November 22

The Stoic Trader Series | How Stoicism Can Make You a Better Trader

By Yvan


In this article, I’ll discuss stoicism and how this philosophy can help you become a better trader from a trading psychology point of view –in other words, a stoic trader.

But first, let me say this: when people usually think of philosophy, they think of dense books, confusing lectures, lengthy debates…

So their eyes naturally glaze over.

In their minds, philosophy is the last thing they want, let alone something they need.

Especially not as traders.

But this is naive.

You see, philosophy isn’t just all of those “boring” things. In fact, it is there to help find solutions to some of life’s problems, not only theoretically, but practically.

And as you’ll see in the next series of articles entitled The Stoic Trader Series, philosophy 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.

With that out of the way, let us look at what stoicism is.

I’ll do my best to skip the fluff and really boil everything down to an essence.

So… let’s go.

What is stoicism?

Simply put, 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 internal security and peace in such times of external warfare and crisis.

The Greco-Roman philosophy didn’t promise material security or peace here and now or in an unknown afterlife. What it did promise is an unshakable capacity to go through the ups and downs of life, and to s.i.m.p.l.y be happy.

Stoicism’s Central Teachings

Like any philosophy of life, stoicism helps us in three main ways:

1. Stoicism opens our eyes to certain realities of life:

A. Impermanence – most things in life are impermanent and subject to change, starting with your own life.

B. Suffering – no matter where you stand in life, suffering is a common thread for each and all. Life has difficulties and can sometimes be incredibly cruel.

C. Uncertainty – many things in life are out of our control, and because there is such uncertainty, there is risk.

2. Stoicism provides specific precepts on how to navigate these sometimes harsh realities. It invites us to take stock of reality and to:

A. Willingly do what we were born to do.

B. Not overthink things.

C. Respond with wisdom.

3. Stoicism offers a general framework for how to assess what’s really important for us:

A. Is something that immediately unpleasant happening for the greater good? Then let it happen.

B. Embrace what is in your nature, and do more of it.

C. Understand that nothing painful that happens to you is something that you can’t bear. So bear it willingly.

A Set of Tools for a Better Life

Well grasped and well-lived, stoicism helps us become more enlightened versions of ourselves and frees us from needless suffering and mediocrity.

As a stoic trader in the making, this alone should make you pause. In the market, you’ll be faced with countless ups and downs. Periods of wins and periods of losses… that’s the very nature of trading.

When stoicism is fully grasped and turned into a set of habits, it can help you navigate that uncertainty with more composure.

That said, practitioners of stoicism are often thought to be emotionless. But that is not true at all, and it misses the point. 

Stoics across centuries thought deeply about how to live a harmonious life, and they developed a potent set of philosophies and practices to help whoever wants to listen to navigate their own existence with wisdom.

So it’s not so much that stoics are emotionless, rather it’s that they have the tools to help them go through life with more stability and purpose.

As said above, stoicism’s central teachings remind us of 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 that simple. 

How is stoicism applied/ practiced?

There are a number of stoic exercises out there that can help you cultivate insight, wisdom, and equanimity, and I won’t share all of them here, just a simple one.

Here goes:

When you find yourself struggling (emotionally) with something, make it a habit to determine whether or not that which is troubling you is in your control.

This habit will let you approach all circumstances you find yourself in with more wisdom and composure.

Here’s an example…

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, don’t you?

But stoicism teaches you that this is not really under your control because it depends in part on both external circumstances and the will and feelings of your partner.

You can seek to influence the way he/she feels about you and your relationship by being as loving a companion as you can be and working towards making the relationship the best you can.

Your actions are surely under your control. However, the outcome –him/her loving you back– this is out of your control.

It is quite freeing if you can open your eyes to this reality and accept it.

And I know it’s hard for a lot of people to accept that outcomes are often are out of their control. They refuse to see and acknowledge it because the alternative is painful.

So they build their lives around an illusion of control.

But happiness and peace can’t be secured if they’re rooted in things that are constantly changing.

Happiness and peace are much more reliable when they exist in spite of change.

That’s what stoicism wants you to understand, practice, and rehearse.

Let’s look at another example… this time, a trading one.

Suppose you find yourself to be irritable. You’re angry and frustrated because you got stopped out of a trade only to see price reverse and go hit your profit target.

These things happen very often in the market. I’m sure you’d agree.

Now, if you understand that you can’t control the markets and that you can only control yourself, your actions, your perception, and the focus you place on being consistent, you won’t have a tendency to beat yourself up for losing.

You would have less of a tendency to get worked up and seek to revenge trade because you’d know that it’s pointless.

And you’d focus more on trading your strategy and sticking with your trading plan because you’d know that these are the only things you can control.

You’d also focus on improving the way you respond so that you don’t let yourself get bullied by your emotions.

Look, I understand… having such a mindset, being a “stoic trader”… it’s not easy. This trick is remembering.

When hardship strikes, remember to ask yourself the following:

“Do I have control over this? What’s in my control?”

When this becomes automatic (a habit) you’ll notice a big change in the way you respond.

Finals words

As you see, stoicism is a philosophy that empowers, and it’s certainly very relevant to the endeavor of trading.

If you understand it and can apply it in your life, then you will create a lot of positive change for yourself, and as a result, your experience of trading will only get better.

This is how you become a stoic trader.

My aim with this article was to keep everything short and to the point. That said, there is still much to be said about stoicism.

In the next article, I’ll introduce Marcus Aurelius, one of stoicism’s main figures.

We’ll take a brief look at his life, the things he did, and how he became a stoic.

And finally, we will do a reflective exercise together based on the things he said. This will help you see cultivate composure and insight as you begin to see things through the eyes of a real practicing stoic trader.

See you next week.

 

—-

Memorable Lines From This Post

Philosophy 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.

Click to Tweet

In the market, you’ll be faced with countless ups and downs. Periods of wins and periods of losses… that’s the very nature of trading.

Click to Tweet

When stoicism is fully grasped and turned into a set of habits, it can help you navigate that uncertainty with more composure.

Click to Tweet

When you find yourself struggling (emotionally) with something, make it a habit to determine whether or not that which is troubling you is in your control.

Click to Tweet

happiness and peace can’t be secured if they're rooted in things that are constantly changing.

Click to Tweet

Share The Full Post


Take it Further with The Trading Psychology Mastery Course

"The course has impacted positively my trading by bringing awareness to my monkey mind habits during live trading. The awareness is impacting my life in general where I am making better choices. i would recommend it highly to every trader I know." ―Mandeep Gill