Naked Trading: What Does It Mean?

Filed under: Learn Forex Trading |

 

If you have been interested in trading for a while, you may have heard the term ‘naked trading’. This does not mean that you sit at home on your computer in your birthday suit while trading the markets (although in some cases, this might well be true in some of the hotter climates!). There are a number of books that refer to such ways of trading the markets, such as ‘The Naked Trader’ by Robbie Burns, and ‘Naked Forex’ by Alex Nekritin and Walter Peters. However, what this way of trading refers to is a simplistic method devoid of complicated indicators and trading parameters. It is referring to looking at a naked price chart, with nothing overlaid to distract the viewer.

 

Figure 1.

Figure 1.

I too think of myself as a naked trader. I keep my charts clean, with a white background and black and white candlesticks. I remove the volume indicator, and the only extras that I have on my charts are an 8-day and a 21-day exponential moving average to show the trend, and some horizontal support and resistance lines. In fact, Figure 1 shows exactly what my forex charts look like. As you can see, I also take off the grid so that the charts are as clean and white as possible, and I find that this helps to focus the mind and keep things simple and clear.

Figure 2.

Figure 2.

 

Now compare this exact same chart, but this time, let’s include a number of indicators and a different chart colour template (see Figure 2). This is how many traders view their charts – and in my view, it is an unnecessarily overcomplicated way to trade, and one that muddies the mind. Let’s face it – it is a complete mess! For me, naked trading is the only way to trade with any clarity – but which way you go is ultimately, of course, your decision.

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