John Templeton, who has been involved in forex day trading for more than five years and who is the creator of the Trading in the Buff forex signal system, soon found out that all the challenging systems that traders use to pick a profitable forex trade were only muddying the field for him. "I was basically just an inanimate object waiting for haphazard lines to cross, signaling me that I should open or close a trade. Then it dawned on me. How in the world could I make money trading forex, if I don't even apprehend what I am looking at?"
This is when John decided to take the bull by the horns and to reason things out for himself. No more buying into this or that forex system theory. He proceeded by heeding what all the veteran traders had to say on the subject. And more than any other phrase that came out of their mouths was the phrase "price action." John was so appalled at himself that he could have kicked himself. "It was so obvious, I couldn't believe it."
When it comes to trading the forex market, John concluded that the trader has to make a decision between one of two ways to examine the trade: either by using fundamental analysis or using technical analysis. Fundamental analysis takes into consideration all the psychological fundamentals that can bear upon a currency's tendency in the market. Things like the impact that the non-farm payroll numbers that are released once a month can have, or how raising or lowering interest rates can impact a given currency pair.
When it comes to using technical analysis, this type of trader considers that opening up the indicator menu on their charting platform will somehow convey to them which pair of currencies to trade based on how the indicators read. From John's point of view these traders seem to think that -- rather than knowing price movement -- paying attention to charts filled with lagging indicators such as RSI, MACD, and stochastics will lead them to the right trade to enter. After enduring years of losing trades following this same formula, John is persuaded that following this path is a losing cause.
The one technical indicator that most unsuccessful present day traders don't make use of is price action. They're all expecting all their other indicators to fall in line. For this kind of trader, the only important thing is what his static indicators are showing him, and price becomes secondary or even irrelevant. The only thing wrong with using lagging indicators like these is that they do not furnish the trader a clear picture of what the market is realistically doing during a given trading period.
When, for instance, you teach yourself to begin contemplating price support and resistance levels, you are being shown actual statistics which are having an impact on the movement of the market. No lagging indicator is ever going to give you that kind of indication which will hold up for very long. You have to be able to see it immediately from the market itself. This is what John is attempting to hammer home in his currency trading course Trading in the Buff.
The name of his method references the shedding of indicator based strategies and returning to basic price action indicators. In other words, trading in the buff, without using the theoretical indicator window dressing that many traders learn to base their trading habits on. The theories sound good, but they don't always work.
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