kind of stupid

because given the way the diamond market's controlled but it's still true right because people believe it even though it's a manipulated market isn't that true of governments religions sports literally everything in our lives aren't they don't they only exist because of a common perception that they're important and a common belief yes because nothing has when you intrinsic value or inherent value always make the jokes about that nothing has that if you're talking about it's only human perception of the value of that thing. Yeah. Yeah. I mean, right. Like, you know, if I wanted to sell you a stick from my forest here and you, for some reason, believe, you know, you need to start a fire and that stick had value to

you, you might be willing to pay for it. It's literally what also people don't know is Harry Markowitz, who won the Nobel Prize for the paper on asset allocation. I can sort of start at this whole, you know, allocate your assets into different asset classes. He starts his paper with saying, step one is taking your observations and experiences and knowing what you believe. Step two, which I'm here to talk about in this paper is taking your beliefs and deciding how to allocate your assets i he says i'm not going to deal with beliefs i don't know how to deal with beliefs at the end of the paper go back and figure out how to deal with your beliefs but beliefs are step one so like the paper that all of modern finance is based on that guy who wrote it said your beliefs are the foundation beliefs areiefs are everything. It makes so much sense. So

that said, what do you think psychologically has driven the Bitcoin run from 2009 when it was just an idea to the present time when it has become an asset like this, because maybe I'm wrong, but I've never seen certainly an asset go that far and that fast. It'd be interesting to compare it to the pets.com era. Well, hopefully it doesn't end like pets.com hopefully it ends like amazon of the same era right yeah um like i said in 2000 i don't know 15 16 17 it probably would be maybe probably a little earlier well yeah probably way back then. Some people became believers because the existence of a cryptocurrency

made sense to them. And then more people became believers because the existence of a cryptocurrency made sense to them. That's what's driven it. So belief again well converts to the idea that a currency can be digital and that can work basically you know to the extent that it's not more expensive yet it's because there's a lot more people who you know don't quite yet believe they haven't been converted they don't understand it they see the problems with it

whatever those are you know so it's literally conversion you know like a religious conversion really yeah it's so so true you take it like my husband read this book cryptonomicon like four times in the before 2010 because he was so fascinated with the idea and has a bitcoin wallet that he lost and we don't have anymore i know um but like he got it you know kind of through that book and how this could work and he was a former federal reserve economist um makes perfect sense to him and i will say like my professional portfolio managers who care are like yeah 400 000 is a good value for it my husband did a model you know based on his economics

he's like minimum 200 i don't ask me how they came up with it i'm just telling you what other people yeah our i had our team did an entire model but only based on other people's predictions we just basically took the average you know wisdom of the crowd and it was about 235 like that he's not here right now, but I'll tell him. Right in that ballpark. So there's a lot of sense. I've seen a lot of them sort of average out there. But what's interesting here, so you have this belief in Bitcoin that's driving the rise. But in my opinion, having the belief in Bitcoin requires, to some degree, giving up your belief in the legacy systems that you've likely always believed in or not questioned.

If you're buying Bitcoin because you believe central banks are bad, that sends you down the rabbit hole that money is bad and that the monetary policy is bad. So it just seems like a really unique situation because we've all grown up with our money and probably have never questioned it. But to truly believe in Bitcoin, you have to be questioning all of that. Maybe I'm wrong. Maybe you just need to think that it's a, maybe it's just another asset. Yeah. Cause I think I kind of like, I kind of think central banks can be stupid, but like they're not like inherently bad. I mean, maybe they are, but like, I don't know, you know, having been a trader, like you,

my dad was a buy and hold investor. And so I never, you know, and then I ended up walking into this trading room and like, we care what the fed is going to say. And we care when the fed minutes are going this trading room and like, we care what the Fed is gonna say and we care when the Fed minutes are gonna come out and like, why should we care? So, I don't know. I mean, I just sort of see it as it's like, it's a technological revolution

that's gonna make a fundamental thing we need work more effectively, i.e. better than the last. My first cell phone was almost as big as this computer, so I kind of see it like that. It's just ultimately probably a better way than we've got now. It's interesting, but your husband's a Fed economist and got it from the very beginning, right? And I think the public perception would be that if you work at the Fed, you think money printing is good and that this is just debt-based currency, fiat's great, let's go, right? He was a Federal Reserve economist.

He's not any longer. But he was at the Federal Reserve of Dallas. I mean, he was, he was probably fantasizing about it before 2009 because that he just so fascinated with that book, Cryptonomicon. Just to pivot back to the psychology of trading. I think it's just so interesting. If someone is carrying like stress from another part of their life do you think that they can trade or do you

think that they need to step away from trading until they resolve those other things I know that personally if I'm stressed out I make bad decisions yeah yeah I used to I don't do this so much anymore but you know back earlier when I was coaching certain people who were professionals, but really active, I talked, I usually talk to people twice a week, you know, and if they call me one of their calls and say, God, I don't know, like this morning, I just was like completely out of it. And then I did this and then I did that.

And I had a horrible day and I lost. I'd be like, did you have a fight with your wife? And you'd be, or your teenager. And you would be surprised at the percentage of time the answer was yes. Yeah. Because if you, if we have a fight with anybody and I don't care who it is, the IRS, you know,

the cop who stopped us for going one mile, it was being, and I don't care who it is, the IRS, you know, the cop who stopped us for going one mile, I don't care. The feeling we get is like, why can't that person see we're right? And like, it gives you this sense of being out of control. But like, if you buy 2000, whatever, what does feelings that give you? For a you're like in control so it's the you know it's an antidote to feeling out of control and that's why people do it like in momentary in reaction to fights um or you know disagreements or frustrations you know i always tell people like you have psychological capital and the question is to always be asking yourself how much of it you have and what you can do to manage it and if it's out of sync you know you're taking a lot more risk you know it's just if you

had a huge debit it's your actual capital so do you want to take more risk in that? You want to basically as a, you know, transference from the feelings and the other realm, but unlikely to make you money when you're trained, when you're, when you're, when you're acting out your feelings from some other realm of life, you're unlikely to make money. So it totally makes sense. I mean, we see, we always hear about athletes having sort of like a visualization or some sort of routine, like a pitcher who says a certain thing to him to block out the crowd right before he throws each pitch, just that sort of mental routine. Is there something that traders who have these problems

outside maybe in their life, but need to sit down and trade every day, they're day traders, this is what they do at a fund. Is there some sort of routine or some sort of thing that they should do before they sit down for the day to clear those things out? Or is it a very individual? Well, I always say, be able to answer the question, what am I feeling and why? And preferably if it's really agitating, put it down on paper so that you can say okay you know i'm feeling whatever annoyed or afraid even like you know and just verbalize it there's actual actual skill and actual research shows that the better you can differentiate amongst your emotions, put different feelings into words, the better decisions you'll make.

So do it. Write it out on a piece of paper or, you know, in your computer. Delete it or throw it away. No one needs to know. But you're trying to sort out your mental state. I mean, like, I've done some coaching of a Major League Baseball pitcher. And I'm like,'m like look you know so sometimes the umpire probably makes you mad you know turn around and say to yourself god I hate this guy like just let yourself have a feeling for a second because if you don't the feeling will seep into the action.

If you let yourself have it and articulate it and don't judge it, you can unravel it from whatever you're trying to do, pitch or trade. Humans are so strange. It's just when you hear you talk about it and you see it, right? Especially athletes are the best example, like the hot streaks and the slumps. It's incredible. Nothing has physically changed about that person. Nothing has physically changed about their skillset except for the surrounding situation or their mentality. Maybe it's a slightly more important point

or a more important at bat, or they've just been sucking for a month and can't figure out why they're sucking. Slumps are really easy to solve. And by the way, my Yorkie is joining the podcast. So I'm sorry. But again, you need to go back to why did most traders fail? Well, the whole slump thing is, again, because people don't deal with the emotional foundation, right? I always tell people, okay, let's go back to the beginning. I don't care how long ago this started and figure out what happened when the slump started and work through those feelings. And then like, forget everything in between because that was just a reaction. Perfect. Makes perfect sense. I know we're up against time and we're also having some slight technical difficulties. So where can everybody follow you,

keep up with you or hire you? Because we all know that we're all absolute mental nut cases if we're trading. So my company is the Rethink Group and it's the rethinkgroup.net. You can contact us through there. I'm on Twitter is Denise K. Scholl. I'm fairly active and there's lots of podcasts on there. I mean, not on Twitter, on the website. Yeah. That's the best place. There's a blog on there that I wrote really regularly for a lot of years,

not so much anymore, but it's all still there from 2006 and seven and nine and 11 and 14. You know, the human mind doesn't really change. So it doesn't. Evolution's a pretty slow process. I have to ask one more question. So when we're watching Wendy Rhodes on Billions, is that what it's really like? I mean, it's like sitting in an office and just getting bombarded by people with their problems and you're you know or is that just that part yeah yeah no that part's what it's really like um you know people like oh my god i you know had a bad day what should i do um yeah the professional part where she's actually coaching someone you know whether she's talking to taylor a lot of her scenes with taylor are you know of course it takes something that you

would take 10 minutes to talk about you know and she does it in four sentences right she actually actually told me when i consulted that she didn't think it was very realistic because I think her words were drama's inability to deal with like the mundane and the compression of time. Of course. Oh yeah. The life drama surrounding it. Not much of that. Well, thank you so much for taking the time.

This is awesome. So much insight actually really helped me. And I think even like some of the small tactics that you mentioned, I'm in a place where there's some things I definitely need to write down and get out. So I'm going to go do that. Good. All right. Great. Thank you very much.