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A Frank Assessment Of Forex Trader John Templeton's Trading In The Buff Foreign Currency System
John Templeton, who has been an investor in forex day trading for more than half a decade and who is the originator of the Trading in the Buff forex signal system, soon learned that all the complicated methods 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 random lines to cross, telling me that I should open or close a trade. Then it dawned on me. How in the world could I make money trading currency exchange, if I don't even understand what I am looking at?"
This is when John arranged to take the bull by the horns and to reason things out for himself. No more buying into this or that forex coaching theory. He began by listening to what all the professional traders had to say on the subject. And more than any other expression that came out of their mouths was the phrase "price action." John was so aghast at himself that he could have kicked himself. "It was so obvious, I couldn't believe it."
When it comes to trading the foreign currency market, John came to see that the trader has to make a decision between one of two ways to evaluate the trade: either by using fundamental analysis or using technical analysis. Fundamental analysis takes into consideration all the psychological fundamentals that can act on a currency's movement in the market. Things like the effect that the non-farm payroll numbers that are released once a month can influence the market, or how raising or lowering interest rates can effect a given currency pair.
When it comes to using technical analysis, this breed of trader surmises that opening up the indicator menu on their charting platform will somehow reveal 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 understanding price movement -- following charts filled with lagging indicators such as RSI, MACD, and stochastics will direct them to the right trade to make. After surviving 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 modern traders don't utilize is price action. They're all waiting for all their other indicators to line up. 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 such as these is that they do not give the trader a clear vision of what the market is essentially doing during a given trading period.
When, for instance, you discipline yourself to begin considering price support and resistance levels, you are seeing actual statistics which are influencing the movement of the market. No lagging indicator will ever give you that kind of information which will be supported for very long. You have to be able to see it instantly from the market itself. This is what John is attempting to hammer home in his currency trading system Trading in the Buff.
The name of his program refers to the shedding of indicator based strategies and returning to fundamental price action indication. Put another way, trading in the buff, without using the theoretical indicator window dressing that many traders are conditioned to base their trading habits on. The theories sound good, but they don't always work.
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