Are You Willing to Trade Naked?

PristineTrading

Junior member
26 0
Trading naked isn’t about trading in the nude, but could that have some advantages? Maybe in Forex trading, since Forex traders tend to be into more of the esoteric side of trading. All kidding aside, trading naked means removing those things that stop your eyes from seeing the clean beauty of price movement alone. What I am talking removing is indicators, Fibonacci lines, Trendlines, Bollinger Bands, Pitchforks, Waves, Gann, etc. None of these can provide you any more information that isn’t already there.

For this Chart of the Week (COTW), I am not going to discuss indicators like MACD, Stochastic, RSI, Williams percent R or the hundreds of others that are available - other than to say they are unnecessary and should not be used at all. The current market should be enough to prove you that the concepts of overbought and oversold are meaningless, useless and misleading. Release yourself from them and thing will make sense.

90257.gif


The first trading tool covered will be trendlines. These, in theory are supposed to locate support or resistance and probable turning points by connecting dots of swing lows in an uptrend or swing lows in a downtrend. Then the line is projected into the future. The longer the trendline, the more meaningful it is supposed to be as a reference point. Once broken to the downside within an uptrend, that line is supposed to have the opposite effect. If it was support, it will become resistance and vice versa. This is all trendline theory, which if you study this by drawing enough lines and then observe what then happens you will see how ambiguous this becomes.

Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

90258.gif


The next trading tool is Bollinger Bands. These consider the volatility of the instrument being traded a deviation (typically 2, but it’s adjustable) above and below a 20-period moving average. When the bands come together it suggests that an increase in volatility is ahead. When the bands are wide it suggests that a decrease in volatility is at hand. When prices move to either band, that band is supposed to act as support (lower band) or resistance (upper band). As you can see from the above chart, prices can and do hug the upper band and do not have to back away. An instrument in a strong downtrend can hug the lower band (not shown) and continue lower without reversing. Realize that what are narrow bands or wide bands can be very different for different stocks, commodities or currencies. We have not ever touched on using multiple time frames. Bollinger Bands are another vague trading tool that many use and teach. Are you ready to start trading naked?

Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

90259.gif


n the above chart I have drawn Fibonacci lines from several swing highs and lows. As you can see many of the turning points were caught by a line. The theory here is, if you draw enough lines - you can always catch the turning point - in the past. So many traders are caught up in this idea of a golden ratio in all things, so it must be in the markets as well. A widely followed concept by Fib enthusiasts is when Fib Lines overlapping other Fib Lines you’ll find the hidden support and resistance places in stocks, commodities and currencies. From this cliff into the abyss of the black hole of technical analysis you may find yourself in a Gartley pattern, a Square of Nine or in the 5th wave of an Elliot count.

90260.gif


Above is the same chart viewed without the hocus-pocus analysis tools; it’s a naked chart. I have only drawn a few horizontal lines at prior turning points where buyers stepped up in the past. Once you’ve looked to the left and since a prior turning point, take note of that area. Once price retrace to it that is where buyers will show up again. Next step is to let a recognizable candle pattern setup. Ideally, I like some type of failure or shock pattern aligned with mS or MS.

Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

Greg Capra
President & CEO
Pristine Capital Holdings, Inc.
 

Mr Fox

Established member
510 136
Trading naked isn’t about trading in the nude, but could that have some advantages? Maybe in Forex trading, since Forex traders tend to be into more of the esoteric side of trading. All kidding aside, trading naked means removing those things that stop your eyes from seeing the clean beauty of price movement alone. What I am talking removing is indicators, Fibonacci lines, Trendlines, Bollinger Bands, Pitchforks, Waves, Gann, etc. None of these can provide you any more information that isn’t already there.

For this Chart of the Week (COTW), I am not going to discuss indicators like MACD, Stochastic, RSI, Williams percent R or the hundreds of others that are available - other than to say they are unnecessary and should not be used at all. The current market should be enough to prove you that the concepts of overbought and oversold are meaningless, useless and misleading. Release yourself from them and thing will make sense.

90257.gif


The first trading tool covered will be trendlines. These, in theory are supposed to locate support or resistance and probable turning points by connecting dots of swing lows in an uptrend or swing lows in a downtrend. Then the line is projected into the future. The longer the trendline, the more meaningful it is supposed to be as a reference point. Once broken to the downside within an uptrend, that line is supposed to have the opposite effect. If it was support, it will become resistance and vice versa. This is all trendline theory, which if you study this by drawing enough lines and then observe what then happens you will see how ambiguous this becomes.

Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

90258.gif


The next trading tool is Bollinger Bands. These consider the volatility of the instrument being traded a deviation (typically 2, but it’s adjustable) above and below a 20-period moving average. When the bands come together it suggests that an increase in volatility is ahead. When the bands are wide it suggests that a decrease in volatility is at hand. When prices move to either band, that band is supposed to act as support (lower band) or resistance (upper band). As you can see from the above chart, prices can and do hug the upper band and do not have to back away. An instrument in a strong downtrend can hug the lower band (not shown) and continue lower without reversing. Realize that what are narrow bands or wide bands can be very different for different stocks, commodities or currencies. We have not ever touched on using multiple time frames. Bollinger Bands are another vague trading tool that many use and teach. Are you ready to start trading naked?

Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

90259.gif


n the above chart I have drawn Fibonacci lines from several swing highs and lows. As you can see many of the turning points were caught by a line. The theory here is, if you draw enough lines - you can always catch the turning point - in the past. So many traders are caught up in this idea of a golden ratio in all things, so it must be in the markets as well. A widely followed concept by Fib enthusiasts is when Fib Lines overlapping other Fib Lines you’ll find the hidden support and resistance places in stocks, commodities and currencies. From this cliff into the abyss of the black hole of technical analysis you may find yourself in a Gartley pattern, a Square of Nine or in the 5th wave of an Elliot count.

90260.gif


Above is the same chart viewed without the hocus-pocus analysis tools; it’s a naked chart. I have only drawn a few horizontal lines at prior turning points where buyers stepped up in the past. Once you’ve looked to the left and since a prior turning point, take note of that area. Once price retrace to it that is where buyers will show up again. Next step is to let a recognizable candle pattern setup. Ideally, I like some type of failure or shock pattern aligned with mS or MS.

Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

Greg Capra
President & CEO
Pristine Capital Holdings, Inc.

Good Afternoon Greg,

I too trade without the use of indicators on a 1 min chart, and prefer this method of trading, however I would not insult the way others trade, or call indicators "hocus pocus" because as you can appreciate, there's many ways to skin a cat, and there will be people using such indicators to make a killing compared to you or I.

Best
John.
 
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timsk

Legendary member
7,604 2,377
The first trading tool covered will be trendlines. These, in theory are supposed to locate support or resistance and probable turning points by connecting dots of swing lows in an uptrend or swing lows in a downtrend.
Hi Greg,
I'm afraid I agree with Mr Fox, above. Moreover, I find it rather worrying that as CEO of an organization that teaches people how to trade that you don't appear to understand the purpose and function of trendlines. They are not "supposed to locate support or resistance and probable turning points" at all. As their name suggests, they are supposed to indicate trend, nothing more. Many traders who use them for this purpose find that they work just fine!
;)
Tim.
 
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neil

Legendary member
5,167 749
Advertising and psychology

Hi Greg,
I'm afraid I agree with Mr Fox, above. Moreover, I find it rather worrying that as CEO of an organization that teaches people how to trade that you don't appear to understand the purpose and function of trendlines. They are not "supposed to locate support or resistance and probable turning points" at all. As their name suggests, they are supposed to indicate trend, nothing more. Many traders who use them for this purpose find that they work just fine!
;)
Tim.

He's a vendor -so he has to demolish existing approaches before presenting his companies solution. But you know that Tim, unfortunately many do not.;)
 

Forexmospherian

Legendary member
39,928 3,301
Trading naked isn’t about trading in the nude, but could that have some advantages?

.........

The current market should be enough to prove you that the concepts of overbought and oversold are meaningless, useless and misleading. Release yourself from them and thing will make sense.

...............


Are you ready to start trading Naked ?

...............


Pristine Tip: the analysis of support and resistance must be done horizontally, never diagonally.

Greg Capra
President & CEO
Pristine Capital Holdings, Inc.



Hi Greg

Appreciate you are a vendor and therefore wanting to sell your methods - etc - but I would have to differ with you on so many points you have mentioned and would have to agree with other members here who have already commented.

First of all - yes - you can make money trading naked - especially once you have a few years of experience behind you

But - is it the very best method and purely for the top master traders who are in say the top 5% of all traders in the world

Definitely NO

I am trying to think how to start - simply because I don't want to type 5 pages - so will try and keep it brief

I have tried Naked Trading for approx 6 months - after by then having 6 years of trading experience - - and this was over 6 years ago - and during this last time period I have been a Full time retail FX Trader.

Unfortunately - my performance - ie purely pip count etc on same money stakes to previous were down between 10 and 25% of what I was used to.

I just could not get the accuracy i require as a short term Intraday trader - and was losing anything from 3 -5 pips on every trade I took - and even more on some trade.

Price Action alone is just not enough

You need to also bring into play - other indicators - ie Time of the day - Session Price structure and also Market game play theory.

By using purely price action on an intraday basis - you are being inefficient and losing opportunities

I would say on a 1min chart - as Mr Fox as mentioned - working naked would not lose you so many opportunities - but on a 30 or 60 min or even 4 hrs - you are losing out massively - that's of course if you are full time.

Price structure requires indication - mainly by leading indicators - that you seem to have totally dismissed - ie divergence of oscillators and time - and even negative and positive correlations assisted by levels

I would agree that static horizontal levels are stronger than dynamic S & R - but this is a dynamic market - many times I have made trades with RR's of 3 + off a dynamic S & R - before a static S or R as halted the move.

Many will not have heard of Ray lines and although most traders know of Fibs - there are also Murrey Maths and other techniques at leading a forecast to the next level

I would say that I am not a fortune teller - and my set ups are all based on predicting the next 20 -30 mins - not 2 or 4 hrs away.

But by doing that you are able to take more trades - and of course - whether on a 60% or 70% or even 75% win ratio make more money.

OK - for an easy life maybe you are not recommending screwing every pip out of the busy sessions - that's fine and if that's the case - yes trade naked and be happy with maybe only 70% of what you can earn by using more advanced method than just PA and naked trading .

Just an opinion from a trader with over 16k of live trades taken over last 8+ years or so - which I would expect is far more than most trainers / guru's / theorists etc etc

Regards


F
 
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Greg Capra

Newbie
1 0
Naked Trading Updated Comments

My article on Naked Trading intention was to educate and provoke thought. I too used trend lines and various indicators when I started trading and using technical analysis in the late 1980s.

Over a few years of use the questions of their use grew. The obvious inconsistency in their signals and guidance as tool made me question their validity and use. I found that trend line breaks are meaningless as a signal of a violation of the trend. The only event that breaks what is the definition of an uptrend is the violation of a prior low within a series of higher highs and higher low. Opposite for a downtrend.

Drawing lines that are connected by the users choice on a chart in an attempt to define a trend or the break of one serves no useful purpose. All is needed to to follow the trend of high and low or the break thereof. Horizontal not Diagonal.

Oscillators use raises even more questions. Which one or ones, what settings, signals of overbought and oversold conflicts between them, if overbought (extended) why do price continue while overbought. Wrong settings? Changing time frames completely changes signals as does changing settings. The door to endless inconsistencies and confusion is wide open to walk though.

Sorry if anyone was offended by my thoughts. That was not my intention. That being said, raised feelings signals a cord struck, thought provoked and questions some might consider about the use of the technical tools I call hocus pocus. To me they are just that.

Now, it was said that more is needed that just price action. To that point I agree, but indicators and trendlines. What can be used and I do, but not required is the use of Market Internal Gauges for investing, Swing Trading and Day Trading (not indicators) and Inter-market Analysis, which is the study of the relationship between equities, commodities, currencies and interest rates.

If anyone would like to have discussions on these or other trading concepts you are welcome to attend any of my free workshops and I am happy to do that.

All the best,

Greg Capra
 
 
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