AlistarElvis

Naked Forex Trading Strategy

Based on "How Naked Trading Works" video by Walter Peters: https://youtu.be/t-pD3fap25c?t=1m21s. I don't know this person and I am in no way affiliated with him. I just found his video interesting enough to make this into a script.

Rules as described by Walter in his video:

1. if current candle makes a higher high than the previous one
2. and is a bearish engulfing candle
3. and has room to the left
4. and is the largest candle (high - low) compared to the last 7-10 previous ones

Then open trade on the next candle once it breaks bearish engulfing candle's low and take profit close above previous support. Stop loss goes a few pips above bearish engulfing candle high

Do the opposite on a bullish engulfing candle signal.

Works best on 1H, 4H and 1D timeframes.

I haven't done any extensive backtesting on this, but it looks like it gives pretty good signals:
Open-source script

In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.

Want to use this script on a chart?
//Based on "How Naked Trading Works" video by Walter Peters: https://youtu.be/t-pD3fap25c?t=1m21s
study(title = "Naked Forex Trading Strategy", overlay = true)

roomToTheLeftPeriod = input(title="RoomToLeftIntervalCheck", type=integer, defval=7, minval=2, maxval=30)
largestCandlePeriod = input(title="LargestOfLastXCandles", type=integer, defval=7, minval=2, maxval=30)

//1. if current candle makes a higher high
//2. and is a bearish engulfing candle
//3. and has room to the left
//4. and is the largest candle (high - low) compared to the last 7 previous ones

//Open trade on the next candle once it breaks bearish engulfing candle's low and take profit close above previous support
//Stop loss goes a few pips above signal candle high

higherHigh = high > high[1]//step 1
bearishEngulfing = close[1] > open[1] and open > close and open >= close[1] and open[1] >= close and open - close > close[1] - open[1] //step 2
roomToTheLeftRising = rising(high, roomToTheLeftPeriod) //step 3
largestCandle = max(high - low, largestCandlePeriod) //step 4
barcolor(higherHigh and bearishEngulfing and roomToTheLeftRising and largestCandle ? yellow : na)

//1. if current candle makes a lower low
//2. and is a bullish engulfing candle
//3. and has room to the left
//4. and is the largest candle (high - low) compared to the last 7 previous ones

//Open trade on the next candle once it breaks bulish engulfing candle's high and take profit close below previous resistance
//Stop loss goes a few pips below signal candle low

lowerLow = low < low[1]
bullishEngulfing = open[1] > close[1] and close > open and close >= open[1] and close[1] >= open and close - open and open[1] - close[1] 
roomToTheLeftFalling = falling(low, roomToTheLeftPeriod)
barcolor(lowerLow and bullishEngulfing and roomToTheLeftFalling and largestCandle ? white : na)