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.

Very nice vertical leap from Mr. Market (YM) one hour before the close.

Lots of shorters got surprise with the move and all of them run for cover.

That's a big move by the market today.

Bulls starts to get their traction.

NEW YORK (AP) -- A late afternoon surge capped another wild day on Wall Street Tuesday, bringing the S&P 500 back from the brink of entering a bear market. Stocks jumped on reports that European officials were working on a joint effort to prop up the region's struggling banks.

The Dow Jones industrial average closed with a gain of 153, erasing a 200-point deficit in the last 40 minutes of trading. It was down for the whole day before turning positive just 10 minutes before the closing bell.

Indexes opened sharply lower as traders worried that Greece could be edging closer to default. Stocks pared their losses at midday after Federal Reserve Chairman Ben Bernanke told a Congressional panel that the central bank could take more steps to stimulate the economy, then slumped again in the afternoon.

At 3:25 p.m., the market began rising quickly after several news outlets reported that European financial ministers were working on a way to coordinate their efforts to support European banks, as they did during the financial crisis in 2008. Worries that U.S. and European banks could get hammered by a Greek default have been a major concern among investors.

"Right now fear is trumping fundamentals and people are buying on nothing more than rumors," said Mark Lamkin, head of Lamkin Wealth Management. "It's not business risk that the market is concerned with, it's systemic risk. If there truly is a solution to Europe's problems, then we'll set the stage for a nice rally."

The Dow closed with a gain of 153.41, or 1.4 percent, to 10,808.71.

The Standard and Poor's 500 rose 24.72, or 2.2 percent, to 1,123.95. It had been down as many as 24 points in morning trading, 20 percent below its April peak. Had the index closed with a decline that size it would have met the typical definition of a bear market.

The technology-focused Nasdaq composite rose 68.99 points, or 3 percent, to 2,404.82.

Smaller stocks rose much more than the overall market. The Russell 2000 index of small companies gained 39.15, or 6.4 percent, to 648.64.

Analysts said the bounce in small companies was likely due to steep losses in the index the day before as investors picked up stocks that they considered cheap. The Russell index plunged 5.4 percent Monday.

Markets have been reacting nervously to worries about Europe's debt crisis. European finance ministers suggested at a meeting Tuesday that holders of Greek debt may be required to take larger losses than originally thought, which would hurt banks that hold Greek bonds. Greece has said it wouldn't be able to shrink its deficit enough to comply with commitments it made to international creditors. Investors fear that a default by Greece could cause another freeze-up in global markets.

"Europe is the center point of all of this," said Paul Zemsky, head of asset allocation at ING Investment Management. "The big fear in the market is that company earnings are not sustainable and that Europe's problems are going to spread into the U.S. banking system."

In testimony before Congress, Bernanke said the central bank is ready to take more steps to stimulate the economy. That could mean another round of bond purchases aimed at lowering interest rates and encouraging lending. Bernanke said the economy is weaker than the central bank expected and that poor job growth continues to undercut consumer confidence. .

The yield on the 10-year Treasury note rose to 1.82 percent from 1.78 percent late Monday. It briefly went as low as 1.72 percent around 10 a.m., near its record low of 1.71 percent reached Sept. 22. Bond yields fall when their prices rise.

Analysts said Europe's debt problems overshadowed signs that the U.S. economy continues to grow slowly, including a 10 percent jump in auto sales in September and an increase in a measure of U.S. manufacturing.

"Collectively, the data here in the U.S. hasn't been that bad, but investors are looking at Europe and saying `I don't care what the U.S. fundamentals are when we've got much bigger problems overseas that may eventually wash onto our shores,'" said Phil Orlando, chief stock strategist at Federated Investors.

The S&P index has fallen every month since April on mounting concerns about the strength of the U.S. economy and the possibility that the debt crisis in Europe could get worse. The stock market is thought to be forward-looking, reflecting investors' views of the economy in 6 to 9 months.

In corporate news, Bank of America Corp. jumped 4.2 percent to $5.76. It was down 5 percent to $5.24 before the late market surge as investors continued to be troubled by its exposure to soured mortgages securities and a several-day outage of its website. The company's stock lost 9 percent Monday to $5.53, a level not seen since 2009.

Apple Inc. lost 0.5 percent to $372.50. It had been down 5 percent before the late rally after the company unveiled a faster iPhone that fell short of the radical upgrade that some analysts had predicted.

Two stocks rose for every one that fell on the New York Stock Exchange. Volume was heavy at 6.9 billion shares.

The market (YM) made a dramatic move at the last hour of trading day.

Looks like the market starts to turnaround.

Let's see by tomorrow if it will continue.

Traded out at 10512...gain 112 points...

Putting sell limit to 11520...

Buy back YM at 10400 with stop at 10350...