The Inner Voice of Trading: Eliminate the Noise, and Profit from the Strategies That Are Right for You [Hardcover]

Michael Martin (Author)

Book Description

Publication Date: September 28, 2011 | ISBN-10: 0132616254 | ISBN-13: 978-0132616256 | Edition: 1

Want to be a successful trader? It's not enough to master generic trading strategies: you must first know yourself. You must understand your own emotional predilections and psychological tendencies. You must learn how to match your strategies to your own personality. You must choose strategies that are sustainable over the long haul, that you can tolerate–and execute.

 

Michael Martin's The Inner Voice of Trading explains why deep self-knowledge is so crucial to successful trading, helps you gain that self-knowledge, and guides you in applying it. Drawing on interviews and discussions with great traders like Michael Marcus and Ed Seykota, he shows how to quiet your mind, develop an "inner voice" you can rely on, and make it your most important trading ally.

 

As seen in Barron's, Minyanville.com and HuffingtonPost.com

Editorial Reviews

From the Back Cover

“In The Inner Voice of Trading, Michael Martin recounts his own quest to become a successful trader, illuminating his journey with engaging trading episodes. Join Martin at his trading desk as he provides important insights into the art and science of balancing thoughts and feelings—and catching the big one.”

 

—Ed Seykota

 

“Some people trade and either don’t or can’t teach; some people teach and have never traded; Michael Martin can teach extremely well and is an experienced trader. This rare combo is a necessity to those who want to succeed in the markets. Read and learn!”

 

—Victor Sperandeo, Founder, Alpha Financial Technologies, LLC

 

“The Inner Voice of Trading provides insights that may help both discretionary and systematic traders adhere to their extensively researched and tested trading programs and be better insulated from their occasional emotional (fear, greed, pride, and so on) temptations to deviate into uncharted waters.”

 

—Bill Dunn, DUNN Capital Management

 

“Michael Martin provides a toolbox to fortify the most important aspect of successful trading: the six inches between your ears. With fresh insights from many of the market’s greatest traders, The Inner Voice of Trading will put you on the path to improving your profits and losses.”

 

—John Del Vecchio, Portfolio Manager, AdvisorShares Active Bear ETF

 

“Too many new and developing traders move from strategy to strategy in the hope of improving their under performance. In The Inner Voice of Trading, Michael Martin helps us understand how we first must work on ourselves before we can become the trader we want to be. Find a place in your trading library for this latest gift to the trading community.”

 

—Mike Bellafiore, Partner, SMB Capital, and Author of One Good Trade

 

Trading is 20% intellectual and 80% psychological. Success begins with the ancient Greek adage: know thyself. Rote, mechanical trading models set you up for failure. To succeed, you must harmonize your trading systems with your emotions. By doing so, you can achieve the inner calm and confidence that translates directly into better decisions—and higher profits.

 

This book will help you find your inner voice as a trader, so you can act on what your analysis systems tell you and crisply execute winning strategies without hesitation.

 

Michael Martin examines your most common trading decisions from an emotional standpoint, helping you “feel the feelings” driving your actions—feelings that often have nothing to do with money. Through compelling interviews, you’ll discover how legendary traders, such as Ed Seykota and Michael Marcus, integrate reason and emotion to make better trades every day—and how you can do it, too.

 

•  Traders are humans first
How your trades reflect the human propensity to pursue pleasure and avoid pain

 

•  Choosing strategies you can sustain over time
How to find trading approaches you can tolerate—and consistently execute

 

•  Letting go: You don’t need to be right all the time
Stop seeking validation from your trades—that’s not what they’re for

 

•  Reducing your losses through self-discipline and surrender
How emotionally aware traders improve performance by keeping their losses small

 

About the Author

Michael Martin has been a successful trader for over 20 years. He’s been teaching for the last 13 of those years through UCLA Extension and the New York Society of Security Analysts (NYSSA), a member society of the CFA Institute. During that time, he also served as Associate Editor at Trader Monthly. He was born and raised in New York and now lives in Los Angeles.

 

He contributes to The Huffington Post, The Business Insider, and his blog MartinKronicle.com. He has also been published in Barron’s.

 

His interest in trading commodities began as a student, both in the classroom and at work. It was during a random work-study program that he got introduced to creating seasonal models for Heating Oil and Natural Gas for a large hedger using Lotus 123.

 

That led to working on Wall Street and trading commodity accounts. The commissions were gigantic, but he figured he could earn several times more by earning an incentive fee. After only 3 years at a brokerage firm, he started his own company.

 

After moving to Los Angeles from Manhattan, he started his own CTA and also began teaching. Around that time he joined the Incline Village Trading Tribe and flew from Los Angeles to Lake Tahoe for meetings. He also formed the Trading Tribe in Los Angeles, for which he was Chief. Coincidence or not, he was ranked #1 by AutumnGold around that time.

 

His trading courses are available online and can be found at MartinKronicle.com.

Product Details

• Hardcover: 192 pages
• Publisher: FT Press; 1 edition (September 28, 2011)
• Language: English
• ISBN-10: 0132616254
• ISBN-13: 978-0132616256
• Product Dimensions: 6.2 x 0.8 x 8.1 inches
• Shipping Weight: 12 ounces (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (66 customer reviews)
• Amazon Best Sellers Rank: #244,169 in Books (See Top 100 in Books)

More About the Author

Michael Martin has been a successful trader for over 20 years. He's been teaching for the last 12 of those years through UCLA and the New York Society of Security Analysts (NYSSA), a member society of the CFA Institute. During that time, he also served as Associate Editor at Trader Monthly.

He has condensed all the insight he's learned through his own reading, his own trading experiences, and that from having interacted with some of the world's best traders such as Ed Seykota, Victor Sperandeo, and Michael Marcus, to create the Certificate Program in Commodity Studies for the NYSSA.

Michael currently blogs at his own website, MartinKronicle.com, as well as The Huffington Post, and The Business Insider. His work has been published in the Commodities Corner column of Barron's.

"I was inspired to write "The Inner Voice of Trading" after realizing that there are thousands of 'How To Trade Like So-And-So...' books. I've always known that upwards of 80% of trading is in your head - it's psychological and emotional - it's not about technique per se."

"Most of my students ask me questions about how to increase their confidence in their trading, not which instruments to trade, nor when to enter or exit a position. I kept a journal of all my responses - things that I had to learn - what I call the 'emotional hazing' that you have to go through if you want to become a professional trader. I immediately new I had a book on my hands. By the way, that segment became an entire chapter in the book. It's called 'My Tuition' and I think it's one of the funniest in the book."

Most Helpful Customer Reviews

84 of 92 people found the following review helpful

2.0 out of 5 stars doesn't really do what it says it does October 9, 2011

By monkuboy VINE™ VOICE

Format:Hardcover|Amazon Vine™ Review (What's this?)

In the face of 25 five-star glowing reviews as I type this (the majority of which I notice are the only review the person has posted on Amazon), I must stand on the other side and give this two stars.

The premise or theme of this book is that trading is 20% intellectual and 80% psychological (I won't argue with that), and that to be successful in trading a person must know thyself, and to harmonize your trading systems with your emotions. The way I understand what the author is saying is that you have to find a trading system that integrates with your character and personality - a style that fits the way you are (because let's face it, most people are pretty much set when they are still kids and it is really hard to make significant changes after that - hence the reason why self-help books keep selling, over and over and over again to the same people - different titles but similar themes). So that is what I was expecting from this book - to educate the reader on how to know thyself, and to adapt that self to a compatible trading style.

That is not the case. Instead, the author does describe various trading styles, points out how emotions have created unsuccessful trades, and then he tells the reader how they must change to take the emotion out of it, or to look at things in a certain way because it is a more sensible way to trade. In other words, he is doing what countless other books out there do, giving advice on how you should emotionally approach a trade. Yes, there are lots of books that advocate strict methods of trading (such as reading charts, or using certain criteria to trigger a buy or sell order), but there are also lots of books that address the emotional component of trades.... The author describes his book in a fairly unique manner, but the actual content belies the description. This turned out to be just another book that advises the reader on how not to let his or her emotions get the better of themselves when engaging in trades.

I also found that the author writes about some subject matter in a very breezy, informal way that assumes the reader is already familiar with the mechanics of those types of transactions. If you are not one of the people who is familiar with that type of transaction then the point of what he is saying may be over your head, as some of them were for me. I thought some things could have been explained better.

As an educational read, this book is average. If you've never read a book about the psychological aspects of investing, then this would be worthwhile because the author covers the topic in a relatively short space. But if you've already read other books on the subject, this one is not going to tell you something you haven't already read somewhere else. It tries to portray the subject from a different angle, but the actual writing is no different than many other books out there. Read more ›

27 of 30 people found the following review helpful

5.0 out of 5 stars The quiet voice of truth, outshouted by fear and greed October 22, 2011

By Aaron C. Brown TOP 500 REVIEWERVINE™ VOICE

Format:Hardcover

Several reviewers have claimed that this book does not contain actionable advice. I understand the complaint, the only specific recommendations are generalities like keep a journal, practice yoga and meditation, take satisfaction in small losses, learn from successful practitioners and join a support group for traders. In particular, this book leaves out the very important point that you need some kind of an edge. Your inner voice must speak the truth. While this part is easier than most people think, there are lots of well-known, published techniques to get an edge, it cannot be ignored. My guess is 80% of people fail at trading because they never acquire one. The author's advice is reserved for the other 20%.

Among that group, I agree with the author that failure usually comes from wanting something other than success. Many people want to boast about bold, clever trades. That's an expensive hobby. Focusing on what other people will think steers you down losing paths. The author blames the American educational system for turning out people who value being smart and giving the answer the teacher wants to hear over accomplishing goals and respecting their own idiosyncratic intelligence. I think it's something deeper. Good trading is disruptive. Humans are socialized not to trade well, which is one of the main reasons simple trading techniques work.

The value of this book is its clarity and honesty. It's not an ABC of what to do, it's an expertly-crafted vision of what to be. Someone who wants an ABC has already missed the point. The author tells you how to listen to your inner voice, he's not selling a transcript of what your inner voice says.

The book uses stories about trading and life so show what trading is.... If you don't understand that, you cannot make money consistently enough for success. Much more important, you will not be happy even if you do make money.
A trading room is not the place to acquire self-confidence or public acclaim. Trading is not a skill you acquire that once you have it generates money effortlessly. A profitable trade does not quiet your inner demons or make you a better human being. Unless you have rigorous clarity about those things you should find a safer occupation than trader. This book makes these points gently and indirectly, but powerfully nonetheless.

To the extent the author does venture into specifics, he's not always accurate. He praises yoga and meditation, and advises getting away from distractions to hear your inner voice. That's great advice for some people. But I think it's equally possible to find your center in competition, say a poker game or race. Insight can come from immersing yourself with a crowd at a concert or party. Calling your inner voice "quiet" is only a metaphor. You can hear it equally well in a crowd of frenzied, yelling traders as in a sensory deprivation tank, and as clearly when you're pushing yourself to the limit as when you are completely relaxed in an ashram.

He repeatedly emphasizes the important of taking lots of small losses and relying on less frequent but larger gains to generate long-term profit. That is usually right in trading, but it's not a universal rule. There are good strategies that do the reverse, say making 1% every month, except every couple of years losing 10%. The key is to know the type of bet you're making and not to try to force it into the wrong distribution, and not to acquire investors who don't understand your game. The author is very critical of leverage. Leverage is dangerous, of course, but it is essential to many good strategies. In fact, a lot of market opportunities are created by other people's leverage aversion.

The most blatant error is his description of quant traders. He is precise and accurate about traders he knows personally, but he admits his account of quants came from Scott Patterson's book. Unfortunately, he read this too quickly and confuses events from four days in August 2007, which inflicted unexpectedly large but not crippling losses on many quant traders (losses that were quickly recouped), with later events during the financial crisis that happened to different traders. He asserts incorrectly and with no support that quants stuck blindly to models, unable to conceive that the market disagreed. There may be some people who do this, but the author names specific quant traders who have lasted far too long and acquired far too much success to be accused of this rookie error. Among several other howlers in these regrettable three pages, quants are accused of holding illiquid instruments and of failing to react to increases in market volatility. Quants generally want a good price history, which means they tend to trade the most liquid things: equities and listed futures. And a quant thinks about a bet size in volatility terms. Therefore, when market volatility increases, most quants automatically scale back their position sizes in proportion. They don't even think about it as cutting positions. It is qualitative investors like the author who are far more likely to be found in illiquid positions, and sizing in constant notional terms (number of contracts or dollars) rather than volatility. Quants are prone to certain kinds of mistakes, but not these mistakes.

Errors and inaccuracies aside, this is a great book for novice and experienced traders. Soaking up its wisdom distilled from experience and introspection will help you become more successful. And that's true even if it doesn't make you a penny. Read more ›

17 of 22 people found the following review helpful

5.0 out of 5 stars Like a bullet the price always tells the truth September 29, 2011

By Michael Alenikov

Format:Hardcover

Michael Martin hit a home run with the important insights revealed this book. Mr. Martin is an accomplished trader who has the ability to look within himself for answers and gives examples of how you can too. He explains how trading is mostly emotional and you control everything from when to enter or even if you should enter a trade. A quote from the book says, "Your sense of self-awareness is as unique as your fingerprints." He explains that emotional self awareness and being compatible with your trading system are primary to your success because "the act of trading is 20% intellectual and 80% psychological." He explains how ego, volatility, over leverage, and unanticipated events work together to blow up traders. Also, if you don't take your emotions into account, your knowledge about trading systems and what works and doesn't work in trading the markets will make no difference because in the end you still will not know how to trade. The answer is not to seek out more information, it is to study yourself. His chapter on relative value trades outlines some excellent ways to view the market. Listen to your "inner voice", get some awareness into yourself and your trading and read this book.

14 of 18 people found the following review helpful

2.0 out of 5 stars Nothing new, boring October 3, 2011

By Plano Geek

Format:Hardcover

This book is slim and small. I should have been able to read it in one sitting but it was so boring that I kept falling asleep.

The first chapter started out well enough. It promised that by the end of the book I would be in touch with my inner voice of trading.

What does the book offer to help me with that achievement? It tells me that you need yoga, meditation, or a trading tribe. It also tells me that an emotional hazing will get me there.

For yoga, it offers a book written by a yoga instructor. I can see many took that recommendation because the price for the book has risen in just 1 day.

For meditation, it offered to start the day with thinking about your positive outcomes. Steenbarger said the same thing - concentrate on what you do well.

For a trading tribe, it says it is hard to find a good one. The author acknowledges he got lucky by being in one with Ed Seykota.

The first chapter talked a lot about achieving an emotional connection to your trading rules and method. From this emphasis, I expected some concrete steps on how to achieve that. It offered nothing. It did say that you can achieve your inner voice through an emotional hazing. It gave some examples of people who had lost everything at least once - and thus went through emotional hazing. I guess losing everything is a concrete step to take. Unfortunately, not one I am willing to take.

Part of the book is a rehash of stories from Market Wizards or brief one liners that were original to the really good books on trading psychology by Steenbarger and Douglas. If you read books by either of them, you will not learn anything new in this book.

There is one very odd chapter on trading pairs.... It is odd because it didn't seem to have anything to do with the inner voice of trading.

The book has gray boxes that highlights a section from the page. You would think these highlights would be nice tips. They are sometimes. But more often than not they are meaningless and not something you would want to go back through the book and reread. For example, "A few dozen Stanford Ph.D.s would go to the Amazon Rain Forest and shake down the natives for their witch doctor/medicine man methods". If I wanted to quickly reread the book for tips, how would that gray-boxed sentence help me?

In all, this book is a disappointment. It may be of some use to a beginner trader to prepare their mind before they learn from a really helpful book by Steenbarger or Douglas. Read more ›