Book Review for "The Inner Voice of Trading"

A successful trader or investor in financial markets succeeds through a combination of factors. There is the "what they know" part; there is the trading format the trader or investors uses; and there is the less well explored element in the mix - the "other" of the trader besides technical/factual knowledge. Michael Martin's new book "The Inner Voice of Trading" (FT Press) is an exposition on this last element.

Michael Martin has been a market professional on the sell-side, a trader of his own account in stocks and commodities, and someone who has been a trader trainer for a living. He has also interviewed great traders seeking insights into the ways of working that made them great (see his website www.martinkronicle.com). This background makes him well equipped to explore what seems to be the hardest part of trading in which to excel.

Financial markets are full of smart people with MBAs, CFA qualifications, and, increasingly, PhD's.Quite sophisticated trading systems can be bought off the shelf for really very little outlay (hundreds of dollars rather than thousands). Logically there could be many more successful traders than there are. So there is an argument to be made that this last element of trading - the soft factors, and focusing on knowing yourself as an investor/trader - is one that is under explored and developed. This is the gap this book is seeking to fill.

Martin's progress through the psychology of successful trading is reinforced by evidence and quotations from prominent traders. This gives the thrust of the book credibility if not authority. In an era of the "me first" society his focus on development of the individual's own trading culture should find appeal, but though this is part self-help book, be aware that this not a step one-step two guide to to how to do it. The book has well-observed pointers but is not a manual for trading.

That written, Michael Martin's book will have resonance for those already operating in financial markets on the buy-side, and will be extremely helpful to the neophyte trader. This is a welcome addition to the oeuvre of investment books, and its' focus makes it a good companion text for those who like the "Market Wizards" series and their ilk.  




For other views of this title see the Amazon page for it.

Opportunity to Attend a Master Class with Trader Vic

I've known of Victor Sperandeo for a long time now – I first read of him in "New Market Wizards" (incidentally I can heartily recommend both Market Wizard books by Jack Schwager), and he is featured in Barrons periodically. He has been described as the trader's trader, and I was getting quite excited when I was told that he is running a traders' Master Class next month. So I was disappointed when I enquired and I found out it is running in New York, and I wouldn't be able to get along myself. However, as a friend of mine has set this up, and he himself is a trader trainer I know this is going to be a very interesting day to participate in, if you are a professional trader.

In investing and trading there are very few opportunities to enhance your learning except by doing beyond a certain point. So this is an unusual chance to meet a well-regarded experienced trader who is prepared to share some of his own trading style and what rules he has given himself. I am told that Victor will be sharing material that is not included in his books, and anyone going along will have the chance to engage with Victor and get beyond the superficial. There is a whole programme that will run 9-6.00, so it will be intense at times, but course material etcetera is included.

If you contact me (via s-kerr@tiscali.co.uk) I can forward details and get a discount for anyone that comes through me. It looks suitable for trading firms to offer to an employee/partner as a thank you bonus to an investment professional that has had a good 2010. I wish I was going to be there!

Ari Kiev and the Trader Trainers

I'm sad to record that Ari Kiev died this week - you can find an obituary in The New York Times. Ari Kiev was a psychiatrist with interests in several areas including depression and suicide. He applied his knowledge and techniques to new fields including working with top tier athletes and traders in markets. And in working with traders he expanded the armoury of techniques of trader trainers.

I first came across trader trainers about ten years ago. To be clear, I'm not writing about Richard Dennis' turtles experiment, though that itself is an interesting topic. Trader trainers such as Van Tharp and Scott Kaminski (and Ari Kiev) work with investors, typically short-term leveraged players in markets, looking to improve their outcomes. These trainers teach time-tested methods and approaches that have worked for the very best traders in markets. I have a book case full of investment and trading books – biographies, historical accounts, academic papers and classic writing on investments. I rate the "market wizard" type books particularly highly for giving helpful insight. Those who truly invest, that is operate with a long holding period and rely on fundamentals rather than technicals, have a wide variety of approaches and methods. Those who trade for a living (short term, and price and technically focussed) and are successful at it do not vary to anything like the same degree. Kiev's practice with traders concentrated on the classic elements, adding his own technique.

There are a number of core activities, skills, disciplines and attitudes for successful traders. These are what Ari Kiev spent much of his time putting across to his trader clients. He was first brought into working with traders by Steve Cohen of SAC, who recognised parallels in trading with top-performing athletes, and had heard of Kiev's work with the sporting elite. Kiev was retained by SAC and worked part of his week in Connecticut in one-on-one sessions with SAC's traders. In the course of time Kiev codified his thoughts and put them into print. So you can read what and how he trained traders in his classic "Trading to Win" (1998), and other titles. I would also recommend Ari Kiev's podcasts.

Of all the trader trainers I know about, it was Ari Kiev's approach and methods I have referred to most over the last year in the course of my consulting work with hedge fund managers. Consultants on the investment and risk management processes such as myself have to tailor their work to the specific portfolio manager or team that is the client at the time. When it comes to the trading part of managing a hedge fund, Ari Kiev's techniques and tools will be part of that body of work on which we draw for years to come. A good legacy in work terms.

PLEASE LET ME KNOW BY E-MAIL IF YOU ARE INTERESTED IN MORE ON TRADER TRAINERS

The photograph above is from The New York Times website (see first hyperlink above).