Another trading method used by people is naked Forex trading. It is the oldest and simplest method in the book, and any trader who has been in the trading industry long enough knows how important naked trading is. Whether or not this method is for you, you need to understand this style of trading to identify the strategies used by other traders.
This article will talk about everything you need to know about naked Forex trading and how this trading strategy can be used to your advantage.
What exactly is naked Forex trading?
Naked forex trading is a trading method where the price is king, and there is no need for technical analysis and complex indicators. Also known as price action trading, this method comes without any indicators if there is a high probability that there will be a profit immediately. This means that instead of relying on the volume, exchange rate, and open interest of a currency pair, Forex traders will just focus on price charts and real-time information.
When you trade using this method, you make decisions based on the state of the current market instead of considering the future price movements of the currencies.
Is trading in naked Forex good?
Naked trading in forex is one of the most efficient ways to trade as an individual. Especially when you have a lot of other things on your mind, naked trading can help by lessening the load when making decisions. Unlike technical analysis, in which you would have to check so many patterns just to see which one is right, only to be wrong and lose a trade while putting so much effort into it.
Making more trades and winning them within a specific time frame will put you above technical analysis traders.
Are patterns and trends still used in naked Forex trading?
Patterns and trends are still used, but only to confirm positions. They are not the basis for the Forex traders’ decisions but only a supporting indicator. When naked trading, part of your decisions are reactionary; some of them are also speculatory. When you see an opportunity to sell and profit, you do it. If you’ve decided to push the market a bit higher before selling, you might want to confirm this decision with a few lines and patterns just to ensure.
How To Trade in the Forex Market Naked
Trading naked is not necessarily just going into the market naked with just you and your device against the world. To trade naked, there are a few things you should know and practice:
How to trade without indicators
Trading without indicators is one thing that entices people about naked trading. Not having to memorize all the patterns, not having to draw so many lines that you don’t even know how to draw or erase on the trading chart. However, this doesn’t mean you don’t need to know anything about trading without indicators. You need to learn about how the market moves and its cycles.
The forex market goes through cycles, and to figure out when you should trade without indicators, you need to know what these cycles are. Ranging Lows, Trending Upwards, Ranging Highs, Trending Downwards.
Ranging lows are when the prices move up and down on a fixed range on the lower end of that timeframe. Trending upwards is when highs are going higher, and the lows are going up as well. Ranging highs are when prices are moving up and down on a fixed range on the higher end of the price in that timeframe. Trending downwards is when highs are going down, and the lows are also getting lower.
Where did naked Forex trading come from?
Similar to fundamental trading in stocks, naked trading came from how the human brain works without the assistance of highly technical patterns. Think of it as intuition and instinct. Some traders with so much experience can naked trade all day and make a huge profit. Some are gifted with a natural feel for patterns without learning them. Practice makes perfect, and as you learn, you may lose money, but think of it as payment for the experience.
Pros and Cons of Naked Forex Trading
The pros and cons of naked Forex trading are still hotly debated in the Forex community. This section will highlight the positive and negative features of doing naked Forex trading to help you decide whether this trading method is worth a try or not.
Here are some of the pros and cons of naked Forex trading:
Helps You Practice Your Market Reading Skills
Since naked Forex trading relies on price action charts, this simplified method will help you develop your market reading skills and make spontaneous decisions based on what you think will give you the most profits.
Trade Without Indicators
While naked Forex trading can be good for those with strong intuition and guts to take immediate action, trading without indicators can be dangerous for some. Knowledge of the market will require you to understand how it works. If you want to try naked Forex trading, you first need to learn to read price action charts to understand the patterns and trends.
Trade with Pure Price Action
Another positive feat of naked Forex trading is that it is trading with pure price action. This means that you won’t need complex Forex indicators with fancy oscillators. All you need to master is how to look at the candlestick trend along with the basic trendlines to be able to pull it off.
Discover More About Nake Forex Trading with Decode Global
Naked forex trading can be a great way to make money if you understand how it works. At Decode Global, we want to help you do just that. Sign up for a free demo or live account today and see how our team of experts can help you achieve success in the Forex market.