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:
 |
Calling the Market Bottom - May 20, 2012 Posted by: TheAppleInvestor
Video duration: 297 seconds http://room.apple-in vestor.com |
 |
The 4 Tenets of Successful Trading Posted by: TheAppleInvestor
Video duration: 176 seconds http://room.apple-in vestor.com/free-webi nars |
 |
Money and Risk Management Webinar - Position Your Trade for Profit Posted by: TheAppleInvestor
Video duration: 243 seconds http://room.apple-in vestor.com/free-webi nars Learn a trade setup along with a solid money and risk management strategy. Also, you'll get the Top 10 Money and Risk Management tips...all for free! |
 |
Truthful Lies about Gold, Silver and Apple Posted by: TheAppleInvestor
Video duration: 135 seconds http://room.apple-in vestor.com |
 |
Gold and Silver have Outperformed Apple over the last Decade Posted by: TheAppleInvestor
Video duration: 191 seconds http://room.apple-in vestor.com |
 |
Apple as Market Proxy Posted by: TheAppleInvestor
Video duration: 172 seconds http://room.apple-in vestor.com |
 |
Silver Lunatics NOT in Short Supply Posted by: TheAppleInvestor
Video duration: 180 seconds You'll never go poor by underestimating the intelligence of Silver lunatics on YouTube! |
 |
Silver Bugs as Useful Idiots Posted by: TheAppleInvestor
Video duration: 251 seconds Silver is not money, it's a commodity. And the people who are fanatical against this viewpoint are nothing more than the useful idiots of the charlatans that make money from the volatile market the lunatics create. http://room.apple -investor.com |
 |
Silver Bubble Theory Posted by: TheAppleInvestor
Video duration: 467 seconds Here's my theory of what started Silver on its meteoric rise to $50 per ounce. |
 |
Trader Motivation Posted by: TheAppleInvestor
Video duration: 128 seconds What is your motivation as a trader? Don't know? Well you should, it's the singular most important thing you need to know. http://room.apple -investor.com |
 |
Forecasting an Up Day for the E-mini S&P for Friday April 20th Posted by: TheAppleInvestor
Video duration: 124 seconds Using a Hidden Divergence I am forecasting an UpDay, at least to start the day, for Friday April 20th. |
 |
China has Spain and US by the Gonads - Idiots TA Report for Wednesday April 18 2012 Posted by: TheAppleInvestor
Video duration: 249 seconds Follow the money and you'll see that China has their dirty little fingers all over this European debt crisis. And they stand to come out on top unless we develop our own set of cajones. http://room.apple -investor.com |
 |
Idiots Market and TA Report for Tuesday April 17 2012 Posted by: TheAppleInvestor
Video duration: 371 seconds This is my take on the markets, followed by a quick run through the major futures contracts that might be affected by the market news. |
 |
TA for Idiots - Trading Divergences, Regular and Hidden Posted by: TheAppleInvestor
Video duration: 412 seconds It is imperative to understand the differences between regular and hidden divergences before you commit dollar one to a trade based on divergences. http://room.apple -investor.com |
 |
Technical Analysis for Idiots - Channel Volume Analysis Posted by: TheAppleInvestor
Video duration: 310 seconds Here's another case where volume tells the story of support and resistance. The lines you draw on charts are not support and resistance, volume by price tells the truth. http://room.apple -investor.com |
 |
Technical Analysis for Idiots - Support and Resistance in the S&P futures for April 16th 2012 Posted by: TheAppleInvestor
Video duration: 194 seconds Most Technical Analysts will draw lines and say this is where support and resistance lie, yet they have no idea what they're talking about. This video shows exactly where support and resistance is, and why. http://room.apple -investor.com |
 |
Trade Pattern - Symmetrical Triangle Breakdown Posted by: TheAppleInvestor
Video duration: 91 seconds Demonstration using time lapse video to show the impact of trend and volume. http://room.apple -investor.com |
 |
Technical Analysis for Idiots - My Market Theory Posted by: TheAppleInvestor
Video duration: 324 seconds This is the first episode of my TA for Idiots series. In this video I describe my theory of the markets as the basis for all future episode analyses. http://room.apple -investor.com |
 |
Opening Range Breakout System - an Automated Trader Posted by: TheAppleInvestor
Video duration: 155 seconds This system is used to discover the optimal criteria to use when implementing the Opening Range Breakout Strategy. I can use the system do discover the optimal settings for any stock, ETF or futures contract. And people that participate in my webinar will benefit from this work. http://room.apple -investor.com/openin g-range-breakout/ |
 |
Opening Range Breakout Trade Setup Posted by: TheAppleInvestor
Video duration: 421 seconds The Opening Range Breakout Trade (ORB) has been around for a while and for some traders it has made their trading career. This video describes the trade and the setup. If you would like to learn more about the trade, I'm offering a webinar. Go to the following URL to register... http://room.apple -investor.com/openin g-range-breakout/ |
 |
The Essentials of a Trade Plan Posted by: TheAppleInvestor
Video duration: 518 seconds This is the reader's digest version of a webinar series I will be providing on becoming a strategy trader. That's a trader that trades a strategy, not to be confused with a discretionary trader who trades based on no specific strategy, but rather what looks good at the time. http://room.apple -investor.com |
 |
What is a Money Management Strategy? Posted by: TheAppleInvestor
Video duration: 267 seconds Last video I talked about the importance of a Money Management Strategy, this video I describe what it is. http://room.apple -investor.com Music by @WhistlersBrother from the Album My Lucky Day, get it on iTunes at: http://itunes.app le.com/us/album/my-l ucky-day/id418000079 |
 |
The Secret of Money-Risk Management and Execution Posted by: TheAppleInvestor
Video duration: 271 seconds The importance of proper money and risk management, along with execution cannot be understated as the principle things that will determine whether or not you are profitable in your trading. http://room.apple -investor.com |
 |
Oil Speculators vs Natural Gas - You Are Getting Ripped Off Posted by: TheAppleInvestor
Video duration: 175 seconds The US is focusing once again on Big Oil and Oil Speculators as the problem to our energy woes, when in fact the real problem is the inattentiveness of the US to the real solution, and that's Natural Gas. http://room.apple -investor.com |
