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John Templeton, who has been an investor in forex day trading for more than five years and who is the author of the Trading in the Buff forex signal system, soon discovered that all the complex ways 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, telling 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 understand 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 training theory. He proceeded by heeding what all the experienced 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 shocked 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 act 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 thinks that opening up the indicator menu on their charting platform will somehow or other show 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 being familiar with price movement -- following charts permeated with lagging indicators such as RSI, MACD, and stochastics will steer 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 contemporary traders don't make use of is price action. They're all waiting for all their other indicators to line up. For this kind of trader, the only substantial 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 furnish the trader a clear picture of what the market is realistically doing during a given trading period.

When, for instance, you discipline yourself to begin considering price support and resistance levels, you are being shown actual statistics which are having an impact on the direction of the market. No lagging indicator is ever going to give you that kind of information which will be supported 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 system Trading in the Buff.

The name of his method refers to the shedding 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.