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.
Article Source: http://EzineArticles.com/?expert=Nathan_Navachi
http://EzineArticles.com/?Forex-Trend-Trading-With-a-Simple-Moving-Average&id=2690813
 |
Technical Analysis Indicator MACD part one Posted by: markofibo
Video duration: 571 seconds Global video hits: 178824 most technical analysis indicators are lagging. Let me show you how to use MACD properly and its Leading indicator values. |
 |
Understanding Stock Trading Technical Analysis Tutorial w/ the Zecco Zirens Posted by: Zecco
Video duration: 241 seconds Global video hits: 93873 Zecco, which provides Free Online Stock Trades through Zecco Trading, has created a series of video tutorials to help improve your understanding of stock trading. This video covers technical stock analysis, including technical indicators, investing education, using technical indicators like MACD, Mac-D, volume, and stochastic. |
 |
1. Technical Analysis Lesson 1: Intro to Technical Analysis Posted by: InformedTrades
Video duration: 174 seconds Global video hits: 113132 www.informedtrades.c om Lesson 1 of a series introducing technical analysis for traders of the stock futures and forex markets from |
 |
Learn about Technical Analysis Posted by: investtech
Video duration: 182 seconds Global video hits: 1015 How to identify Trends, Support & Resistance, Price patterns, Trading volume www.investtech.com |
 |
Technical Analysis Indicator MACD part two Posted by: markofibo
Video duration: 590 seconds Global video hits: 76584 part two of the three part series on MACD |
 |
Technical Analysis Educational Seminar Nov 2009 Posted by: thermal1
Video duration: 3978 seconds Global video hits: 3457 Recording of a webinar about technical analysis from Brian Shannon. Purchase the book at www.technicalanalysi sbook.com |
 |
Business Finance Stock Market Technical Analysis 2/14/08 Posted by: thermal1
Video duration: 540 seconds Global video hits: 10629 www.alphatrends.net |
 |
Google Inc (GOOG) technical analysis Posted by: thermal1
Video duration: 301 seconds Global video hits: 2116 technical analysis of the trend in google |
 |
Technical Analysis Indicator MACD part three Posted by: markofibo
Video duration: 571 seconds Global video hits: 90288 the final wrap up in the three part series on MACD |
 |
Stock Market Technical Analysis 7/1/08 Posted by: thermal1
Video duration: 567 seconds Global video hits: 26393 www.technicalanalysi sbook.com |
| Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 |
