A Realistic Assessment Of John Templeton's Trading In The Buff Foreign Exchange Course
John Templeton, who has been involved in forex day trading for more than five years and who is the author of the Trading in the Buff forex signal system, soon found out 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 arbitrary 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 comprehend what I am looking at?"
This is when John determined to take the bull by the horns and to figure things out for himself. No more buying into this or that forex system theory. He began by absorbing what all the professional traders had to say on the topic. 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 exchange 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 upon a currency's change 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 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 in some way 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 -- following charts permeated with lagging indicators such as RSI, MACD, and stochastics will lead 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 present day traders don't use is price action. They're all waiting for all their other indicators to match 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 the same as these is that they do not give the trader a clear picture of what the market is essentially doing during a given trading period.
When, for example, you train yourself to begin looking at price support and resistance levels, you are being shown actual statistics which are influencing the flow 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 immediately from the market itself. This is what John is attempting to hammer home in his forex trading course Trading in the Buff.
The name of his method refers to the shedding of indicator based strategies and returning to fundamental price action indication. 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.