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 found out that all the complicated 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, 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 apprehend what I am looking at?"
This is when John arranged to take the bull by the horns and to figure things out for himself. No more accepting this or that forex training theory. He began by heeding what all the pro 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 forex market, John realized that the trader has to make a decision between one of two ways to analyze 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 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 thinks that opening up the indicator menu on their charting platform will somehow or other show 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 knowing price movement -- following charts full with lagging indicators such as RSI, MACD, and stochastics will guide them to the right trade to enter. After enduring years of losing trades following this same formula, John is convinced that following this path is a losing cause.
The one technical indicator that most unsuccessful present day traders don't use is price action. They're all waiting for all their other indicators to fall in line. 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 such as these is that they do not supply the trader a clear vision of what the market is realistically doing during a given trading period.
When, for instance, you train yourself to begin contemplating price support and resistance levels, you are being shown actual statistics which are influencing the movement of the market. No lagging indicator will ever give you that kind of indication 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 endeavoring to hammer home in his currency trading course Trading in the Buff.
The name of his method references the removing of indicator based strategies and returning to basic price action indicators. 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.
Copyright 2010 Online Banking Software | rss