Forex, Apuntes de Derecho Empresarial y Laboral

¡Descarga Forex y más Apuntes en PDF de Derecho Empresarial y Laboral solo en Docsity!

nak e d

forex

alex nekritin walter peters, phd

High-Probability Techniques for

Trading without Indicators

FREE Trading Software and

Video Tutorial Included

Foreword by Abe Cofnas

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Aus- tralia 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.

Naked Forex

High-Probability Techniques for

Trading without Indicators

ALEX NEKRITIN

WALTER PETERS, PhD

John Wiley & Sons, Inc.

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

viii CONTENTS

• CHAPTER 10 The Trendy Kangaroo
• CHAPTER 11 Exiting the Trade
• CHAPTER 12 The Forex Cycle PART THREE Trading Psychology
• CHAPTER 13 Creating Your Trading System
• CHAPTER 14 Becoming an Expert
• CHAPTER 15 Gaining Confidence
• CHAPTER 16 Managing Risk
• About the Trading Software and Video Tutorial
• About the Authors
• Index

Foreword

T

he Internet engendered the online trading phenomenon. One can trade anywhere there is a connection to the World Wide Web. The re- sult 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 pro- vide 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 re- ally apply to other markets as well. First and foremost, price is the most im- portant indicator of all. All indicators are derived from price. Many traders have forgotten this fact because computerization has made it easy to gener- ate 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 be- cause 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 know- ing one’s personality in trading. Trading systems that are based on untested algorithms that are purely technical will surely fail. Nekritin and Peters ar- gue 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 sup- port 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

ix

Preface

U

nfortunately, most forex traders lose out. Profitable trading is re- served 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 suc- cessful trading. There are professional traders around the globe, many of them good friends of mine, who use “naked” charts to make trading deci- sions. 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 hold- ing 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 sim- ple. 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

xi

xii PREFACE

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 ac- tion 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 success- fully with simple trading systems. Simple systems are robust and powerful. However, ultimately, your success as a trader will depend, not on the trad- ing 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 compan- ion 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

P A R T O N E

Naked Forex

Trading Revealed

C H A P T E R 1

The

Fundamentals of

Forex Trading

Gregory: “Draw thy tool... ” Sampson: “My naked weapon is out.” —Shakespeare, Romeo and Juliet

W

elcome 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.

A QUICK LESSON IN CURRENCIES

“Forex” is simply an abbreviation for “foreign exchange.” All foreign ex- change transactions involve two currencies. If an individual trader, a bank, a government, a corporation, or a tourist in a Hawaiian print shirt on a tropical island decides to exchange one currency for another, a forex trade takes place. In every instance, one currency is being bought and,

3

4 NAKED FOREX

simultaneously, another currency is being sold. Currencies must be com- pared to something else in order to establish value; this is why forex trading involves two currencies. If you and I go to the beach and I tell you the tide is low right now, how do you know this is true? You may decide to compare the current water level to the pier. If there are starfish and mussels exposed on the pier, you may believe me because you can compare the current water level to the previous water level. In forex, we compare currencies in much the same way, currencies are traded in pairs and, thus, one currency is always compared to another currency. An example may be helpful to illustrate how currencies are traded. If you are a hotshot forex trader, and you believe that the EUR/USD is going to go up, you may decide to buy the EUR/USD. Thus, you think that the Euro currency will get stronger, and the U.S. dollar will weaken. You are buying the EUR/USD currency pair, another way to look at this is to say you are buying Euros and simultaneously selling U.S. dollars. The unique (and often difficult to understand) aspect of forex trading to keep in mind is this: Each forex transaction involves the buying of one currency pair and simultaneously the selling of another currency pair. If you have experience buying or selling in any market—the stock mar- ket, a futures market, an options market, the baseball card market, or the used car market—then you understand markets. For any market transac- tion a buyer wants to buy something and a seller wants to get rid of some- thing. The forex market is simply a money market, the place where specula- tors exchange one currency for another. In many ways, the forex market is no different from the stock market. The major differences between forex and the stock market are as follows: A forex transaction involves buying one currency pair and selling another, also, the symbols to identify forex pairs are consistent and systematic, unlike the symbols used to identify companies listed on a stock exchange. Forex traders buy and sell countries. It is true: Forex traders are ba- sically buying “shares” in a country, just as a stock trader buys shares in a company. For example, if forex trader Emma decides to sell the EUR/USD, she is essentially selling the European Union (and buying the United States). To be even more specific, we might suggest Emma is buying the economy of the United States, and selling the economy of the European Union. Does this mean that Emma must keep tabs on all the economic data for all the countries that she is trading? The short answer is no, but we will talk more about news and trading based on economic news and data a bit further on in this book. Just as a stock has a symbol, so do currencies. Table 1.1 illustrates the most popular currencies and their symbols. Do you notice a pattern? There is a secret code for currencies. The three-letter code for each currency pair is composed of the country (first two letters) and the name of the currency