Naked Forex E-Book

Alex Nekritin

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch

Seitenzahl: 351

Veröffentlichungsjahr: 2012

Beschreibung

A streamlined and highly effective approach to trading without indicators

Most forex traders rely on technical analysis books written for stock, futures, and option traders. However, long before computers and calculators, traders were trading naked. Naked trading is the simplest (and oldest) trading method. It's simply trading without technical indicators, and that is exactly what this book is about.

Traders who use standard technical indicators focus on the indicators. Traders using naked trading techniques focus on the price chart. Naked trading is a simple and superior way to trade and is suited to those traders looking to quickly achieve expertise with a trading method.

• Offers a simpler way for traders to make effective decisions using the price chart
• Based on coauthor Walter Peters method of trading and managing money almost exclusively without indicators
• Coauthor Alexander Nekritin is the CEO and President of TradersChoiceFX, one of the largest Forex introducing brokers in the world

Naked Forex teaches traders how to profit the simple naked way!

Leseprobe

Contents

Cover

Series

Title Page

Copyright

Dedication

Foreword

Preface

Acknowledgments

Part One: Naked Forex Trading Revealed

Chapter 1: The Fundamentals of Forex Trading

A QUICK LESSON IN CURRENCIES

PLAYERS OF THE FOREX MARKET

TOOLS OF THE TRADE: FUNDAMENTAL VERSUS TECHNICAL INDICATORS

WHAT IS NAKED FOREX?

Chapter 2: Avoiding a Trading Tragedy

IS THERE A “BETTER” INDICATOR?

TAKING RESPONSIBILITY FOR LOSING TRADES

LEARNING FROM MARKET BIOFEEDBACK™

Chapter 3: Back-Testing Your System

THREE GOALS OF BACK-TESTING

MANUAL BACK-TESTING

USING BACK-TESTING SOFTWARE

AUTOMATED BACK-TESTING

TOP THREE BACK-TESTING TIPS

Chapter 4: Identifying Support and Resistance Zones

ZONES ARE BIG FAT BEER BELLIES

OLD ZONES, NEW ZONES

HOW TO FIND ZONES

FIVE TIPS FOR FINDING ZONES

Part Two: Naked-Trading Methodology

Chapter 5: The Last Kiss

WHAT IS A BREAKOUT TRADE?

WHAT IS A LAST KISS?

TRADING THE LAST KISS

Chapter 6: The Big Shadow

WHAT DOES IT LOOK LIKE?

DOES BIGGER EQUAL BETTER?

THE STOP LOSS

ENTERING THE TRADE

IMPORTANCE OF THE CLOSING PRICE

ROOM TO THE LEFT

PROFITING FROM BIG SHADOWS

THE RULES

Chapter 7: Wammies and Moolahs

THE DOUBLE BOTTOM

THE DOUBLE TOP

IDENTIFYING WAMMIES AND MOOLAHS

HOW TO TRADE WAMMIES

HOW TO TRADE MOOLAHS

TIPS FOR WAMMIES AND MOOLAHS

Chapter 8: Kangaroo Tails

WHAT IS A KANGAROO TAIL?

THE OPEN AND CLOSE

KANGAROO TAILS ARE LONG

KANGAROO TAIL PLACEMENT

ENTERING THE TRADE

THE STOP LOSS

PROFIT TARGETS

KANGAROO-TAIL TIPS

Chapter 9: The Big Belt

WHAT IS A BIG BELT?

THE BEARISH BIG BELT

THE BULLISH BIG BELT

TIPS TO TRADING THE BIG BELT

Chapter 10: The Trendy Kangaroo

WHAT IS A TRENDY KANGAROO?

TREND INDICATORS

TRADING TRENDY KANGAROOS: RESTING SPOTS

TRENDY KANGAROO CHARACTERISTICS

BEWARE THE TRENDY KANGAROO TRAPS

Chapter 11: Exiting the Trade

EXITING WITH MONEY

EXIT STRATEGIES

MANAGING EXITS

Part Three: Trading Psychology

Chapter 12: The Forex Cycle

WHAT IS THE CYCLE OF DOOM?

LIVING IN THE CYCLE

DEFEATING THE CYCLE

Chapter 13: Creating Your Trading System

WHAT DO YOU BELIEVE?

RISK RULES

MANAGING YOUR TRADES

KNOWING YOUR TRADING PERSONALITY

DEFINING YOUR TRADING SYSTEM

Chapter 14: Becoming an Expert

WHY DO YOU WANT TO TRADE?

THE SECRET OF THE EXPERTS

SIX STEPS TO BECOMING AN EXPERT

DOING IT AGAIN

BORING TRADING IS EXPERT TRADING

A SIMPLE TRICK

Chapter 15: Gaining Confidence

THE ORIGIN OF CONFIDENCE ISSUES

CONFIDENCE IN YOU

REASONS FOR LOSING STREAKS

THE BAD MARKET THEORY

Chapter 16: Managing Risk

YOUR RISK PROFILE

TRADING PSYCHOLOGY AND RISK MANAGEMENT

RISKY MONEY TRAPS

About the Trading Software and Video Tutorial

About the Authors

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding.

The Wiley Trading series features books by traders who have survived the market’s ever changing temperament and have prospered–some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, please visit our Web site at www.WileyFinance.com.

Copyright © 2012 by Alex Nekritin and Walter Peters. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Nekritin, Alex, 1980- Naked Forex : high-probability techniques for trading without indicators / Alex Nekritin, Walter Peters. p. cm. – (Wiley trading ; 534) Includes index. ISBN 978-1-118-11401-8 (cloth); ISBN 978-1-118-22435-9 (ebk); ISBN 978-1-118-26244-3 (ebk); ISBN 978-1-118-23749-6 (ebk) 1. Foreign exchange market. 2. Foreign exchange futures. 3. Speculation. I. Peters, Walter, 1973- II. Title. HG3821.N45 2012 332.4′5–dc23 2011043306

For all gun traders as well as those rude and cute possums of the world.

Foreword

The Internet engendered the online trading phenomenon. One can trade anywhere there is a connection to the World Wide Web. The result has also been the creation of instant experts, trading gurus who offer modern versions of snake-oil cures for traders. The web is flooded with trading alerts, systems, and blogs that promise returns that will lead to instant wealth. Most of the books in the field fail to provide actionable knowledge. In this environment, Alex Nekritin and Walter Peters in Naked Forex: High-Probability Techniques for Trading without Indicators provide an honest and effective presentation about forex trading that certainly beginners need, and that more experienced traders forget they need.

Naked Forex makes some powerful points about trading forex that really apply to other markets as well. First and foremost, price is the most important indicator of all. All indicators are derived from price. Many traders have forgotten this fact because computerization has made it easy to generate new indicators. Indicators work more like training wheels for learning to ride a bicycle. They are temporary in their capacity to help traders build their skills. They actually limit the evolution of a trader’s performance because they provide a disincentive to “listen” to the market. Naked Forex goes into detail on how a trading signal that is indicator-based is inferior to what Nekritin and Peters call a “naked” signal.

Another key insight that the book provides is the importance of knowing one’s personality in trading. Trading systems that are based on untested algorithms that are purely technical will surely fail. Nekritin and Peters argue that trading systems should reflect decisions that traders would make that are based on looking at charts. Manual backtesting, they suggest, is an effective way to identify a trading system’s strengths and weaknesses.

A third major focus of Naked Forex is the concept of identifying support and resistance zones. The fact is that with the trillions of dollars that float each hour through the currency markets, prices reach certain levels and stop. One can try to figure out why they stop rising or stop falling. But the job of the trader is to observe accurately where the price is and where it came from. Price zones provide the naked truth about market sentiment. If a price breaks through a zone, no matter what the reason, it is a signal–and a more powerful signal than any indicator. Nekritin and Peters call these points of price action market scars. It is a good metaphor because markets have memory and so do traders. The authors introduce the “last-kiss trade” as a powerful tool in identifying when breakouts have occurred. The book is filled with gems that provide visualizations of price action, such as the big shadow, kangaroo tails, and the big belt.

As someone who has been training people on how to trade forex for nearly 13 years, I welcome this book as one that stands out as a basic manual on how to evaluate and trade the increasingly chaotic forex markets. I will use it for my students.

Abe Cofnas author of Trading Binary Options (Bloomberg) and editor of The Fear and Greed Trader Newsletter, Agora Financial, Inc.

Preface

Unfortunately, most forex traders lose out. Profitable trading is reserved for the select few. Expectations drive reality for many things in life, and successful trading is no different. Most forex traders have three preconceptions about successful trading. These are the three myths of successful trading, and the structure of this book is based on each of these myths.

Myth 1: Successful trading must be indicator based. The first part of this book dispels this myth. There are many ways to profit in forex, some of them do involve indicators, but indicators are not necessary for successful trading. There are professional traders around the globe, many of them good friends of mine, who use “naked” charts to make trading decisions. In some ways, indicators delay the progression of the trader because the focus is on the indicator, rather than price action. Indicators become the scapegoat for losing streaks and often keep losing traders in a holding pattern. It is much easier for the novice trader to begin trading without indicators from the beginning.

Myth 2: Successful trading must be complex. The second part of this book is about naked trading systems. These systems are incredibly simple. Do not confuse simplicity with ineptitude. Although these systems are simple when applied correctly, they may also yield big profits and build confidence in your trading. You may view this as the meat of the book, the most important section, but I disagree. I think the third section is the most critical to your trading success.

Myth 3: Successful trading is dependent on the trading system. This is probably the most widely held belief among traders. This is precisely why there are thousands of trading systems on the market, all promising great riches to the brave traders who pony up the money for the next Holy Grail. Many veteran traders understand the importance of trading psychology. Personal beliefs and attitudes toward risk are the greatest predictors of trading success, and the trading system is not nearly as important as many traders assume. For most traders, after years of trading, this fact becomes apparent. The third section of the book concerns trading psychology and how you may both identify and change your thinking, because this is the real driving factor in your trading success.

Many readers will continue to hold onto these myths. In fact, some readers (those who believe trading success depends on the trading system) will simply read the second section and begin trading the naked trading systems. This is unfortunate. The first section is critical because it offers reasons for price action trading (a new belief system) and a course of action for becoming an expert at naked trading (new trading habits). The third section is where breakeven and slightly profitable traders will learn to move into the realm of the true professional trader. All sections of the book are important, and it is my hope that by reading it you will find simple methods for extracting profits from the market.

You can trade successfully without indicators. For many traders, naked trading is both refreshing and easy to apply. You can trade successfully with simple trading systems. Simple systems are robust and powerful. However, ultimately, your success as a trader will depend, not on the trading system, but on how you incorporate your beliefs and attitudes about risk into your trading routine. I hope this book will aid you in your journey to trading success.

I also hope that you keep in touch by stopping by the companion web site for this book, complete with live market trades, additional tools, and new naked trading systems. You will find this on the Web at www.fxjake.com/book.

Walter Peters, PhD Sydney, Australia October 2011

Acknowledgments

There are many people who deserve acknowledgment for this book. The list includes but is not limited to the following: Meg Freeborn for patience and unique ability to turn rough stones into polished gems (I know because I have seen her do it). Eddie Kwong deserves credit for putting this book idea in front of the right people. Sean Lydiard is living proof that six degrees of separation is fact. Arshia Bolour, who is a true brother in every sense of the word. Abe Cofnas, for his patience and kindness in helping me with the conversion from trader to trading author. Evan Burton for believing in the book idea and making it happen. Colin Jessup for his unique perspective on naked trading. My brother Ashkan Bolour, who introduced me to the world of forex so many years ago. My parents for unconditionally supporting me in every endeavor. My dissertation committee (and Dr. David Estes in particular) who taught me years ago how to write so that others could understand me. My sister for always being there for me. And to the first-line editor Melissa McConaghy—without your help, I am certain this book would not have happened.

—W.P.

PART ONE

Naked Forex Trading Revealed

CHAPTER 1

The Fundamentals of Forex Trading

Gregory: “Draw thy tool …”

Sampson: “My naked weapon is out.”

—Shakespeare, Romeo and Juliet

Welcome to the world of forex trading. Forex is the largest market in the world. Forex traders exchange $4 trillion each day, but is forex the best market for you? The answer depends on what you are looking for. If you want a market that never sleeps, if you want the opportunity to trade at any time of the day, if you would like to make a boatload of money in a short amount of time, forex may be for you (it should be noted that you may also lose an incredible amount of money in a short amount of time). Traders with very little money can begin trading forex. In forex, you may take relatively large trades with small amounts of money because of the favorable leverage requirements. There are many reasons to become a forex trader, but before jumping into the reasons, perhaps we should take a closer look at the characteristics of a forex trade.