Nude Trading in Forex: How it Works and Is It Really Profitable

Nude trading means trading based on a clean chart without technical analysis indicators. Discover how to do so, with pros, cons & find out its effectiveness.

Have you ever heard of Naked or Nude Trading?

The word may look strange or weird, but it is a popular strategy in the currency market. Traders can make a good profit with this simple and effective style.

Being a reputable platform, we want our clients to get well-versed with diverse strategies. Thus our in this blog, we will learn what naked trading is, how it works, pros, and cons. Also, we will find out if the strategy is actually profitable.

What is Nude Trading?

Nude trading means trading based on a clean chart without technical analysis indicators or tools. Naked traders generally use real-time price data, and the current fundamental analysis conditions.

In the present scenario, technical analysis uses technical analysis indicators. These indicators include Relative Strength Index, Moving Averages, Fibonacci Retracement, and Volume Indicators.

However, Naked trading strategy is a traditional concept that gives importance to live market data. It has been in practice since a time when indicators were not even in existence. The strategy uses raw price action concepts instead of complex maths or statistical data for interpreting the market

Nude Trading Example

A trader was looking at the EUR/USD chart and identified a Morning Star candlestick pattern on chart. Morning Star is a bullish reversal three-candle pattern that indicates traders to open a buy position.

The trader then watches the fundamental market conditions, and these conditions say the same thing as the morning star pattern. So the trader opens a long position in EUR/USD, setting the take profit and stop loss according to the risk-to-reward ratio.

4 Tools for Naked Trading Strategy

If nude traders do not use technical analysis indicators, then how do they make trade decisions? Well, the question is genuine. Here are the top tools to use as a Nude Trader:

Trading Charts:

Charts are the most popular tool for trading. A chart shows the movement of asset price in a visual form. Traders can identify the trends, key price levels, and the probability of price reversal or continuation through charts.

However, with Naked Trading, charts need to be clean. No trendlines, no indicators, and no technical analysis concepts.

Candlestick Patterns:

Now, if a chart needs to be clean, then how will you interpret it? The answer is candlestick formation and structure. On a chart, price movements are represented through candles, and these candles form patterns on it.

Each pattern suggests a valuable interpretation about the future movements. Candlestick patterns such as head and shoulders, shooting stars, evening star, doji, hammer, engulfing, cup, and handle are the top patterns to use.

Trends:

Naked traders keep the chart clean and avoid forming trendlines on the chart. But identifying trends can be quite easy just with a visual price representation. So the strategy also considers trends and their strength for making trade decisions.

Key Price Levels:

Key price levels mean the level where the price can make a significant move. Support and resistance are significant levels on a trading chart. A price touch or a price break to these can suggest your potential moves.

How to Start Nude Forex Trading

Get a detailed understanding of what the forex market is and how it works. Also, clear your basics about naked trading, price action, and technical analysis.
Once you have grabbed proper understanding, select your favorite currency pairs. At this stage, you need to choose three to four pairs as per your knowledge and interest.
Learn reading trading chart patterns, identifying key price levels, and mastering price action trading concepts.
Set the criteria of naked trading, like the tools to use, risk-to-reward ratio, and time frame. Prepare a blueprint of your strategy based on it.
Based on your plan and strategy, identify buying or selling opportunities. Also, do not place real trade directly first; practice it on demo accounts. Once you are satisfied with demo trade results, start with naked trading.

Pros of Naked Trading

Easy and Simple:

Naked trading requires understanding of price action concepts. You don’t need to get into mathematical calculations, statics, or indicator interpretations. Even a beginner with decent market knowledge can use this strategy.

Broader Trading Aspects:

Nude trading is not only about charts. Its scope is much broader. Naked traders consider current market conditions and sentiments for making trade decisions. These factors lead to informed trade decisions and increase the overall trading outputs.

Diversity:

Not only forex, but stock, crypto, indices, ETFs, and other traders also use it. You just need to clear concepts, and you can apply the same theories for trading diverse products.

Flexibility and Adaptability:

The rules of naked trading are not rigid. The strategy allows you to make changes in your plan based on current market conditions.

Cons of Naked Trading

Lack of Confirmations:

Not using technical analysis indicators affects the trading strategy. However, these indicators are a great tool for confirming the price action interpretations. Not using them restricts your ways to confirmations.

Lagging:

Nude trading is subjective, which means two people can make different interpretations seeing the same task. And even both perspectives can be right or wrong. In addition, the strategy lags behind others.

Currently, when you have so many technical analysis tools to interpret charts effectively, these tools only enhance your decision-making.

Wrapping Up: Is Naked Trading Profitable

Yes, Nude trading can undoubtedly give you excellent profit. Price actions are the most effective way to make trading decisions, and the entire naked forex trading is based on it.

So you can make a significant amount of money using it. However, make sure you have a solid blueprint, good analytical skills, knowledge of currency market, right psychology, and proper risk management plans.

Want to start Naked Trading

Open an account with Beirman Capital and get started on your trading journey with us. We understand what our clients need for diverse trading strategies, and we provide all. Trade with ease and have full control over your trading with us.