Watch the CAGED System online guitar lesson by Jason Loughlin from 1-2-3 Country
The CAGED system is a very simple short cut for insuring that you are always aware of the chord tones. You are using the open chord shapes as a template to help you visualize the building blocks of a chord. Chord tones are a point of resolve and everything else is tension. It's simply telling you to visualize the C, A, G, E and D chord shapes on the neck. We'll be using three. The C, A and E shapes. We can get a lot of mileage out of these three.