Steady Your Impulses
"Don't be bounced around, but submit every impulse to the claims of justice, and protect your clear conviction in every appearance."
— Marcus Aurelius, Meditations
Another very interesting meditation today and again it can be very useful when we compare it to trading.
Days of soaring highs or crushing lows were quite common when I started out on my trading journey. It was a case of boom or bust! This was all because I didn't have a plan and I refused to take controlled losses. I had no structure in my trading.
The stoics talk of using a filter so that they can test good impulses against bad ones. This filter is split into three areas; justice, reason and philosophy. This is something that we can also use in trading.
#01 Justice; We always want to do the right thing when we are trading, as we do in life in general. We have a set criteria of rules that must be met to enter a trade using our strategy. If all the criteria is met then we can justify our selection, but we must always be ready to exit the trade in a heartbeat if the occasional trade is going against us.
#02 Reason; What is the reason we have entered a trade? Well it's quite simply that all the criteria for our strategy is met and we are not breaking any rules. This means our reasoning is solid.
#03 Philosophy; This acts as a guiding principle for our behaviour while trading. We stay stress free, calm and unemotional, because we know that we are in total control of our trades and know how to react in a heartbeat, at any point. A philosophy I use, that I find great for when I am trading is this; "Don't expect anything from the markets and you won't be disappointed!"
As it says in the last sentence of today's meditation; "Think before you act (criteria fully matched). "Ask: who is in control here? (We are, because of how we can confidently react to any scenario during a trade). "What principles are guiding me?" We stick to the principles of our trading rules and follow them exactly as we have laid them out.
So in summary this means that we are not jumping in on trades, purely on impulse. We have a clearly defined set of rules and criteria that must be met, for us to enter a trade. This gives us a clear advantage on our trading journey.