Michael Martin is a full-time trader, instructor and writer of the acclaimed MartinKronicle blog. He now also boasts an Amazon top 20 investment book with “The Inner Voice of Trading: Eliminate the Noise, and Profit from the Strategies That Are Right for You”. I have just done a short interview with Michael, as reported below.

PduP: “The Inner Voice of Trading” is an interesting title for a book. What exactly is your “inner voice”?

MM: It’s a bit of a misnomer in that it’s a sense of calm and confidence that you have when you’re entirely present and in the zone, so to speak. I liken it to how a gifted athlete or actor can be in the moment and deliver a strong performance that seems to transcend the individual.

I promise you that when the Director says “Action”, Jack Nicholson is not thinking about his acting technique any more than SA cricketer Johan Botha is thinking about the mechanics of his grip while spinning / bowling. Victor Sperandeo does not need to consult a manual on his short-term set-ups when he’s looking at gold or silver for a trade.

PduP: What are the typical mental stumbling blocks people encounter and why are they so common?

MM: One stumbling block that I see all the time is how traders, men especially, do not embrace the concept of surrender. They equate it with quitting or losing. But “surrender,” the way I mean it, connotes taking the small losses along the way that are part of your methodology. If you’re a professional trader, losses are part of the business.

PduP: That’s a good analogy for trading.

MM: Yes, I think so. Ed Seykota, who wrote the Foreword to my book, said “Great traders have the talent as much as the talent has them.” My guess is that great traders — as well as great performers such as Nicholson, Streep, and Botha — lose themselves in the moment and rely on their preparation. There must be something that is greatly meditative in how they prepare. Therefore, when it comes time to execute, their inner voices kick in and they are simply present and they do as they are prompted to do.

PduP: What is something that my readers can do right now?

MM: I think keeping a journal of your emotional progress is the only way to go. Humans have short memories for things that are emotionally uncomfortable for them. Traders and financial advisors are humans first, and I believe our emotional systems truly run our professional lives, not what we can derive from asset allocation or a heuristically-based trading system.

Anything in the world can come to push your emotional buttons, so it is critical to keep a chronology of how you are evolving emotionally. That’s the only way you can grow. You have to be brutally honest with yourself and how you feel, especially when you’re losing money. Smart people don’t like being wrong, and they will do almost anything not to admit they were wrong nor take a short-term small loss because it is so unpleasant. Ironically, it is the taking of small losses that make your big winners look so good in the end.