How adopting a STOIC attitude can make you a better trader.

 


At dawn, when you have trouble getting out of bed, tell yourself "I have to go to work - as a human being. What do I have to complain of, if I'm not going to do what I was born for - the things I was brought into the world to do?"  Marcus Aurelieus 

The above quote from the well-regarded third-century Roman Emperor captures the essence of the attitude central to the ancient Greek philosophy of Stoicism. Being successful as a trader in the financial markets requires the same type of mental state. From the self-employment aspect of things like getting out of bed to executing your strategy flawlessly day-in and day-out with purpose when things aren't going your way.

The mental aspect of success in trading cannot be understated. Those who master it have a significant edge over those who haven't. How can the wisdom in Stoiscm help give you this edge?  I will use a series of quotes from famous Stoics to illustrate the concepts that will help you achieve the greatness of your potential.

 Self-Discipline

What did I do well today?

Where were my discipline and self-control tested, where did I do good?

What did I do bad, why did this occur? Furthermore, how can I improve?

Seneca

Cultivating this level of discipline that Seneca describes should be our constant goal as professional traders as well as for life in general. What does it matter how great your system is if you don't have the discipline to execute it?  You can and should use tools like the stop-loss and take profit orders in order to automate your trading system, though so much will rely on your own force of will, such as choosing the correct position sizes based on your money management principles and having the patience to wait for your pre-determined conditions to present themselves without trying to get creative to try to invent trades. Anyone who started out as a paper trader and then made the transition to real money understands the real difference in idea vs implementation. It's simple to do when no real money is on the line. 

 Key Takeaways -  

  • Do a careful evaluation of your performance. Identify what you are doing well. Identify your mistakes.
  • Strive for consistent improvement. 
  • Do these things DAILY

 Focus

"Concentrate every minute like a Roman - like a man - on doing what's right in front of you with precise and genuine seriousness, tenderly, willingly with justice. And on freeing yourself from all other distractions."   

Marcus Aurelius - Meditations 

When you sit down to trade, focus on trading. That can include a wide range of actions. You're going to be staying informed on the market you are trading in. Scanning for setups. Analyzing charts. Backtesting. Research. Executing orders. All of these things deserve and require your full attention. Don't let the time you set for trading be pulled in other directions; schedule a separate time to respond to emails, run errands, or work on another project that isn't directly related to trading. 

Take it seriously. This is your business after all isn't it? You can't afford to half-ass it. Pay attention and engage with your work like it matters. You won't beat the competition if they are more precise than you in your analysis. Do you want to win or lose?

Set up your environment with this in mind. Work in a dedicated area that is free from outside distraction. This can mean working alone in the bedroom instead of in the living room with the whole family running around. Or it can mean that you go to a private office, workshare, a cafe, or even the library, where you can find a corner for yourself that you are comfortable with. We all start somewhere but the important thing is that in order to reach the kind of intense focus or flow-state required to achieve at the highest levels, we need to design our work life in a way that severely limits distraction. If you don't use your phone for trading, turn it off.  


Key Takeaways -

  • Just Trade
  • Take it seriously 
  • Make effort to free your surroundings from distraction

Emotional Regulation

Just keep in mind, the more we value things outside our control, the less control we have. 

Epictetus

It doesn't matter whether you trade crypto, the stock market, or the commodity markets. It doesn't matter how skilled you are at reading charts. There WILL be volatility and the negative variance can leave you with a string of losses. Your system will be put to the test. The ability to work through the range of emotions during the short term is a key factor in what separates the winners from losers in the long term. It could even be said that how you emotionally react to the financial swings is the best reflection of your ability to trade fluctuating asset classes effectively. 

The invaluable lesson Epictetus gives us is that by choosing to value the factors that are within our control (such as preparation and the aforementioned discipline and focus), we can get optimal results as opposed to expending energy towards the stress of short-term fluctuations in our fortunes. In trading, we are constantly analyzing external factors. It's easy to be disappointed when despite your analysis, the trade goes the other way. Especially when it has real financial consequences. To trade like a STOIC is to realize that we don't control the outcome, but we do control our reaction to it and that reaction is integral to increasing the probability of future positive outcomes. This can also mean tempering your enthusiasm in the other direction when things are going your way. It's important to remain rational so that you don't experience "winners tilt" and begin making riskier or poorly thought out trades after a good run. Keep working on what you can control and don't get carried away emotionally in the results, good or bad.

Key Takeaways -

  • Attend to what you can control
  • Don't sweat the swings
  • Stay grounded


These are only a few of the key concepts from Stoicism that can make you a better trader. If this resonates with you, I encourage you to read the popular works.  Meditations by Marcus Aurelius is a smooth read with much valuable content that you can implement into your daily life. Start there. 


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