Naked Forex

What's Naked Forex about?

• Price Action Focus: Naked Forex by Alex Nekritin emphasizes trading without indicators, relying solely on price action to make trading decisions. This approach helps traders understand market movements more deeply.
• High-Probability Techniques: The book introduces techniques that can be applied across various market conditions, suitable for both beginners and experienced traders.
• Psychology and Risk Management: It delves into the psychological aspects of trading and the importance of risk management, crucial for long-term success in forex trading.

Why should I read Naked Forex?

• Avoid Indicator Dependence: Many traders struggle with indicators that can lead to confusion. This book teaches you to focus on the market itself, enhancing your trading skills.
• Practical Strategies: The authors provide actionable strategies, such as the Last Kiss and Big Shadow methods, that can be easily implemented in your trading routine.
• Comprehensive Learning: It covers essential topics like support and resistance zones, trading psychology, and back-testing, providing a well-rounded foundation in forex trading.

What are the key takeaways of Naked Forex?

• Price is King: The book stresses that price is the most important indicator, and all trading decisions should be based on price action rather than secondary indicators.
• Trading Psychology Matters: Understanding your trading psychology and managing your emotions is crucial for success. The book provides insights into building confidence and managing risk effectively.
• Simple Systems Work: The authors advocate for simple trading systems that are robust and easy to apply, leading to consistent profitability over time.

What is the Last Kiss method in Naked Forex?

• Breakout Strategy: The Last Kiss method is a breakout strategy that involves waiting for the market to consolidate within a defined range before breaking out.
• Retouch Principle: After a breakout, the market often returns to the zone for a retouch, confirming the breakout's validity. Traders enter a trade only after this retouch occurs.
• Entry and Exit Rules: A buy stop is placed above the bullish candlestick after the retouch for bullish trades, while a sell stop is placed below the bearish candlestick for bearish trades.

How do I identify support and resistance zones in Naked Forex?

• Historical Price Levels: Support and resistance zones are identified by looking at historical price levels where the market has reversed multiple times.
• Zone Characteristics: Zones are not fixed points but areas on the chart where price has shown a tendency to reverse. The more touches a zone has, the stronger it is considered.
• Use of Line Charts: The authors recommend using line charts to easily spot these zones, as they highlight the closing prices and make it easier to identify areas of support and resistance.

What is a Big Shadow in Naked Forex?

• Two-Candlestick Formation: A Big Shadow is a two-candlestick reversal pattern where the second candlestick is significantly larger than the first, indicating a potential market reversal.
• Location Matters: The Big Shadow must print on a support or resistance zone to be considered valid, adding to the reliability of the reversal signal.
• Entry and Stop Loss: For bullish Big Shadows, a buy stop is placed above the high of the big shadow, while the stop loss is set below the low.

What are kangaroo tails in Naked Forex?

• Definition of Kangaroo Tails: Kangaroo tails are specific candlestick patterns that indicate potential market reversals, with a long shadow and a closing price significantly different from the opening price.
• Trading Strategy: Traders use kangaroo tails as entry signals, placing buy or sell stops just above or below the tail's high or low.
• Key Characteristics: Ideal kangaroo tails have long tails and should print at significant support or resistance zones, enhancing the reliability of the signal.

What is the big belt concept in Naked Forex?

• Definition of Big Belts: The big belt is a candlestick pattern occurring at significant support or resistance levels, indicating potential reversals.
• Trading Implications: Traders use big belts to identify entry points, placing sell stops below bearish big belts and buy stops above bullish big belts.
• High Win Rate: Big belts often have a high win rate, especially on daily charts, making them valuable for traders seeking significant market movements.

How does Naked Forex address trading psychology?

• Importance of Psychology: Trading psychology is crucial for success, as emotions can significantly impact trading decisions.
• Cycle of Doom: The book introduces the "cycle of doom," describing the repetitive cycle of searching for new systems after losses.
• Building Confidence: Strategies for building confidence include back-testing and maintaining a trading journal, helping traders develop discipline.

How can I back-test my trading system as suggested in Naked Forex?

• Manual Back-Testing: The book recommends manual back-testing by reviewing historical price data to evaluate your trading system's effectiveness.
• Using Software: Automated back-testing software can streamline the process, providing insights into win rates, drawdowns, and overall profitability.
• Setting Goals: It's essential to set clear goals, such as aiming to triple a demo account with a specific risk percentage, to focus on achieving consistent results.

What are the best quotes from Naked Forex and what do they mean?

• "You make your money when you make your exit.": This quote emphasizes the importance of having a solid exit strategy in trading.
• "Profits come from traders.": It underscores that trading success depends on the trader's mindset and execution, not just the system.
• "Every battle is won before it is ever fought.": Reflects the importance of preparation and planning in trading, suggesting successful traders anticipate challenges.

How does Naked Forex suggest managing risk?

• Risk Management Rules: The book emphasizes strict risk management rules, such as limiting the risk per trade to a small percentage of the trading account.
• Maximum Drawdown: Traders are encouraged to set a maximum drawdown limit to manage trading activities and avoid emotional decision-making.
• Accountability: Finding an accountability partner can help enforce risk management rules, reducing the likelihood of emotional trading.