Learn Forex – Trading Forex Naked on Price Action Alone
Learn Forex (FXpath.com) – When traders talk about ”trading naked,” they are usually referring to one of two meanings. One of those meanings will not be delved into here. The second meaning alludes to the use of charts that are devoid of mechanical indicators. Why trade without indicators? Naked traders would argue that mechanical indicators are primarily just mathematical derivatives of price, and that nothing can tell the real story like price alone can.While most forex traders use indicators at least to some extent (and these ubiquitous chart elements will always have their significant place in technical analysis), naked trading provides the perspective that price movement can be traded effectively without having to cover it with the spaghetti of often unnecessary chart clutter. It should be noted here that drawn elements such as trendlines, Fibonacci, pivot points, chart patterns, horizontal support/resistance lines, and the like, are not generally considered indicators, and so are used substantially in naked trading.
A classic document on simple, straightforward price action analysis without the use of indicators can be found at the link below. Many readers may have read this simple document before. It can be extremely valuable in bringing technical traders, who are often enamored with the latest indicator or indicator-based system, back to the basics of pure price action trading. Please click here for the link.
James Chen, CTA, CMT (bio)
- Click here for my book, Essentials of Foreign Exchange Trading (Wiley).
- Click here for my book, Essentials of Technical Analysis for Financial Markets (Wiley).
- Click here for my video DVD set, High-Probability Trend Following in the Forex Market (FXstreet).
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Comments
I read that article a lot of years ago and it still rings true up to today. Think the author of that article is a futures trader but it applies just as well to the Forex. My trading is simlar. Thank you.
Best regards, mohan
Thanks for commenting and sharing your experiences with price action trading, Jerry and Mohan!
James Chen
I’d also like to add that the market profile is also considered a tool of the bare price action analysis that comes from the stock market but is usable in Forex too and can be quite helpful in determining the price sentiments of the daily trading sessions.
hello there,
i’d really want to know more on price action been trying to download the ebook but dont know which and it’s slow maybe it’s due to my connection.
Thanks for your input, Andriy! And Aliyu, you can contact the site administrator for help. Please go to the contact page and fill out the contact form. Thanks!
James
Hi james, please i am a newbie in trading. i have almost blown out my account by trading technical using so many indicators. Please, kindly help me out. I will really like to learn price action. I’m trying to trade so i can assist myself in school and a family. I really want to trade price action without so many indicators confusing me. My e-mail is above. Please PM me. Really grateful!!!
thank you very much James Chen,gotten it ,it will be my daily reading ebook till i know more on it been using some indicators and now will look towards improving my trading style with price action.
Hi Jay,
Thanks for your comments. There are many ways in which traders come to learn a trading style and methodology that works for them. Trading naked on price action alone is only one of those approaches. Whichever style of trading you ultimately choose depends on your own experience, learning, and experimentation (preferably on demo accounts before you jump to a live account). The advice I can give you is simply this: it takes a LOT of learning and experience to become a proficient, consistently profitable trader. It is definitely NOT easy. And there are really no shortcuts. Every trader must apply himself/herself intensely and for a substantial period of time in order to trade consistently well according to the specific trading style chosen. So your best bet would be to scale back to a demo account, learn as much as you possibly can, whether on the many free websites out there (like this one), or through books or other traders, and then practice your trading incessantly. Hope that helps, Jay. Thank you.
James
Hi,
Thanks, for your sharing excellent experience regarding naked trading and more valuable tools to find the best way in Forex Market.
Iman
great post james. i used to use around 10-15 indicators at one time including a few ma’s and rsi, macd, stochs, adx, atr and others. but it was just too confusing. i ended up getting rid of everything and starting to just pay attention to the price candles and resistance and support. its incredible what you can see in the price candles if your willing to look and really pay attention to what there telling you. hey thanks again james,
jerry ng