What We Control And What We Don't
"Some things are in our control, while others are not. We control our opinion, choice, desire, aversion, and, in a word, everything of our own doing. We don't control our body, property, reputation, position, and, in a word, everything not of our own doing. Even more, the things in our control are by nature free, unhindered, and unobstructed, while those not in our control are weak, slavish, can be hindered, and are not our own."
— Epictetus, Enchiridion
This seems such a big thing for the stoics, to be able to concentrate on the things we can control and to forget about the things that are outside our control. No point wasting your energy on things that we can't control which makes absolute sense of course. Transferring this to trading, we can't control the outcome of an external event such as a horse race or a football game for example. But what we can do is control our opinion on these events and trade it accordingly, if it fully meets our criteria. So using the stats/data that we have available to us, we can form an opinion on how a horse race or football match is likely to go. A regular front runner may hit the front early on and the odds steam in, or a regularly held up horse may be slowly away and held up in the rear and it's odds will drift, so in either scenario we can take our targeted profit. Maybe a football match will start slowly and the odds to lay over 3.5 goals will drift nicely for us to take an early profit. We can't control the outcome as that is impossible, but we are using our opinion based on our information from the historical stats/data that is available to us. This we can control of course and by adopting a neutral mindset, as soon as a trade goes in play. We can then react in a heartbeat, if we see what we are not expecting. This could be a front runner starting slowly, or a hold up horse shooting to the front early on, or a really fast start to a football match with plenty of action. By reducing our expectancy levels, we are taking evasive action and moving swiftly to exit our trade for a smaller profit than we originally targeted, scratch or in the worse case scenario, a controlled red.
So in a trading sense we are not as such forgetting about things that are outside our control, as that would be a set and forget strategy which is more of a straight gamble on an outcome. We are controlling our trades to enable us to cut any potential losses at a more manageable level, BEFORE they ARE outside our control. If we can do this effectively, every time that we enter a trade that isn't going to plan, we are protecting our bank and giving ourselves a much better chance of being successful traders, which is our long term aim of course.