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:
 |
20090203YouTubeRollovertoFTVYouTube Posted by: elprimermatador
Video duration: 148 seconds |
 |
01/30/2009 FTV Noon Report by Matador Posted by: elprimermatador
Video duration: 285 seconds Happy Friday everyone, Here is the latest installment of the FTV Noon Report. There are some really cool things happening right now. Check it out! Have a great weekend everyone, Matador : ) |
 |
01/29/2009 FTV Noon Report Posted by: elprimermatador
Video duration: 233 seconds Hi all, Matador here again with a quick intraday market summary. Technicals are looking good again even as the markets fall under pressure. Enjoy, Matador : ) |
 |
01/27/2009 FTV Noon Report on SPY, CAT, and AAPL Posted by: elprimermatador
Video duration: 396 seconds Hi all, Here is a quick but good look at the intraday technical analysis of the SPY, CAT, and AAPL stocks. There is some good action today in a seemingly news driven market. Hope you are all having a good day in the markets, Matador : ) |
 |
01/20/2009 Market Overview Posted by: elprimermatador
Video duration: 266 seconds Now you all know why I called myself the bull killer (matador ). Yikes... Hope your day was ok today...and hang in there, Matador |
 |
01/15/2009 FTV Noon Report Posted by: elprimermatador
Video duration: 239 seconds Hi All, Here is the FTV Noon stock market report. Let me know if you would like me to add anything to these and I will do it : ) Thanks for all the feedback recently...it is wonderful and helpful, Matador : ) |
 |
01/14/2009 FTV Member Trade Analysis Posted by: elprimermatador
Video duration: 585 seconds Hi all, Continuing on with another trade analysis from one of our members named Salsaprince. Have a great rest of the night and I'll see you tomorrow at noon : ) Matador |
 |
12/03/2008 One Explination of TRIN Posted by: elprimermatador
Video duration: 381 seconds Here is a better description of the TRIN for anyone interested. It is such a great market internal to know and use. I love it!!! Hope you are all having a great week, Matador from www.FreeTradingVideo s.com |
 |
12/02/2008 Broad Market Analysis and TRIN Posted by: elprimermatador
Video duration: 277 seconds Check out the intraday action between the broad markets and the TRIN reading. Great divergence!!! Enjoy, Matador : ) |
 |
11/14/2008 Real Time Market Action SUN and GS Posted by: elprimermatador
Video duration: 359 seconds Another intraday video about some nice price action. Relative strength and weakness as well as more market internal information is provided. Matador : ) |
 |
11/13/2008 After Hours Wrap Up Posted by: elprimermatador
Video duration: 244 seconds This is a follow-up video on the intraday market action we saw in the previous video. Always nice when things actually work out and you actually get follow through : ) |
 |
11/13/2008 Real Time Market Action SPY and TRIN Posted by: elprimermatador
Video duration: 275 seconds This is a real time video of some great signals the market internals are giving us as of 1:00 pm EST. These are of course short term observations so be careful how you act upon them. Should be a good learning piece : ) |
 |
POT Trade Management Posted by: elprimermatador
Video duration: 143 seconds This is a description of the trade management I am doing for my POT trade. This is just one of many ways to manage a trade but due to the market environment, I am being more aggressive with my profit taking. |
 |
PCLN False Setup 30 Minute Gap Strategy Posted by: elprimermatador
Video duration: 225 seconds This is a technical chart description of a false set-up for a 30 minute gap strategy. |
 |
FSLR Day and Swing Trade Using 30 Minute Gap Strategy Posted by: elprimermatador
Video duration: 452 seconds This is a description of an day and swing trade on FSLR using the a 30 minute gap strategy. This includes the entry, exit on half of the position and management techniques on the remaining shares. |
 |
Broad Market Technical Analysis Feb. 7, 2008 Posted by: elprimermatador
Video duration: 216 seconds This is a brief description of some technical analysis on the S&P500 ETF. This mainly focuses on the retracements that have occurred in recent weeks. |
 |
Pullback Buy Explanation in Chart School Posted by: elprimermatador
Video duration: 370 seconds This is a description of the pullback buy set up as outlined in the Chart School section of www.FreeTradingVideo s.com. Some initial psychology is also presented and discussed. |
 |
SPY and CNH Analysis for January 31, 2008 Posted by: elprimermatador
Video duration: 363 seconds This is a description of the SPY as of the morning of January 30th, 2008. The relative weakness stock CNH is also described in comparison to the broad markets. |
 |
Relative Strength Stocks on January 30, 2008 Posted by: elprimermatador
Video duration: 352 seconds This is a list of stocks that are experiencing technical and fundamental strength as of January 30th, 2008. |
 |
Discussion on Various Types of Gaps Posted by: elprimermatador
Video duration: 530 seconds This is a description of several types of gaps that occur in the market. "Normal","Exhaustion ", "Continuation", and "Catastrophic" gaps are described. Some psychology is explained as well as the visual representation on candlestick charts. |
 |
January 24, 2008 Market Synopsis Posted by: elprimermatador
Video duration: 395 seconds This is a description of the broad markets as of January 24th, 2008. The TRIN market internal is also looked at in concert with this to help add some depth to the overall analysis. |
 |
Friday, January 18th, 2008 Premarket Synopsis Posted by: elprimermatador
Video duration: 227 seconds This is a synopsis for the premarket activity on Friday, January 18th, 2008. The broad markets, the VIX, and TRIN are compared to see some divergences. This is helpful for Swing Traders and Day Traders alike. |
 |
Broad Market Recap January 17, 2008 Posted by: elprimermatador
Video duration: 426 seconds This is a technical analysis description of the broad market action for Thursday, January 17th, 2008 using candlestick charts. |
 |
First Step in Nightly Routine Posted by: elprimermatador
Video duration: 260 seconds This is a description of the first step in my nightly routine for swing trading or weekly routine for position trading. |
 |
Broad Market Breakdown January 10, 2008 Posted by: elprimermatador
Video duration: 442 seconds This is a breakdown of the broad market as of January 10th, 2008. |
