Sunday, August 12, 2012

Book Review: The Inner Voice of Trading - 1

The Inner Voice of Trading by Michael Martin

For me, this is an excellent book, with a five star rating. I am reading it for the second time. Ever since Amazon introduced the Kindle, I have been buying ebooks, rather than the printed version. This review is for the ebook, although I assume there is no difference between the digital and the printed book.

The Kindle edition comes at US$ 12.15, a bargain for the contents of the book.

Ed Seykota, well known technical trader, in his foreward to the book says "Traders know the essential principles of trading: ride your winners; cut your losers; manage your risk; use stops; stick to your system and ingore the news. These principles work well in trading and in life in general- when you follow them consistently. Many people, however, find that following rules is not always a whole lot of fun"

The Author explains the book's objective - "The heart and soul of this book examines trading decisions from an emotional standpoint and helps you gain insight into your behavior."

The underlying message is to manage your risk - keep losses small. Exit a position if it goes against you. But, as traders we start thinking - suppose the position comes back then what do we do? The answer is simple - You can always get back in if you exit too soon.

Readers should think about this one.

As I trader, I have one clear principle which I follow - go with the market flow. Michael tells traders to 'Surrender and accept market movements' which is roughly equivalent to going with the market flow.

Traders are faced with whipsaws and losing trades almost every day. Accept these whipsaws, and, explore your feelings about frustration and despondency. "By allowing yourself to feel frustration, you eliminate the feeling of despondency for the rest of your life. That's a great trade.


Jitender Yadav said...

Respected Sir,
Thanks for this very useful post and good to know that you prefer environmental friendly e-books.
Please suggest/review some more books on trading for the benefit of the readers of this blog.
Your Fan
Jitender Yadav

ume wal said...

have a patience, Do not rush for trade & cut your losses quickly
is it two contradictory statement?

Dinesh said...

Dear Sir,

Very useful..I must say.

I also think the trader should be a keen observer and should keep looking for a suitable opportunity/trade. It may come quickly or may take some time. So, one should have patience. A trader should also have heart to accept defeats continuously till a golden trade gets him/her a jackpot to not only cover the losses but also reward with good profit.

Kutty said...

Dearest sir,

This is my first comment.I am a novice trader. I have been reading,studying,analysing and reflecting upon all your previous years blogs,articles and comments of your fans,admirers and students.There are no words to admire and praise you. we all love you so much.

Please give a list of your all time favourite,must read top 10 books for any trader.

I have become one of your numerous fans,admirers,students and followers.I pray to God to give you a wonderful,long and healthy life.

Eager to post more comments in future.

With love, Kutty.

Pi said...


Had to ask you something. When one looks at the daily OHLC data, the open prices used to be unreliable earlier for Nifty. I was looking at data and my sense is that since the introduction of the pre-open session, the open values now have some meaning, unlike earlier.

What is your observation regarding the same? Are the values meaningful and accurate now and can be used for testing purposes or they are still not good enough. As it is we don't have enough data yet, less than two years.