The Hidden Edge Most Investors Ignore
Why your biggest mistakes are not caused by emotion, but by failing to understand it
Do you remember the Wendy Rhoades character from the show Billions?
She is the highly-skilled psychiatrist and performance coach at the hedge fund Axe Capital. A confident, powerful, and central figure who provides high stakes trading psychology for hedge fund managers.
If you have seen the show, it quickly becomes obvious the character is based on someone who understands active investing at a very deep level.
These are only a handful the favorite lines attributed to her character in the show:
"You think you’re playing the game, but the game is playing you."
"The reason you're winning, is because you are willing to do the things other people will not."
"Only a fool doesn’t look at the downside. But only a coward allows it to dissuade him from that which he knows he must do."
"The moment you think you’ve won is the moment you’ve already lost."
"You’re tuned into the voice yelling at you over the loudspeaker that you’re stupid and you’re ignoring the quiet one inside telling you where the alpha is. Now, that’s the voice that got you here."
I was thinking about this while listening to an interview with investing coach Denise Shull, the person Wendy Rhoades was based on.
The interview is worth your time.
If you don’t have the time to watch or listen, see my notes below…
My Notes
Your biggest investing mistakes usually do not come from feeling too much. They come from failing to understand what you are feeling before you act.
Most investors have been taught the wrong lesson about market psychology.
The goal is NOT to remove emotion.
That cannot be done.
Emotion is part of how the brain processes risk, uncertainty, and opportunity.
The real edge is learning to recognize what you feel, separate personal fear from actual market information, and then act with honesty instead of urgency.
In volatile markets, that skill matters even more because panic, regret, and the need to feel better can easily masquerade as conviction.
Why We Get In Trouble
Feelings are Predictions: The brain constantly predicts if a situation is good or bad based on past experiences. This information is delivered as a feeling, not a calculation.
The “Intellect” Trap: Investors often use logic to rationalize an emotional impulse after the fact. For example, “buying the dip” is often a move to avoid the pain of future regret rather than a data driven decision.
Emotion vs. Action: The goal is not to stop feeling, but to stop acting blindly on those feelings. By identifying the emotion, you gain the “choice” of whether to execute the trade.
Emotion is not the problem
• Acting too quickly to relieve discomfort is the problem
• Investors often act not because the setup is clear, but because they want the discomfort to stop
What is really happening during a drawdown
• A falling market often triggers more than fear of losing money
• It triggers fear of being wrong, looking foolish, missing the rebound, or feeling regret later
• This is why bad decisions are often about identity as much as capital
Key Concepts
A better way to think
• Ask yourself: What do I want to happen? (Hope)
• Then ask: What do I think will happen? (Judgment)
• Then ask: What am I afraid of? (Risk)
• This simple process exposes the gap between hope and judgment
The “WTF” Framework
To separate personal psychological “noise” from actual market signals, Shull suggests asking three specific questions:
W (What do I Want?): Acknowledge your desire (e.g., “I want the price to go up to $100k”).
T (What do I Think?): Access your actual market expertise (e.g., “The price action looks broken and doesn’t make sense”).
F (What do I Fear?): Identify the underlying anxiety (e.g., “I’m afraid I’ll look stupid if I sell now and it bounces”).
Separate the two buckets
• Some emotions are about you
• Some are about the market
• “I will feel stupid if I miss the bounce” is about you
• “This price action feels off and I do not trust it yet” may be about the market
• The job is to separate those before taking action
Losses need to be processed
• Big losses are not just financial events
• They often feel like something important has died
• If you do not process that honestly, you are more likely to force the next trade trying to make it back too fast
Why writing helps
• Writing slows the process down
• It reduces the odds that emotion gets expressed through your fingers at the buy or sell button
• Clarity in language leads to clarity in action
The real trait strong investors develop
• Not emotional numbness
• Not perfect confidence
• The ability to get comfortable being uncomfortable
• The willingness to sit with fear, frustration, regret, and uncertainty long enough to hear what is actually true
What separates better decision-makers
• They do not always feel better than everyone else
• They are just better at recognizing what they feel
• They understand their own tendencies
• They trust their process more
• They do not confuse urgency with opportunity
This is one of the most important investing lessons to internalize: you do not need to become emotionless to improve your results. You need to become more honest with yourself and your process.
The investors who learn to identify what they feel, separate ego from evidence, and act from clear judgment instead of emotional relief put themselves in a much stronger position over time.
Bottom Line: Do not ask how to feel less. Ask how to understand what you are feeling before it turns into action and take notes. That is where better decisions begin.
* Denise Shull’s Intuition Brain Game, Introduction to the Trader Brain course, Market Mind Games book, and Blog are worth exploring if this topic interests you.
Until next time my friends,
C.E. Kirk
“The mistake too many people make is either not having a plan in the first place or, once they do, treating it as immutable law.” - Denise Shull