Have You Traded Naked?
How long have you been trading? If you have been trading any more than a few months, chances are you have gone through many cycles of trading systems, timeframes, and strategies.
You have probably tried multitudes of different indicators, stop-loss strategies, entry signals, and alert services, and more than likely you are still trying new indicators as they are released by Joe Blog in a forum somewhere (such as that Akuma99 fellow and his Stormy indicator).
What about trading naked?
Have you tried that?
It really is invigorating.
Now before I get complaints from mothers, wives, and boyfriends, by trading naked I do of course mean, trading a chart with NO indicators at all, nothing, null, zero, zilch, nada … you get the idea.
Anyone reading this blog for a while will know I am an advocate of minimizing the number of indicators on your charts, but this time I am coming from a different angle.
Here is a hypothetical, a trader starts out with very little knowledge of technical analysis, they trade with consistent losses, and so start adding indicators to their charts trying to find that "magic bullet" that will turn things around.
Slowly their knowledge builds, and they start to understand which indicators are best for their trading style, and things start to turn around, making some consistent, while small profits and things are looking better.
This might continue for a little while, before the want for greater profits, or just sheer curiosity brings them to try something new, perhaps with some success, perhaps not, with the thought that they can always go back to what was working before.
Soon they have a whole new set of indicators on their charts, and their results start to suffer, soon they realize this and try to go back to their original system but find it is not working anymore, so they add a new indicator … and the cycle continues.
… when you are trying so many new indicators, systems, and alerts, things can get jumbled up and confusing …
Hopefully, not many of you fit this description, but I fear many would (I did for sure at one point), so how do you get out of this loop?
I believe this because essentially, despite all the colorful lines, histograms, oscillators, and arrows, profits are made when the PRICE moves in the direction you have predicted.
It is the price that all indicators are based on, and it is the price that will ultimately decide your fate in the markets.
I found the best way to clear confusion is to simply strip my charts clean, switch to demo mode, and trade a week with no indicators at all, ultimately this is how I ended up trading live as well but that is a personal preference.
So why do I think this works?
Here in Australia, there is a phenomenal swimmer named Ian Thorpe, who does or has held the world records in the 200m, 400m, and 800m freestyles.
He won his first world championship at 14 years old and is touted as the best Australian swimmer of all time.
He has been asked many times, how he swims so smoothly and yet so fast, and his answer is always "I have a feel for the water".
Most elite sportsmen will talk about "being in the zone" when they can just feel what is going to happen and act on it instantly, Jordan, Woods, Federer … they all talk about it.
So what has this got to do with trading? Well, the easiest description of what "being in the zone" feels like it when things just seem uncomplicated and easy.
When you know what needs to be done and you do it. When you are trying so many new indicators, systems, and alerts, things can get jumbled up and confusing as you try to remember what a red line above a green line but between a blue line while above the histogram means.
Trading naked, lets you look at the core of trading, price action.
By trading naked you are exposing yourself to what all of your indicators are interpreting, and you are letting the greatest supercomputer in the world, your brain, process, calculate, and interpret what is in front of you.
Even if you are a die-hard indicator user, if you do this even a day every month, it will ground you in the basics, and help you get that "feel" for the markets.
I don’t talk about this from theory, I did this when things weren’t going my way at the beginning of my live trading, and the result really benefited from it.
So give it a go, I firmly believe it will help you in the long run, whether your system includes indicators or not.