In this video Alistair Schultz, Chief Market Analyst, runs through his top five trading philosophies and how to implement these into your trading.
Hello, and welcome to another ACY Securities market tutorial. My name is Alistair Schultz, and I'm going to be a host for today's trading journey. Today's topic is on my top five philosophies of trading and some of these things I've learned over my career, I've heard from others or enacted the myself, but either way they things to be mindful of either now or in the future, when it comes to your own trading. The first one is knowing your market is imperative, that you understand the market that you are trading and what its value is really driven from. So regardless of whether you are new or a veteran's are trading, then you need to understand the principles that make up the price movements behind your given instrument. So hypothetically, if you were into video games, then you might know when a video game is going to be coming out.
You can, might be able to know who the manufacturer of that video game is, what the expected release price is going to be. How many people might be interested in engaged in purchasing it, perhaps even pre purchases. And either way you'll understand that when that game gets released, perhaps the stock value of the company that is behind it will increase in value. So there's one way of thinking about it, and it's an easy way to sort of transfer that knowledge. So if you pick an industry or a market that you understand, it makes it much more easy to transfer that knowledge and put it in a different light, such as looking for a trading position. Another one might be that you you're already working in that industry as a say you're in the automotive industry. In which case you would be looking at what's going on with the new Evie cars and how that might affect certain stock prices and where you might go with that.
If you're looking at a currency pair, you need to consider two different economies. You need to look at one side of the parent, let's say, hypothetically Australia, the AUD USD, or the Aussie dollar, then you would need to look at the Australian dollar side and what goes on to their GDP. What goes on with the politics there, what goes on with the exports that imports and everything else with it. And then you also need to look at the us dollar side and what's going on in the U S situation. The idea is here that knowing your market means actually being able to build a picture in your mind about what is going on within that market and why certain fluctuations or news events might change the value of the item or the instrument that you were looking at. So the easiest place to start for you, if you are new for trading is obviously transfer some of those skills that you already have in a certain particular market into the stock world or the currency world or wherever it may be, but in the markets in general.
And then from there start building on that, start learning more, start researching a little bit more and understanding and build until you can build that picture in your mind. And one day it'll just click. You'll be sitting there after having done all this reading, and you'll hear a piece of news that comes out or rate a pace of news and you go, oh, that's going to devalue that economy. Well, that's going to de-value that market or that stock or that instrument. And you'll have a much better understanding of what's going on in the real world. So know your market. The next one is sort of figure can consider is don't cloud your judgment. And it's very difficult to do even for a seasoned professional clouding your judgment. What I mean by that? Well, the first thing to consider is when you in placing a trade and you've done all your analytics, and you've thought about all your position, you may have even placed that trade, but then two minutes off pace in the trade, you read an article that is adverse to the one to two, your own trading plan, and it changes the idea in your head.
It clouds the judgment for what you were planning to do with that position, regardless of whether you have set out a plan on when you're getting in, when you're getting out, why you've made that and formulated that idea around it. And the theory that you've put into placing that trade will all get topsy-turvy and you all of a sudden start doing things that you hadn't planned on doing. So don't let anything sort of cloud your judgment once you're in that trade, try and start reading other information. I know it's almost impossible to do that because it's such a volatile market. And we've also got, you know, a, an ever evolving situation, regardless at any time of the day when it comes to trading. So sometimes you will get that key piece of information that does change it dramatically. But the important part is not sort of get too wrapped up in the opinionated side of things on whether a private market is going up or down.
Once you're in a position, commit to it, that's as best as you're going to get. So don't cloud your judgment, not even for a moment, don't even let it get Misty. Once you're in, you're in the next one is sort of have a look at is treating it like a business. Now, unfortunately, this is an aspect that I see a lot. People tend not to treat trading like a business. They treat it like a hobby or an extra income. So therefore you put in part-time effort, you get part-time results. You put in full-time effort, you get full-time results, but the other more detrimenting facts or to the more issue at hand, really when treating it like a business comes down to it is that if you were to consider any other business on the planet that isn't trading might be manufacturing or anything else like that, most businesses have a high failure rate in their first several years.
In addition to this, you would also look at the idea that during the first couple of years, if they are successful, they usually run at a deficit, but in trading, no one has that same sort of philosophy. No one looks at it in that, that sort of light. So the reality of is that it is the same and they need to treat trading as a business. I don't know many traders. Who've made a lot large sum of money in that first couple of months, or first couple of years. It really is a time and effort sort of thing. And unless you are putting that time and effort, like it's a business, then you're not going to get the results that you're looking for. You can't expect to sort of go and make huge sums of money off very small capital, because you wouldn't do that in any other business.
So why would you expect to do it in this one? This is just business avenue. It is nothing different. We still get taxed on it. So well, there really isn't a very big difference. Now, the next one is aim small, Ms. Small and aim. Small Ms. Small is obviously something that is derived from, from shooting philosophies. But in this instance, when it comes to trading, I apply it to the idea that the smaller your trades, the less chance of risk you're going to have, and therefore the less you're going to miss on a target. So even if you do take these little trades quite regularly and you know, not infrequently, then it gives you the opportunity that if you do get something wrong or you do get your, your cloud, your judgment, it allows you to close your position, go out, reset, reassess, have a look at the analytics that you're thinking about, reformulate your opinion, and then place a new trade that fits in with the demographic that you're looking at.
So if you are going to be thinking about placing trades, you don't want them to be too big because if they are too big, then it puts in more nerves, puts in more psychological aspects that you don't necessarily want to play with. So aim small, Ms. Small is my fourth philosophy for you to consider the next one, probably one that you've all heard before, but instead of it being don't drink and drive it's, don't drink and trade. And as much as this isn't a philosophy, it's kind of a general rule that you would consider. It's something that, you know, people do really need to think about before they actually jump on to the trading desk. It's all too easy to go home and have a drink, a couple of beers, whatever it may be, and then have a look at the chart. So everyone's sort of done it before, at least once in their lifetime.
And usually they don't have good results out of it. You might get lucky a few occasions, but most of the time it doesn't end up well, for lack of a better reason, it's because you don't have the best judgment at that point in time, your judgment is impaired. Just like it is one of these in a car, and you've had a few drinks then, you know, you shouldn't be in that situation. And so we should apply the same sort of methodology towards when it comes to our trading, because we have impaired judgment off of alcohol and other substances. So therefore our trading decisions are not going to be at the best of the day. And also for that matter, if you're at the bar and you've gone out with some friends, whatever it may be, and someone tells you and gives you some advice, write it down on your phone, don't try and place a trade right then.
And there, it's better that you have look at it with a clear mind, then one, that's got some level of alcohol and or whatever other substances in your, in your body. So you want to make, to maintain that idea that you are doing the right thing by your trading account and not actually doing it whilst you've had a drink or two. So don't drink and trade. Now, if there are anything else that you would like to hear about me and the sort of from me and they sort of videos, or perhaps you've got some questions about today's video, or maybe even some other videos, feel free to send me an email talktoal@acy.com Of course, like & subscribe this video so you can get more great content from me and ACY securities in the future. Have a great trading day ahead.
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