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:
 |
Forex Fundamentals: The Japanese Economy Posted by: ForexAcademy101
Video duration: 312 seconds Forex video workshop on the Japanese Economy and its most important indicators. Enumerates strengths, weaknesses and peculiarities. |
 |
Forex Fundamentals Training: Eurozone Posted by: ForexAcademy101
Video duration: 306 seconds Introduces the Eurozone; its strengths and weaknesses, and mentions its indicators |
 |
Delineates the strengths and weaknesses of the american economy and ... Posted by: ForexAcademy101
Video duration: 492 seconds Delineates the strengths and weaknesses of the american economy and explains its most important indicators. After watching this video you'll be able to make sense of sudden forex market movements that occur just after the issue of a major indicator and you'll be able to formulate an hypothesis about where the price of a particular USD-related currency pair is going to go. |
 |
Forex Fundamentals: Introduction Posted by: ForexAcademy101
Video duration: 466 seconds Introduces Forex Fundamental Indicators and provides some economics background. First of a six part series. Visit www.forexacademy101. com for more info. |
 |
Forex Trading Academy: Fibonacci webinar Posted by: ForexAcademy101
Video duration: 171 seconds Learn Forex trading with this fibonacci lesson, part of a course in forex technical indicators at www.forexacademy101. com |
 |
Forex Trading technical indicator cci: commodity channel index Posted by: ForexAcademy101
Video duration: 321 seconds This video describes how you can use the relative strength index to trade the forex market. For more information, videos, and articles, please visit www.forexacademy101. com. |
 |
Forex Trading Academy Technical Indicator RSI Posted by: ForexAcademy101
Video duration: 196 seconds This video describes how you can use the relative strength index to trade the forex market. For more information, videos, and articles, please visit www.forexacademy101. com. |
 |
Forex Trading Academy Technical Indicators Simple Moving Averages Filter Posted by: ForexAcademy101
Video duration: 181 seconds Explains how to use multiple SMA-lines to create a filter to help you better analyse the Forex Markets. |
 |
Forex Trading Academy Technical Indicators Moving Averages Posted by: ForexAcademy101
Video duration: 161 seconds Learn how to use technical indicators to trade in the forex markets. This video explains the Simple Moving Average. |
 |
Forex Academy Trading Skills Posted by: ForexAcademy101
Video duration: 426 seconds What to know before trading on the forex markets; essential skills for success. |
 |
Forex Trading Technical Analysis Bollinger Bands Trends Posted by: ForexAcademy101
Video duration: 331 seconds How to use Bollinger Bands to identify and trade trends in forex markets |
 |
Forex Trading Technical Analysis Bollinger Bands Posted by: ForexAcademy101
Video duration: 211 seconds How to use Bollinger Bands to trade on the Forex Markets |
 |
Make Money Trading Forex From Scratch Posted by: ForexAcademy101
Video duration: 181 seconds How to start from scratch and make money trading forex. |
 |
Forex Academy Trading Training Candlesticks Posted by: ForexAcademy101
Video duration: 240 seconds This video shows you what you can do with candlestick charts |
 |
Forex Trading Training Posted by: ForexAcademy101
Video duration: 144 seconds This video is about going with the flow of the market |
 |
Forex Trading Academy Posted by: ForexAcademy101
Video duration: 51 seconds Forex Academy Introductory Video |
