Long Posts

Stoicism Series 1-5: What Is Stoicism And How It Can Help You Become A Better Trader

Luck is what happens when preparation meets opportunity. ~ Seneca

First of all, I want to say this: When people usually think of “philosophy,” they think talking or lecturing, or even reading long, dense books… So their eyes glaze over. It’s the last thing they want, let alone something they need. Especially not in trading.

But this is naive.

You see, philosophy isn’t just all of that. In fact, it is there to help solve some of the problems of life, not only theoretically, but practically. And as you’ll see in the next series of articles entitled The Stoicism Series, it is very relevant to trading and in helping us develop a mindset that is robust and stable as we trade the markets for financial freedom.

That being said, let us look at what stoicism is.

What is stoicism?

Stoicism was born in a world falling apart…

Stoic philosophy has been around since at least ancient Greece and is thought to have been developed by a guy named Zeno of Cyprus. And over the years, it has been adopted (and practiced) by slaves, poets, emperors, politicians, and soldiers, as well as ordinary folks to help with their own existential problems.

Stoicism was born in a world falling apart and it took off because it offered people security and peace in such times of warfare and crisis. The Greco-Roman philosophy didn’t promise material security or peace in the afterlife. What it did promise is an unshakable capacity to go through life, no matter the circumstances, and to simply be happy.

[Stoicism] is about adjusting your responses to whatever happens, enduring whatever must be endured with stability, and enjoying whatever can be enjoyed.

In its essence, stoicism, like any philosophy of life, provides us with both a general framework for how to assess what’s really important for us, and specific precepts on how to navigate everyday life.

Stoicism, well lived, frees us to tackle the hard problems of this world so that vicissitudes don’t really get to us. In that sense, Stoics are thought to be emotionless. But that is not true. The Stoics had centuries to think deeply about how to live a harmonious life, and they developed a potent set of philosophies and practices to help us navigate our existence, appreciating the good while handling the bad.

So it’s not so much about being cold hearted and suppressing emotions, it’s about going through life with stability.

Stoicism’s central teachings remind us how unpredictable the world can be, and the philosophy gives us the tools we need to be steadfast and in control of our emotions and reflexive senses.

It’s simple as that.

 

Some stoic leaders

Here are three of the main ones…

1. Marcus Aurelius

Marcus Aurelius

Marcus Aurelius was born in a prominent and established family but nobody at the time would have predicted that he would one day become Emperor of the Roman Empire.

In short, the reigning emperor at the time, Hadrian was nearing death and childless. He had to pick a successor and chose a guy named Antoninus who was a senator but also childless. As per Hadrian’s condition, Antoninus had to adopt Marcus.

Little that is known of Marcus’ childhood but that he was a studious and down to earth young man who preferred his books and philosophy, yet who was next in line for the most important position in the empire.

Eventually, Antoninus died after a long reign, and Marcus became Emperor — making him the most powerful man on earth at that time.

Though it is said that he ruled with kindness, compassion, and heart, his reign wasn’t easy: wars with the Parthian Empire, the barbarian tribes menacing the Empire on the northern border, the rise of Christianity as well as the plague that left numerous dead.

It is important to realize the magnitude of power that Marcus possessed. He held one of—if not the most—powerful positions in the world at the time. If he chose to, nothing would be off limits. He could indulge and succumb to temptations, there was nobody that could restrain him from any of his wishes…

Yet he sat down each day to write himself notes about restraint, compassion, and humility. Through his writings, Marcus Aurelius has provided us a rather unfettered glimpse into the life of a practicing Stoic.

 

2. Epictetus

Epictetus

This guy was born a slave. His owner, however, gave him the permission to pursue liberal studies and he discovered stoicism through a stoic named Musonius Rufus who became his teacher and mentor.

Later, Epictetus obtained his freedom and started teaching philosophy in Rome for nearly 25 years, where he taught many of Rome’s greatest minds.

This lasted until emperor Domitian famously banished all philosophers in Rome. Epictetus then fled to Nicopolis in Greece where he founded a philosophy school and taught there until his death.

Epictetus’ strong and detailed studies regarding the Stoic system makes it that any analysis of Stoicism is incomplete without Epictetus’ work being included.

 

3. Seneca

Seneca

Seneca was born in southern Spain over 2,000 years ago and was educated in Rome. Eventually, after having pursued a career in politics, he became a high-ranking financial clerk.

When Claudius became the emperor, his life took a sharp turn as he was exiled to the island of Corsica on the premises of supposed adultery with Julia Livilla, the emperor’s niece.

Eight years later, in another twist, Agrippina, mother of future Emperor Nero secured permission for Seneca to return and for him to become her son’s tutor and adviser.

Nero later became one of the most notorious and tyrannical emperors in the history of the Roman Empire. Seneca, at one point, became one of the richest people in the Roman Empire. His wealth came largely while in service to Emperor Nero.

But eventually, the tyrannical Nero turned on him and demanded his suicide. During those turbulent periods, Stoicism remained a constant in Seneca’s life.

 

Those were Stoicism’s three principal leaders. But it is not only those three. In fact, Stoicism has been espoused by many — kings, peasants, slaves, presidents, artists, writers, entrepreneurs — across time and these adepts, enthusiasts, and practitioners illustrated the philosophy as their way of life.

 

 

How is stoicism applied/ practiced?

You must learn to separate what is and isn’t in your power.

The application of stoicism happens through a couple of insights. One of them is that you must come to the realization that there are things that are in your control and things that aren’t.

You must learn to separate what is and isn’t in your power. This lets you approach everything with equanimity and composure.

 

Here’s a simple example…

Let’s say you are in a long-term relationship, and you love your partner. You presumably want, like most people do, to be loved back and for the relationship to last.

But those outcomes are not really under your control because they depend in part on both external circumstances and the will and feeling of your partner.

What is under your control, however, is to be as loving a companion as you can be, and to work towards making the relationship the best you can.

Now, if you transpose this analogy to trading and it’ll become clear to you that the workings are the same.

Suppose you find yourself to be irritable, you get angry because you got stopped out of a trade only to see price reverse. These things happen very often, right?

If you can understand that you can’t control the markets, you can only control yourself and follow your trading plan, you’ll eventually inch closer to success. Because you won’t be fighting the markets anymore. You’ll be concerned with your reaction to whatever happens — improving it.

Externally, you may or may not achieve said success (because remember, things external occur out of a long chain of cause and effect and mostly out of your control), but stoicism wants you to understand that it doesn’t really matter in the end because success is entirely up to you – it’s an inside job. It’s how you decide to feel (and live) in each and every moment.

Epictetus summarized this dichotomy of control in this way:

Some things are within our power while others are not. Within our power are opinion, motivation, desire, aversion, and, in a word, whatever is of our own doing; not within our power are our body, our property, reputation, office, and, in a word, whatever is not of our own doing.

No happiness can be secure if it’s rooted in things that are constantly changing and out of your control. Your trading account can grow or shrink; in life, you can prosper or falter, even your loved ones can be taken from you. Yet, in the midst of such changing and unreliable external conditions, there is one thing that can be unwavering: Your mind and the control you have over it.

And this is the only thing that really matters in the end because the control you have over your mind determines how you see and experience the world.

The world might take everything from you, but the promise of stoicism is that a fortress exists inside each and every one of us.

While it’s natural to feel defeated at times, the Stoic works to stay indifferent to everything that happens on the outside, to stay equanimous and equally happy in times of triumph and disaster.

I won’t lie, this is a demanding way of life, but I can promise you, the reward it offers is freedom from the thoughts and the emotions that so often seem to control us, when it is us that should have control over them.

 

Another example…

Here’s another example of how stoicism can be practiced: You see a trade opportunity, you get your signal, yet you don’t take it. Because you don’t want to go through the pain of being wrong, since in the past being wrong has caused you some degree of pain.

So your mind unconsciously tries to avoid being wrong which causes you freeze up. And, naturally, you pull up excuses for why you didn’t get into the trade.

I’m sure you’ve been through such a scenario at some point.

Here’s what Seneca, wrote,

Two elements must, therefore, be rooted out once and for all—the fear of future suffering and the recollection of past suffering; since the latter no longer concerns me, and the former concerns me not yet.

He goes further by saying,

“The greatest loss of time is delay and expectation, which depend upon the future. We let go the present, which we have in our power, and look forward to that which depends upon chance, and so relinquish a certainty for an uncertainty.”

Through a stoic perspective, first we hold the understanding that the past is no longer under our control: so we let it go. Then we understand that the future will come eventually, but the best way to prepare for it is to act where and when we are most effective—which is right here, right now.

As you can see, stoicism is a sort of mindfulness practice. In fact, there’s a lot of overlap between Stoicism and Buddhism. These two philosophies do compliment each other very well, and one could even say that stoicism is the intellectual understanding and the practice of mindfulness as prescribed by the Buddha is the actual application.

 

Some modern day stoic practitioners/ enthusiasts

Some modern day stoics

According to an article published on inc.com, Jeff Bezos, Elon Musk, Bill Gates, and Warren Buffett all used stoic philosophy to build their empire, whether they did it knowingly or not.

But many other great minds in modern day have read, studied, quoted, or admired the Stoics.

For instance,

Bill Clinton — The former president reads Marcus Aurelius’s Meditations every year according to this New York Times story.

Arnold Schwarzenegger — Openly said that he’s is a fan of the Stoic philosophy.

T-Pain — The 6X Platinum selling, Grammy Award winning American R&B artist has recorded the “Stoic” mixtape as well as the “Stoicville” album.

Tom Hiddleston — The English actor (“Thor” and “Avengers”) said on twitter that he was is a fan of Seneca.

JK Rowling — The author of Harry Potter also said on Twitter that she’s a fan of Marcus Aurelius.

Nassim Nicholas Taleb — The author, philosopher and former trader has expressed his respect and admiration for Stoicism—and Seneca in particular—in both The Black Swan and Antifragile.

Neil Strauss — The author of 7 New York Times bestsellers, including The Game: Penetrating the Secret Society of Pickup Artists lists one of his favorite books as On the Shortness of Life by Seneca.

Of course, there are many others. This is a non-exhaustive list.

Finals words

As you see, stoicism is a philosophy that empowers and it’s certainly very relevant to the endeavor of trading. If you can apply it to your life, then you will bring tremendous change in your life and your experience of trading as well will only get better.

There are many other stoic insights worth mentioning and the practice of stoicism demands that you grasp them fully if you ever want to begin to apply them in your life. I’ll express them in the next articles couple of articles. We’ll see them as they were shared by those three Stoic leaders – Marcus Aurelius, Epictetus, and Seneca.

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Yvan
I've been trading for a living since 2006. By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one. Through my work here at Trading Composure, I aim at helping you do the same.
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