It can be very confusing for the novice trader, and this is one reason why naked trading, trading without indicators, can be liberating. When starting out, many traders focus on the indicator. This is completely understandable since nearly 90 percent of the forex trading books, the vast majority of forex sites on the Internet, and forex trading seminars focus on indicators and indicator-based trading.
Indicators encourage “secondary thinking,” which is a real handicap for traders looking to acquire expertise. Secondary thinking involves analyzing the indicator, spending time considering where the indicator may go, rather than focusing on the market. Naked traders, by definition, focus on the market, which is very different.
Focusing on indicators may be one of the primary reasons that some forex traders do not make money. Indicators can be confusing, unhelpful, and just plain wrong. In the next chapter we take a look at technical trading, and some of the tragic trading mistakes forex traders make, and how to avoid them by adopting the naked-trading approach.