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:
 |
CFA Level 1 Last Minute Tips.mp4 Posted by: arifirfanullah
Video duration: 486 seconds Financial Management Lecture by Arif Irfanullah www.arifirfanulla h.com |
 |
Dividends Part 2.mp4 Posted by: arifirfanullah
Video duration: 1652 seconds Financial Management Lecture by Arif Irfanullah www.arifirfanulla h.com |
 |
Dividends Part 1 Posted by: arifirfanullah
Video duration: 1434 seconds Financial Management Lecture by Arif Irfanullah www.arifirfanulla h.com |
 |
CFA L2 Last Minute Study Tips.mp4 Posted by: arifirfanullah
Video duration: 335 seconds Financial Management Lecture by Arif Irfanullah www.arifirfanulla h.com |
 |
Real Options Posted by: arifirfanullah
Video duration: 3385 seconds Real Options Explained by Arif Irfanullah |
 |
IS LM and AD curves.mp4 Posted by: arifirfanullah
Video duration: 1045 seconds IS and LM curves Derivation of AD curve from IS and LM curves |
 |
Options Quiz Payoff and Profit Diagrams.mp4 Posted by: arifirfanullah
Video duration: 616 seconds Financial Management Lecture by Arif Irfanullah www.arifirfanulla h.com |
 |
Black Scholes Model and Put Call Parity Posted by: arifirfanullah
Video duration: 2683 seconds Option pricing using the Black Scholes Model Put Call Parity |
 |
2012 CFA Level 2 Video Triangular Arbitrage on Currency Cross Rates Posted by: arifirfanullah
Video duration: 795 seconds 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om Triangular Arbitrage on Currency Cross Rates |
 |
2012 CFA Level 2 Video Arbitrage on Mispriced Forward Rates .mp4 Posted by: arifirfanullah
Video duration: 512 seconds 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om Arbitrage on Mispriced Forward Rates |
 |
2012 CFA Level 2 Video Ethics Tips.mp4 Posted by: arifirfanullah
Video duration: 321 seconds Ethics Tips 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om |
 |
Option Payoff and Profit Diagrams.mp4 Posted by: arifirfanullah
Video duration: 1263 seconds Financial Management Lecture by Arif Irfanullah www.arifirfanulla h.com |
 |
2012 CFA Level 1 Video R63 Options Markets and Contracts Part 1.mp4 Posted by: arifirfanullah
Video duration: 1040 seconds 2012 CFA Level 1 Online Lecture www.arifirfanullah.c om Derivatives R63 Options Markets and Contracts Part 1 |
 |
2012 CFA Level 1 Video R65 Risk Management Applications of Derivatives Part 1.mp4 Posted by: arifirfanullah
Video duration: 980 seconds 2012 CFA Level 1 Online Lecture www.arifirfanullah.c om Derivatives R65 Risk Management Applications of Derivatives Part 1 |
 |
2012 CFA Level 1 Video R64 Swap Markets and Contracts Part 1AD.mp4 Posted by: arifirfanullah
Video duration: 1335 seconds 2012 CFA Level 1 Online Lecture www.arifirfanullah.c om Derivatives R64 Swap Markets and Contracts Part 1 |
 |
Call Options Posted by: arifirfanullah
Video duration: 3500 seconds Financial Management Lecture by Arif Irfanullah Financial Management www.arifirfanullah.c om CFA Video Lectures Overview of Options with a focus on Call Options |
 |
2012 CFA Level 2 Video R60 Portfolio Concepts Part 1.mp4 Posted by: arifirfanullah
Video duration: 971 seconds 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om PM R60 Portfolio Concepts Part 1 |
 |
2012 CFA Level 1 Video R62 Futures Markets and Contracts Part 1.mp4 Posted by: arifirfanullah
Video duration: 977 seconds 2012 CFA Level 1 Online Lecture www.arifirfanullah.c om Derivatives R62 Futures Markets and Contracts Part 1 |
 |
2012 CFA Level 1 Video R61 Forward Markets and Contracts Part 1 .mp4 Posted by: arifirfanullah
Video duration: 896 seconds 2012 CFA Level 1 Online Lecture www.arifirfanullah.c om Derivatives R61 Forward Markets and Contracts Part 1 |
 |
2012 CFA Level 2 Video R59 Using Credit Derivatives .mp4 Posted by: arifirfanullah
Video duration: 1036 seconds 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om R59 Using Credit Derivatives .mp4 |
 |
2012 CFA Level 2 Video Pricing and Valuation of Currency Swaps .mp4 Posted by: arifirfanullah
Video duration: 1682 seconds 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om Pricing and Valuation of Currency Swaps .mp4 |
 |
Capital Structure Part 3.mp4 Posted by: arifirfanullah
Video duration: 2505 seconds Capital Structure Part 3.mp4 |
 |
Capital Structure Part 4.mp4 Posted by: arifirfanullah
Video duration: 2109 seconds Capital Structure Part 4.mp4 |
 |
2012 CFA Level 2 Video R57 Swap Markets and Contracts Part 1.mp4 Posted by: arifirfanullah
Video duration: 876 seconds 2012 CFA Level 2 Online Lecture www.arifirfanullah.c om Derivatives R57 Swap Markets and Contracts Part 1.mp4 |
 |
2012 CFA Level 1 Video R58 Yield Measures, Spot Rates, and Forward Rates Part 1.mp4 Posted by: arifirfanullah
Video duration: 991 seconds 2012 CFA Level 1 Online Lecture www.arifirfanullah.c om FIS R58 Yield Measures, Spot Rates, and Forward Rates Part 1.mp4 |
