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 discovered that all the challenging methods 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 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 money trading forex, if I don't even apprehend 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 proceeded by heeding what all the professional traders had to say on the topic. And more than any other slogan that came out of their mouths was the phrase "price action." John was so appalled 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 on a currency's change 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 impact 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 tell 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 being familiar with price movement -- following charts permeated with lagging indicators such as RSI, MACD, and stochastics will guide them to the right trade to enter. 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 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 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 example, you train yourself to begin contemplating price support and resistance levels, you are seeing actual statistics which are influencing the movement 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 instantly from the market itself. This is what John is trying to hammer home in his forex trading course Trading in the Buff.

The name of his course references the removing of indicator based strategies and returning to basic price action indicators. In other words, trading in the buff, without using the theoretical indicator window dressing that many traders are taught to base their trading habits on. The theories sound good, but they don't necessarily work.