December 6

The Stoic Trader Series | Marcus Aurelius’ Stoic Wisdom for Traders

By Yvan


Today, we’ll look at Marcus Aurelius—aka the last good emperor of Rome—his life, mindstate, and how trading is a tremendous opportunity for us to implement his stoic teachings.

This post is part 2 of a series of posts called The Stoic Trader.

In the previous one, we looked at stoicism, what it is as a philosophy, and how it can help make you a better trader.

Alright, let’s begin.

Marcus Aurelius, The Wise

Marcus Aurelius was born in 121 CE in a prominent and established family. But nobody at the time would have thought that he would one day become Emperor of the Roman Empire.

In short, the reigning emperor at the time, Hadrian, was childless and nearing death. He had to pick a successor, so he chose a guy named Antoninus who was a senator.

But since Antoninus was also childless, he had to adopt Marcus Aurelius as per Hadrian’s initial condition.

At that time, Marcus Aurelius was a studious and down to earth young man who visibly preferred his books and philosophy to anything else, yet he was next in line for the most important position in the empire.

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

Though it is said that Marcus ruled with reason, compassion, and heart, his reign was anything but ‘smooth sailing.’

1. There were wars with the barbarian tribes from the north.

2. The empire was ravaged by multiple earthquakes and floods.

3. Christianity was on the rise which upset many of the well-established traditions and ways of life.

4. The plague was also a real issue at that time.

So, as you can imagine, it was a time of great change and turmoil, and Marcus Aurelius’ reign was tumultuous and tormented.

But he always seemed calm under pressure, and able to make the fairest and most rational decisions no matter the circumstances –which earned him the moniker The Last Good Emperor of Rome.

It is important to realize the magnitude of power that Marcus Aurelius possessed. He held the most powerful position in the world at the time. If he chose to, nothing would be off-limits. He could indulge and succumb to temptations and live a life of utter debauchery if he wanted.

Really, he absolutely could. And there would be nobody that would be able to restrain him from any of his wishes…

Yet he sat down each day to write himself notes about restraint, compassion, and humility.

And through these daily writings, the wise Marcus Aurelius has provided us, moderners, a rather unfettered glimpse into the life of a real practicing Stoic.

Marcus’ Stoic Wisdom for Traders

So, as we’ve seen so far in this series, Stoicism is a philosophy of life. It teaches you not what to think but how to think.

And for us traders, it’s a practical guide to applying wisdom to our trading decisions.

It also helps us appreciate what we have in life whilst pushing us to alter our mindset in such a way that we cannot but succeed in achieving any goals that we might have.

But more broadly, it helps us just focus on living life as a thriving rational human being.

This is the core of Marcus Aurelius’ teachings.

Like most stoics, Marcus Aurelius believed that, just as physical pain is caused by illness and injury to the body, worry, distress, frustration, and irrational fears are caused (at least in part) by mistaken judgments and incorrect beliefs.

Particularly about good and bad and this dichotomy of control we talked about in the previous post.

Marcus taught himself to stop caring about the things that were out of his control and to instead focus on those things that were within his control.

Now, for us stoic traders, what would this look like?

It’s very simple…

First, you have control over your execution.

Of course, above anything else, you need a proven trading system, but that should go without saying.

But then, your execution has to be spotless. You have to get better at initiating your trades at the right time, and closing them at the right time.

Second, you have control over risk management.

You have to get really good at this too. You must keep most of your losses small and you must also develop the courage, vision and audacity to just go in with a little bit more size once in a while when the conditions allow for it.

Keep this in mind: You can’t be a trader if you don’t take risks.

And third: You have control over your perception.

When playing this game, bad things will happen. (Losses)

That’s the name of this game! It’s a fact of trading. You can’t win them all. Whether you choose to see things in a positive or negative way is entirely up to you.

For a true stoic trader, there are no losses, no failures, only lessons. And this is very important.

Knowing is Not Enough…

Now, everything we’ve seen from this point 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 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, can’t display 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.

You must come to develop new attitudes and qualities, you much teach your nervous system to relax better when faced with adversity, and you must gain better control over your instinctual responses.

And you must strive to strengthen those new mental patterns by practicing them in everything that you do which includes trading.

That’s what makes you a stoic trader.

That said, below is a stoic meditation to get started. It offers an opportunity to reflect on Marcus Aurelius’ 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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Memorable Lines From This Post

Stoicism is a philosophy of life. It teaches you not what to think but how to think. And for us traders, it’s a practical guide to applying wisdom to our trading decisions.

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[Stoicism] helps us appreciate what we have in life whilst pushing us to alter our mindset in such a way that we cannot but succeed in achieving any goals that we might have.

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Distress, frustration, and irrational fears are caused (at least in part) by mistaken judgments and incorrect beliefs.

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When playing this game, bad things will happen. (Losses) That’s the name of this game! It’s a fact of trading. For a true stoic trader, there are no losses, no failures, only lessons.

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