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A Frank Evaluation Of John Templeton's Trading In The Buff Foreign Exchange Program
John Templeton, who has been involved in forex day trading for more than half a decade and who is the author of the Trading in the Buff forex signal system, soon learned that all the complex systems that traders use to pick a winning forex trade were only muddying the field for him. "I was basically just an inanimate object waiting for random lines to cross, informing me that I should open or close a trade. Then it dawned on me. How in the world could I make a profit trading forex, if I don't even understand what I am looking at?"
This is when John determined to take the bull by the horns and to reason things out for himself. No more accepting this or that forex system theory. He began by listening to what all the pro traders had to say on the topic. And more than any other catchwords 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 exchange market, John came to see that the trader has to take 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 act upon a currency's movement in the market. Things like the influence that the non-farm payroll numbers which are released once a month can have, or how raising or lowering interest rates can effect a given currency pair.
When it comes to using technical analysis, this kind of trader surmises that opening up the indicator menu on their charting platform will somehow or other reveal to them which currency pairs to trade based on how the indicators read. From John's point of view these traders seem to think that -- rather than comprehending price movement -- adhering to charts full with lagging indicators such as RSI, MACD, and stochastics will guide 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 failed present day traders don't utilize is price action. They're all waiting for all their other indicators to match up. For this kind of trader, the only significant 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 give the trader a clear vision of what the market is realistically doing during a given trading period.
When, for example, you teach yourself to begin considering price support and resistance levels, you are seeing actual statistics which are influencing the direction of the market. No lagging indicator is ever going to give you that kind of information which will last for very long. You have to be able to see it instantly from the market itself. This is what John is trying to hammer home in his currency trading system Trading in the Buff.
The name of his program refers to the removing of indicator based strategies and returning to basic 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 necessarily work.
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