December 20

The Stoic Trader Series | Epictetus’ Stoic Wisdom for Traders

By Yvan


This post is part 3 of a series of posts called The Stoic Trader.

In part 2, we briefly looked at Marcus Aurelius’ life and wisdom, and how trading is such a great opportunity for us to implement his stoic teachings.

Today, we’ll do the same for Epictetus.

Let us begin…

Epictetus, The Pragmatic

Epictetus’ story is really fascinating. The guy was born a slave some 2000 years ago – his name literally means “acquired.”

His owner, however, gave him permission to pursue liberal studies and he discovered stoicism through a stoic named Musonius Rufus who later became his teacher and mentor.

Shortly after emperor Nero’s death, Epictetus obtained his freedom and started teaching philosophy in Rome for nearly 25 years.

He taught many of Rome’s greatest minds at that time and his philosophies revolved around contentment regardless of circumstances, drawing heavily from his personal experience as a slave.

Epictetus also taught that reason by itself is good and that poor reasoning is the cause of most negative feelings.

Eventually, Emperor Domitian, the one who came after Nero, decided that it was a good idea to banish all philosophers in Rome. So he did, and Epictetus had to flee to Nicopolis in Greece.

There, 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 studying his discourses.

He never actually wrote anything down himself. His student Arrian did. And that’s how we have good written records of his lessons.

Epictetus’ Stoic Wisdom for Traders

As said above, Epictetus’ teachings cover reason and contentment. As a trader, these can be useful in one major way.

Let’s say, you have a trade in mind. You’ve done your homework, you’ve prepared an action plan, you’ve stalked that trade for a few days and now it’s ripe and ready for the taking.

So, you get in.

Days later, the market dips down. Then, it goes back up a bit, but moments later, it dips down further, and this triggers your stop-loss order.

To add insult to injury, the market then decides to reverse its course and go straight up without ever looking back.

I’m sure you’ve been in such a situation before.

It sucks! It really does.

But one of the best ways to make even the worst situations a little better is to remind yourself that your situation (no matter how bad it looks) is not even close to the worst.

Because it really could be waaaay worse.

That loss you took… it sucks… but I’m sure you’d agree, it’s better than having the market gap down a couple of points below your stop-loss.

And speaking more broadly, that trading loss is better than losing someone you love.

You see, Epictetus’ stoic teachings help us see adverse events and circumstances not through first reactionary impressions but with perspective.

Here’s a quote directly from the horse’s mouth:

Remember, it is not enough to be hit or insulted to be harmed, you must believe that you are being harmed. If someone succeeds in provoking you, realize that your mind is complicit in the provocation. Which is why it is essential that we not respond impulsively to impressions; take a moment before reacting, and you will find it easier to maintain control.

When something “bad” happens, Epictetus suggested that we can control our perception and alter it before that perception devolves into something that’s ultimately toxic for us and our bottom-line.

This idea of changing your perception was of critical importance for a stoic like Epictetus, for he understood that our choice of perception determines everything… it determines how we feel, how we act, the outcomes we get, the patterns of thought we have, and more broadly the life we live.

So, as an aspiring stoic trader if you can come to a point where you can extrapolate past your first impression of things (trading loss= bad, let’s say) you’ll see that everything is simply just an opportunity – to learn, to grow, to evolve, to become better…

Yes, even the worst trading loss offers that opportunity. As hard as the situation is, there is always an opportunity to learn and to better yourself because it presents choices and lessons that may not otherwise have been recognized.

But okay, let’s say there’s really objectively no opportunity in a specific circumstance. Then, Epictetus teachings still invites us to approach such an adverse situation as a challenge rather than a threat.

You see what I’m saying?

We all have this incredible warrior-like desire to overcome challenges and this little cognitive reframing (from an automatic perception of threat to viewing it as a challenge) will improve your motivation, focus, energy, and self-confidence to help you overcome what stands in your way.

Again, perception is everything, and this realization is the epitome of wisdom. And it’s incredibly powerful – it allows you to find a little bit of gratitude, a little bit of relief, a little bit of hope, even amidst terrible tragedies.

Knowing is Not Enough…

As with the previous post on Marcus Aurelius, everything we’ve seen so far is all just theory. And stoicism was never meant to be some mere theory, it was meant to be highly practical.

Remember, the philosophy came about at a time of warfare, crisis, and instability. So it had to be highly practical, or else it wouldn’t have been of much use.

Yet in this day and age, you’ll find a lot of people who say they’ve studied stoic philosophy, but when push comes to shove, they can’t display even an ounce of wisdom and virtue.

That’s because learning grandiose theories is unfortunately not enough. You must apply what you know — not once, or not twice, you must make it a lifestyle!

I kid you not, this is serious work.

But when you do, you eventually develop new attitudes and qualities; you teach your nervous system to relax better when faced with adversity; you gain better control over your instinctual responses.

That being said, below is a stoic meditation to get you started with that mindset work. It offers an opportunity to reflect on Epictetus’ popular thoughts.

Try it out.

And if you’re ready to take it further, check out the Trading Psychology Mastery Course.

 

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One of the best ways to make even the worst situations a little better is to remind yourself that your situation (no matter how bad it looks) is not even close to the worst.

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We can control our perception and alter it before that perception devolves into something that’s ultimately toxic for us and our bottom-line.

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Our choice of perception determines everything… it determines how we feel, how we act, the outcomes we get, the patterns of thought we have, and more broadly the life we live.

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Approach an adverse situation as a challenge rather than a threat.

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