This is something I need to do a full-blown tutorial on, because I haven't found anything on the Internet that I think REALLY explains it and it's application.
Basically, you take the open chord formations, the cowboy chords, and string them together to show you ONE chord up and down the fretboard.
The chord formations ALWAYS repeat themselves and NEVER change as far as the fretboard is concerned.
Each open chord is a "Position" or a "Formation". They will ALWAYS go in the order of C, A, G, E, D...then would repeat themselves...C, A, G, E, D, C, A, G, E, D, C, A, G, E, D....and so on...
So, take an Open C chord....this looks like the the open C chord "formation"...
C
E--0--
B--1--
G--0--
D--2--
A--3--
E--x--
If we think of CAGED as a static pattern, and each of of the Open Chord Formation relating to the letters in CAGED...we've all ready cover C in Caged. THe next formation wil be A. The next C chord formation we'll find is the "A Formation"...
C
E--3--
B--5--
G--5--
D--5--
A--3--
E--x--
So, that's a C chord, but it's a C chord that looks EXACTLY like the Open A chords does...
So for a C chord...we've played it "shaped" as a open C chord AND an open A chord...but both were C chords.
The next letter in CAGED is G...caGed...
C
E--8--
B--5--
G--5--
D--5--
A--7--
E--8--
Can you see how that C chord looks EXACTLY like a G Formation?
And to answer your next question, YES...people do use this chord. Even more people (Hendrix, Richards, Vai, and about every other guitarist) will use fragments of it.
Hopefully by now you're seeing that CAGED relates to a constant sequence of familiar open chord formations.
The next letter is E...so, here's a C chord that looks like an E chord...
C
E--8--
B--8--
G--9--
D--10--
A--10--
E--8--
Ok, that's C chord, but it looks EXACTLY like an open E chord formation.
The next letter is D...
C
E--12--
B--13--
G--12--
D--10--
A--10--
E--x--
Can you see how that's a C chord, but it looks EXACTLY like an open D chord?
Now here's where it'll start to repeat, starting on C again...
C
E--12--
B--13--
G--12--
D--14--
A--15--
E--x--
See how that's a C chord...and loks EXACTLY like the open C chord was started with?
Now things repeatcontinuing on to A, G, E, D...
C (in athe A foromation)
E--15--
B--17--
G--17--
D--17--
A--15--
E--x--
C (looks like a G formation chord)
E--20--
B--17--
G--17--
D--17--
A--19--
E--20--
So, you can see that by learning CAGED you can start unlocking the fretboard.
Because it's a static sequence, you can start ANYWHERE in the sequence and by knowing the formation you're playing you'll be able to find the same chord above and below itself!
Take an E chord in an A Formation:
E
E--7--
B--9--
G--9--
D--9--
A--7--
E--x--
By knowing CAGED you would know there is an E chord in the shape of a G chord above your chord, and an E chord in the shape of a C chord...
E (in a G formation)
E--12--
B--9--
G--9--
D--9--
A--10--
E--12--
E (in a C formation)
E--4--
B--5--
G--4--
D--6--
A--7--
E--x--
Hopefully all of that makes sense. If so, by the end of the day you are going know a lot more about how the fretboard is organized.
Now this also applies to scales and connecting them up the fretboard...I don't have time to go into that right now. But, try and visualize your scale patterns and find the different chords in them, it'll become clear before long that all of the scales connect using the CAGED concept.
A book that deals directly with CAGED is: Fretboard Logic. It is a great book, although I think it could be organized a little better.
Also, stop by my lesson site (link below). I take a lot of "must know" concetps and explain them thoroughly in detail.
