Forex Trend Trading With a Simple Moving Average
By Nathan Navachi
While many new forex trading systems are based on complicated mathematical market analysis models, some of the most effective forex trading strategies are also the simplest. One of these simple and highly effective strategies is trend trading, where you simply see which direction the market is trending in and then you trade in that direction. If you were trading the EUR/USD currency pair, the way that you could identify the direction of the trend is to open up a daily chart and overlay a simple moving average on the chart. If the direction of the moving average is up, then the pair is in an uptrend; if the moving average line is down, there is a downtrend; and if the line is horizontal then there may be no trend.
Trend trading is a proven way to earn profits in the forex market since it is an established fact backed by decades of market research that currency pairs (and indeed literally all markets) move in trends. If the trend is up then it makes sense to buy, if the trend is down then it makes sense to sell, and if there is no trend then it may not be a good time to trade. The best way to get an accurate sense of the overall trend is to look at a long-term price chart such as a daily, weekly, or monthly chart and see which direction the moving average line is pointing. While it may not be practical to use a monthly chart for trading signals, it can let you see in a quick glance where the market has been and where it will be headed if the trend continues.
It is a general rule of interpreting trading signals that the longer the period of the price chart is, the more reliable the trading signal will be. This strategy of determining the trend and then trading in that direction could be used on a chart as small as a one minute candlestick chart or as large as a daily or even weekly chart if you are really a long-term trader. Now while trading signals from long-term charts can be more reliable, there is also larger risk involved with keeping a trading position open for days or weeks at a time. If you plan to trade on these types of longer time frames, be sure to factor in the amount of leverage you are using as a function of how many pips you are willing to risk on a loss.
On the short-term side, this strategy can be used on a 1-minute or 5-minute chart but the signals may not be as reliable and the trend itself may be erratic and rapidly changing. It is common sense that the steepness of the moving average line indicates how quickly the market is moving up or down, and if you can identify a fast moving trend on this type of price chart then you open yourself up to large gains if you can enter in on the right side of the market and ride the trend for as many pips as possible before the market retraces itself.
The easiest way to learn forex trading is by watching videos. Go to this YouTube video and watch a video commentary for this article.
Nathan Navachi is a professional trader who built http://TheCurrencyMarkets.com as a valuable resource to introduce the world to the forex market.
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UFXMarkets *Daily Forex Currency Trading News* 23-May-2012 Posted by: UFXMarkets
Video duration: 131 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube... . S&P 500 finished with 0.05% change, NASDAQ declined by -0.29% and Dow Jones by -0.01%. |
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UFXMarkets *Daily Forex Currency Trading News* 22-May-2012 Posted by: UFXMarkets
Video duration: 102 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube... The S&P 500 rallied by 1.60%, NASDAQ by 2.46%, and Dow Jones by 1.09% |
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UFXMarkets *Daily Forex Currency Trading News* 21-May-2012 Posted by: UFXMarkets
Video duration: 120 seconds Stocks declined after Facebook shares......http://w ww.ufxmarkets.com . rose by less than expected and the Euro's Greek exit question remains open |
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UFXMarkets *Weekly Forex Currency Trading News* 20-May-2012 Posted by: UFXMarkets
Video duration: 228 seconds U.S. stocks fell for a third ......http://www.ufx markets.com/tools/da ily-market-review... ..consecutive week, amid further slowing of global economic growth and concern Greece may leave the euro area. The Standard & Poor's 500 Index suffered its longest losing streak since August, tumbling 7.3% so far in May. |
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UFXMarkets *Daily Forex Currency Trading News* 17-May-2012 Posted by: UFXMarkets
Video duration: 108 seconds Wall Street saw declines all around with the .......http://www.uf xmarkets.com .....NASDAQ falling by 1.00%, the Dow by 0.43% and the S&P by 0.67%. The US dollar, however, gained versus |
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UFXMarkets *Daily Forex Currency Trading News* 16-May-2012 Posted by: UFXMarkets
Video duration: 123 seconds Wall Street closed the trading day negative........http ://www.ufxmarkets.co m . as the NASDAQ fell by -0.30%. The Dow lost -0.50% and the S&P by -0.57%. US stocks declined |
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UFXMarkets *Daily Forex Currency Trading News* 15-May-2012 Posted by: UFXMarkets
Video duration: 142 seconds Wall Street closed the trading day negative ...........http://ww w.ufxmarkets.com ...as the NASDAQ fell by -1.06% the Dow Jones by -0.98% and the S&P by -1.11. US stocks declined, sending the Standard & Poor's 500 Index to the lowest level since February. |
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UFXMarkets *Daily Forex Currency Trading News* 14-May-2012 Posted by: UFXMarkets
Video duration: 85 seconds Stock markets finished the trading week .............http:// www.ufxmarkets.com/. .mixed. The S&P and Nasdaq gained by 0.01% and 0.01%. respectively, while the Dow declined by -0.33%. |
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UFXMarkets *Weekly Forex Currency Trading News* 13-May-2012 Posted by: UFXMarkets
Video duration: 187 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube... The Dow Jones Industrial Average suffered the biggest loss of 2012 and the S&P fell to the lowest level in two months as US Stocks fell for a second week straight due to a deepening Euro crisis. |
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UFXMarkets *Daily Forex Currency Trading News* 10-May-2012 Posted by: UFXMarkets
Video duration: 135 seconds Wall Street closed the trading day .........http://www. ufxmarkets.com in the red due to ongoing concerns regarding the future of the Euro Zone economy. The NASDAQ fell by 0.39% to close at 2,934; the Dow 0.75%, closing at 12,835, and the S&P closed at 1,354. |
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UFXMarkets *Daily Forex Currency Trading News* 9-May-2012 Posted by: UFXMarkets
Video duration: 112 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube... Stocks closed negative due to investors' concern from the election results in Greece and France and the future of the Euro Zone economy. |
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UFXMarkets *Daily Forex Currency Trading News* 8-May-2012 Posted by: UFXMarkets
Video duration: 111 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Stocks closed positive after the election result in Greece and France. The S&P 500 rose by 18 points, the NASDAQ by 49 points and the Dow by 138 points. |
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UFXMarkets *Daily Forex Currency Trading News* 7-May-2012 Posted by: UFXMarkets
Video duration: 104 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Stocks declined after the Non-Farm Employment Change came out 115K worse than expected. The S&P 500 also declined by 44 points, along with the NASDAQ by 61 and Dow by 367. Investors remain pessimistic about the U.S economy. |
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UFXMarkets *Weekly Forex Currency Trading News* 6-May-2012 Posted by: UFXMarkets
Video duration: 161 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube... Last Friday, the yen rose as government data showed that US Nonfarm payrolls added 115,000 jobs, which is the smallest gain in six months. |
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UFXMarkets *Daily Forex Currency Trading News* 3-May-2012 Posted by: UFXMarkets
Video duration: 142 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. We start with the US stock market -- The S&P 500 and Dow Jones declined slightly after an ADP of Non-Farm Employment change showed employers added only 119K jobs in April, a 7 month Low. |
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UFXMarkets *Daily Forex Currency Trading News* 2-May-2012 Posted by: UFXMarkets
Video duration: 150 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. |
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UFXMarkets *Daily Forex Currency Trading News* 1-May-2012 Posted by: UFXMarkets
Video duration: 141 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. |
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UFXMarkets *Daily Forex Currency Trading News* 30-April-2012 Posted by: UFXMarkets
Video duration: 171 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Wall Street closed the trading week in the green as the NASDAQ rose by 0.62% closing at 3,069.20; the Dow Jones added 0.18% to its value, closing at 13,228.30. |
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UFXMarkets *Daily Forex Currency Trading News* 25-April-2012 Posted by: UFXMarkets
Video duration: 127 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Stock markets finished mixed with a tendency to inclines following stronger than expected New Home Sales in the U.S. The Dow gained by 0.58%, NASDAQ declined by -0.30% and S&P 500 rose by 0.37%. |
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UFXMarkets *Daily Forex Currency Trading News* 24-April-2012 Posted by: UFXMarkets
Video duration: 162 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Stock markets started the week in decline as political turmoil in Europe raised doubts of an ending to the debt crisis. |
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UFXMarkets *Daily Forex Currency Trading News* 23-April-2012 Posted by: UFXMarkets
Video duration: 131 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Stock markets finished the trading week mixed. The Dow Jones gained by 0.50% while Nasdaq declined by -0.24%. Technically, as long as Dow remains below 13,050 the chances of a breakdown rise. |
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UFXMarkets *Weekly Forex Currency Trading News* 22-April-2012 Posted by: UFXMarkets
Video duration: 138 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube... The euro reached its highest level in two weeks against the US Dollar after German business confidence increased to a nine month high. |
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UFXMarkets *Daily Forex Currency Trading News* 19-April-2012 Posted by: UFXMarkets
Video duration: 143 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Wall Street closed on negative side as the Dow declined by 0.63% closing at 1303, the NASDAQ fell by 0.37% closing at 3031 and the S&P500 lost 0.41% closing at 1385. |
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UFXMarkets *Daily Forex Currency Trading News* 18-April-2012 Posted by: UFXMarkets
Video duration: 158 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube..Wall Street finished in the green as the NASDAQ rose by 1.82% closing at 3,042.82; the Dow Jones added 1.54% to its value, closing at 13,120.10, and the S&P closed positive, strengthened by 1.52%, closing at 1,390.42 points. |
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UFXMarkets *Daily Forex Currency Trading News* 17-April-2012 Posted by: UFXMarkets
Video duration: 142 seconds For more currency & commodity news & info, visit http://ufx.co/UFXM-y outube.. Wall Street closed mixed as the NASDAQ fell by 0.76% closing at 2,988.40; the Dow Jones added 0.60% to its value. Technically, as long as the Dow is trading below the resistance level of 12,950, the trend will remain bearish. Next strong support level for the index is at the 12,800. |
