/ Trading

Trading naked (go on, expose yourself)

Chances are you have gone through many cycles of trading systems, time frames and strategies. You watch Forex Factory, Stocktwits and Tradingview, but still things aren’t clicking or have come off the rails.

You may have tried different indicators, stop loss strategies, entry signals and alert services. You are still trying expert advisers from an unknown traders that pain you in unforgiving places.

If this is you, have you tried trading naked?

When you are trading “in the zone” everything seems uncomplicated and easy. When you know what needs to be done and you do it without question and complete trust. You have a “feel” for the markets.

Before I get complaints from mothers, wives, boyfriends and voyeurs (ok so voyeurs wouldn’t be complaining). Trading naked means trading technical methods on a chart devoid of indicators.

Since 2001 I have encouraged traders I have mentored to minimize the indicators on a chart. I see the confusion increase with each new squiggly line. But I am a man of compromise.

A trading naked hypothetical:

Let’s go back to when I started trading.

In the beginning we start out with little knowledge of technical analysis. After a while, and often after a honeymoon period, losses start to mount. Soon we start to add indicators to “filter” the bad signals.

As knowledge builds,understanding of which indicators are best for our trading style forms. Slowly things start to turn around, and we start making some consistent, while small profits.

This might continue for a while, before the want for greater profits, or just plain human nature brings us to try something new.

Soon we have a whole new set of indicators on our charts, and results start to suffer. We realize this and try to go back to their original system but find it is not working as we remember, so we add a new indicator … and the cycle continues.

So how do you get out of this loop?

Get naked

I believe in naked trading because, despite all the lines, histograms, oscillators and arrows, price is always what provides the profits for a technical trader. In the end, despite what indicators say, we use price as our exit points.

Since 2001 simplifying my charts has hands down been the best way to clear confusion and bad results.

So why do I think this works? Let’s draw an analogy from sport.

Trading and sport

Here in Australia, Ian Thorpe is a swimming legend. He held the world records in the 200m, 400m and 800m freestyles. He won his first world championship at 14 years old, and dominated for over a decade. Think Michael Phelps without the headphones.

In a recent interview Ian answered a question on how he appeared to swim so effortlessly and yet so fast. His answer: “I could feel the water”.

Most elite sportsman will talk about “being in the zone”. That place where they can just feel what is going to happen and act on it instinctively. Jordan, Woods, Thorpe, Federer … they all talk about it.

When you are trading “in the zone” everything seems uncomplicated and easy. When you know what needs to be done and you do it without question and complete trust. You have a “feel” for the markets.

When you are in the zone, your thinking is not a conscious process. Trying to remember what a “red line above a green line between a blue line” means in real time encourages conscious thinking.

Trading naked, strips things back to the basics, back to when we started trading all those years ago. It helps to remove conscious thought and let’s you feel the market.

Give it a go

Even if the lure of the squiggly line is too much. Trading naked even a day a month will help to ground you in the core of price action. It should help you get back that “feel”.

I have done this for over a decade when things aren’t going my way and the result always benefit.

Give it a go, I believe it will help you in the long run, whether your system includes indicators or not.