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:
 |
Using Multiple Timeframes to Trade Supply and Demand Zones Posted by: InformedTrades
Video duration: 183 seconds Video by http://www.macrosent iment.com Check out more articles and videos supply and demand zones in our free course on the subject: http://www.informedt rades.com/f302/ To download all videos on the InformedTrades channel and more, check out the InformedTrades Vault: http://www.informedt rades.com/trades.php ?page=vault2 |
 |
Understand Absorption Volume Posted by: InformedTrades
Video duration: 192 seconds Video by http://www.macrosent iment.com View our free course on volume, supply, and demand in technical analysis here: http://www.informedt rades.com/f302/ This video covers the subject of absorption volume -- when "smart money" volume spikes in charts illustrating when smart money has absorbed resistant orders to enable trends to continue. |
 |
Overcoming Losing Streaks Posted by: InformedTrades
Video duration: 292 seconds http://www.informedt rades.com Losing streaks are virtually inevitable for active traders. Here are some practices for dealing with and overcoming them. |
 |
Using Volume to Spot Trend Reversals Posted by: InformedTrades
Video duration: 261 seconds http://www.informedt rades.com This video provides a short overview of how traders can interpret volume to understand trends. For a much richer look at this subject, please see our free course on using volume to understand supply and demand in a market: http://www.informedt rades.com/f302/ |
 |
Understanding Volume and Supply and Demand Zones Posted by: InformedTrades
Video duration: 346 seconds Video by http://www.macrosent iment.com See our free, full course on volume spread analysis and supply and demand zones here: http://www.informedt rades.com/f302/ |
 |
Currency Correlations, Part II Posted by: InformedTrades
Video duration: 184 seconds The second video in a two-part series on currency correlations. Video by: http://www.macrosent iment.com Download this video and all others on the InformedTrades YouTube channel at: http://www.informedt rades.com/trades.php ?page=vault2 |
 |
Currency Correlations, Part I Posted by: InformedTrades
Video duration: 119 seconds A short video introducing traders to the subject of currency correlations. A second video on this subject will follow shortly. Video by: http://www.macrosent iment.com Download all the videos on InformedTrades video channel: http://www.informedt rades.com/trades.php ?page=vault2 |
 |
Review of Big Gold Report From Casey Research Posted by: InformedTrades
Video duration: 156 seconds A premium newsletter for those investing deeply in the gold market and gold mining stocks. Order Big Gold Report ($80 per year): http://www.caseyrese arch.com/premium-pub lications/big-gold?p pref=IDT014PP1111A Join the InformedTrades Gold Club: http://www.informedt rades.com/trades.php ?page=goldclub-intro |
 |
Supply and Demand Zones Posted by: InformedTrades
Video duration: 227 seconds This video explains what supply and demand zones are (price levels likely to attract many orders), and how to profit from trading around them. Video by http://www.macrosent iment.com Download this video and more via the IT Vault: http://www.inform edtrades.com/trades. php?page=vault2 |
 |
Understanding the Re-Monetization in Gold and Silver (Casey Research) Posted by: InformedTrades
Video duration: 194 seconds Learn more about making the most out of the re-monetization of gold and silver by joining the InformedTrades Gold Club: http://www.inform edtrades.com/trades. php?page=goldclub-in tro See other Casey Research products here: http://www.caseyr esearch.com/premium- publications?ppref=I DT000EA1111A |
 |
Trading With Longer Term Pivots Posted by: InformedTrades
Video duration: 593 seconds InformedTrades member DREBG shares with us a lesson on Trading Longer Term Pivots. See DREBG's Free Course: http://www.inform edtrades.com/f375/ Click here to practice trading with a free forex trading demo account: http://clk.atdmt. com/FXM/go/nfrsieng0 100000402fxm/direct/ 01/ |
 |
Probability, Assumption, and Moving Averages in Forex Trading Posted by: InformedTrades
Video duration: 321 seconds Larry Folson shares his forex daytrading strategy based on moving averages, average trading ranges, and probabilities. Learn more about the IT Prop Trader Program: http://www.informedt rades.com/trades.php ?page=itcmtrader Practice this strategy with a free forex demo trading account: http://clk.atdmt.com /FXM/go/nfrsieng0100 000402fxm/direct/01/ |
 |
Trading the Gold Silver Ratio Posted by: InformedTrades
Video duration: 183 seconds This video illustrates a simple method for trading the gold/silver ratio used by InformedTrades central banker Simit Patel. Join us in discussing this video at InformedTrades.com. Simit trades gold and silver with Bullion Vault: http://bit.ly/nVWmVi |
 |
A Trend-Following Technical Analysis Method Posted by: InformedTrades
Video duration: 289 seconds See the full article that goes into greater detail, and the discussion thread on InformedTrades, here: http://www.informedt rades.com/525602-my- simple-technical-ana lysis-method.html Practice trading with a free demo trading account: http://bit.ly/CeAwD |
 |
Managing Risk Across Timeframes Posted by: InformedTrades
Video duration: 206 seconds Discuss this article with us: http://www.informedt rades.com/524882-def ining-risk-tolerance -across-timeframes.h tml Practice trading with a free demo account: http://bit.ly/CeAwD< br /> This video discusses trading across timeframes; having multiple accounts, and using each account to focus on a specific timeframe. Share your thoughts and ask questions by joining us at InformedTrades.com. |
