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:
 |
FXPRIMUS Nigeria - Technical Analysis Posted by: StockTrading4You
Video duration: 809 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing the importance of Technical Analysis. |
 |
FXPRIMUS Nigeria - Money Management Posted by: StockTrading4You
Video duration: 1320 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing the importance of Money Management. |
 |
FXPRIMUS Nigeria - How To Use The MetaTrader 4 Platform Posted by: StockTrading4You
Video duration: 1050 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing how to use the MT4 Trading Platform. |
 |
FXPRIMUS Nigeria - Introduction to Forex (FX) Trading Posted by: StockTrading4You
Video duration: 1132 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be introducing you to Forex Trading. |
 |
FXPRIMUS Nigeria - Live Trading Economic News Posted by: StockTrading4You
Video duration: 356 seconds At FXPRIMUS Nigeria, we are all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing Trading Strategies and using the platform during economic news release. |
 |
FXPRIMUS Nigeria Live Forex Trading Session Posted by: StockTrading4You
Video duration: 1188 seconds At FXPRIMUS Nigeria, we are all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing Trading Strategies and using the platform. |
 |
FXPRIMUS Nigeria - Trading Strategy-Pivot Points Posted by: StockTrading4You
Video duration: 2124 seconds FXPRIMUS Nigeria is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing a Trading Strategy using Pivot Points. |
 |
FXPRIMUS Nigeria - Trading Plan Posted by: StockTrading4You
Video duration: 981 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing the importance of having a trading plan. |
 |
How-To-Use-The-MetaTrader4-Platform Posted by: StockTrading4You
Video duration: 1723 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing How To Use The FXPRIMUS MetaTrader4 Platform. |
 |
Live Forex Trading Session Posted by: StockTrading4You
Video duration: 1549 seconds Assessing the markets prior to trading. |
 |
Introduction-To-Forex (FX)-Trading Posted by: StockTrading4You
Video duration: 1979 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session discusses the basics of forex trading. |
 |
Live-Forex-Day Trading-EUR/USD Posted by: StockTrading4You
Video duration: 231 seconds Assessing the markets prior to economic report. |
 |
Trading-Plan Posted by: StockTrading4You
Video duration: 936 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing the importance of having a Trading Plan. |
 |
Live-Forex-Trading-Session-Wed 16th of Nov 2011 Posted by: StockTrading4You
Video duration: 1193 seconds Assessing the markets prior to trading |
 |
Money-Management Posted by: StockTrading4You
Video duration: 2605 seconds FXPRIMUS Nigeria (www.fxprimus.com) is all about empowering our clients and giving them the necessary tools and education to make them successful traders. This session will be discussing the importance of Money Management. |
 |
Live-Forex-Trading-Session-Wednesday 9th of November 2011 Posted by: StockTrading4You
Video duration: 2134 seconds Assessing the markets prior to trading. |
 |
How To Use The MetaTrader4 Platform Posted by: StockTrading4You
Video duration: 978 seconds Learn how to use the MetaTrader4 Platform on the FXPRIMUS Nigeria trading platform. |
 |
Live-Forex-Trading-Session-Monday 7th of November 2011 Posted by: StockTrading4You
Video duration: 2870 seconds Assessing the market and looking for trading opportunities. |
 |
Trading Strategy-Pivot Points Posted by: StockTrading4You
Video duration: 1892 seconds Learn how to use Pivot Points as a trading strategy. Send questions to nigeria@fxprimus.com and see www.fxprimus.com for details on how to join. |
 |
Live-Forex-Trading-Morning Session Posted by: StockTrading4You
Video duration: 1892 seconds Assessing the forex market for trading opportunities |
 |
Introduction-to-Forex (FX)-Trading Posted by: StockTrading4You
Video duration: 2993 seconds Learn the basics of Forex Trading |
 |
Ghana FX-Live-Forex-Trading-Session Posted by: StockTrading4You
Video duration: 796 seconds Assessing the markets prior to trading |
 |
Setting Up Your FX Primus Nigeria Affiliate Account Posted by: StockTrading4You
Video duration: 509 seconds How to open your FREE FXPrimus Nigeria affiliate account. |
 |
Ghana FX-Live-Forex-Trading Posted by: StockTrading4You
Video duration: 1449 seconds Trading on the Ghana FX Trading Platform. |
 |
Ghana FX-Live-Forex-Trading-Session Posted by: StockTrading4You
Video duration: 2192 seconds Trading on the Ghana FX Platform |
