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
Video scenes shots:
Watch the video:
| URL: | |
| Embed: |
Other videos by this author:
 |
FibMaster AUD/JPY outlook for this week Posted by: FibMarkets
Video duration: 137 seconds http://fibmarkets.co m/category/forex/aud jpy/ FibMaster's FOREX trade setups for the coming week. Trade with more confidence, know the long and short, buy and sell zones! |
 |
USDJPY Forex trade setup - FibMaster Neal Hughes Posted by: FibMarkets
Video duration: 65 seconds http://fibmarkets.co m/trading-desk/ FibMaster's FOREX trade setups for the coming week. Trade with more confidence, know the long and short, buy and sell zones! |
 |
Dow and S&P trade setups for next week. Posted by: FibMarkets
Video duration: 295 seconds http://fibmarkets.co m/trading-desk/ FibMaster's DOW and S&P trade setups for the coming week. Trade with more confidence, know the long and short, buy and sell zones! |
 |
EUR/USD Trade setup, pre London Session Fibonacci Posted by: FibMarkets
Video duration: 218 seconds http://www.FibMarket s.com FibMaster's predicted trade setup before the London session Aug 26th |
 |
FibMaster Market update 2008/06/27 DOW Posted by: FibMarkets
Video duration: 266 seconds This is looking really ugly! For emotional reasons. Most investors will unload their positions and capitulate near the bottom. http://www.dailyf orexcharts.com Post any feedback/comments here; http://www.trader zine.com/forums/ |
 |
FibMaster FOREX update 2008/02/24 USD/JPY Posted by: FibMarkets
Video duration: 89 seconds The USD/JPY chart is setting up! http://www.dailyf orexcharts.com Post any feedback/comments here; http://www.trader zine.com/forums/ |
 |
FibMaster FOREX update 2008/02/23 EUR/CAD Posted by: FibMarkets
Video duration: 104 seconds http://www.dailyfore xcharts.com Post any feedback/comments here; http://www.trader zine.com/forums/ |
 |
FibMaster FOREX update 2008/02/21 USD/JPY Posted by: FibMarkets
Video duration: 171 seconds http://www.fibmaster .com The USD/JPY chart is setting up for a potential triangle breakout. This quick video will tell you what to watch for and how to trade this setup. See this update for specifics. http://www.trader zine.com/forums/ |
 |
FibMaster FOREX update 2008/01/23 EUR/CHF Posted by: FibMarkets
Video duration: 141 seconds Everyone likes easy money, so here is a great trade setup. The EUR/CHF chart has a clear trend with obvious tradess setting up for intraday traders. Of course there are risks, but if you follow this video you will know when to get out of this trade. See this update for specifics; |
 |
FibMaster update 2007/12/13 FOREX review Posted by: FibMarkets
Video duration: 397 seconds Forex chart review from http://www.fibmaster .com Watch this for a complete analysis of the key support/resistance levels on the major forex pairs. |
 |
FibMaster update 2007/12/11 FOREX GBP Posted by: FibMarkets
Video duration: 158 seconds Cable has been pulling back for a great trade. Forex traders, wait for this one to launch before entering! |
 |
FibMaster update 2007/12/04 FOREX Posted by: FibMarkets
Video duration: 209 seconds Traders have already scored pips from my last FOREX update. Now we need to be aware of the Fibonacci levels that are in the way of our trend. See today's forex update for the critical retracement levels on EUR/USD and USD/CAD |
 |
FibMaster update 2007/11/30 FOREX Posted by: FibMarkets
Video duration: 191 seconds The Canadian, Euro, and Swiss charts are all setting up for some great entries. Watch this update so that you'll know where to capture the pips. |
 |
FibMaster update 2007/11/28 USD/CAD & DRYS Posted by: FibMarkets
Video duration: 405 seconds Today's update is a tutorial on how to use Fibonacci studies, and how to know when the market has turned. If you're still wondering which swing points are used for Fibonacci, and whether a market has actually turned you must see this video. |
 |
FibMaster update 2007/11/27 S&P DRYS Posted by: FibMarkets
Video duration: 168 seconds Both of these charts are great for shorting, but you must know how to tell when the move is over. This video tells you how. |
 |
FibMaster 2007/11/26 FOREX chart review Posted by: FibMarkets
Video duration: 259 seconds The potential short trade on the CAD chart is still a possibility, wait for resistance to materialize. The Swiss Franc chart has a great trend for easy trading, but CABLE looks trendless now. I recommend avoiding CABLE until a decent trend appears. See todays FOREX update for details on the major USD pairs; |
 |
FibMaster 2007/11/20 FOREX CAD intraday setup. Posted by: FibMarkets
Video duration: 113 seconds A great setup is developing right now. We don't want to anticipate this trade, wait for the confirmation! |
 |
FibMaster 2007/11/13 Where next for the S&P? Posted by: FibMarkets
Video duration: 202 seconds http://www.fibmaster .com The S&P has been very responsive to Fibonacci levels recently, it's uncanny how that works. There is a battle between a long term bullish trend and a recent down-trend (pullback). Which will win? How can we know? Watch the FibLevels in the following video update, so that you will know; |
 |
FibMaster 2007/11/14 Trading the minis tomorrow? Posted by: FibMarkets
Video duration: 294 seconds http://www.fibmaster .com Here are the support and resistance levels you need to know about for tomorrow (Nov 15th) and possibly the next day. Don't trade the minis without watching this market update. |
