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:
 |
An Interview with Bill Poulos on ETFs - Part 4 Posted by: BillPoulos
Video duration: 325 seconds Entrepreneurial guru Norman Hallett interviews Bill Poulos about his ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
An Interview with Bill Poulos on ETFs - Part 3 Posted by: BillPoulos
Video duration: 435 seconds Entrepreneurial guru Norman Hallett interviews Bill Poulos about his ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
An Interview with Bill Poulos on ETFs - Part 2 Posted by: BillPoulos
Video duration: 540 seconds Entrepreneurial guru Norman Hallett interviews Bill Poulos about his ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
An Interview with Bill Poulos on ETFs - Part 1 Posted by: BillPoulos
Video duration: 438 seconds Entrepreneurial guru Norman Hallett interviews Bill Poulos about his ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 10 Posted by: BillPoulos
Video duration: 397 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 9 Posted by: BillPoulos
Video duration: 481 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 8 Posted by: BillPoulos
Video duration: 536 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 7 Posted by: BillPoulos
Video duration: 582 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 6 Posted by: BillPoulos
Video duration: 505 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 5 Posted by: BillPoulos
Video duration: 574 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 4 Posted by: BillPoulos
Video duration: 506 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 3 Posted by: BillPoulos
Video duration: 523 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 2 Posted by: BillPoulos
Video duration: 488 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
David Jenyns Interviews Bill Poulos - Part 1 Posted by: BillPoulos
Video duration: 567 seconds Listen in on David Jenyns interviewing market guru Bill Poulos about his product the ETF Profit Driver. For more information, visit http://www.ETFTradin gReport.com |
 |
VTTrader - Part 3 Posted by: BillPoulos
Video duration: 253 seconds Join market expert Bill Poulos as he explains the ins-and-outs of the VTTrader charting software and trading platform. For more information, visit http://www.ForexAcce lerator.com |
 |
VTTrader - Part 2 Posted by: BillPoulos
Video duration: 582 seconds Join market expert Bill Poulos as he explains the ins-and-outs of the VTTrader charting software and trading platform. For more information, visit http://www.ForexAcce lerator.com |
 |
VTTrader - Part 1 Posted by: BillPoulos
Video duration: 550 seconds Join market expert Bill Poulos as he explains the ins-and-outs of the VTTrader charting software and trading platform. For more information, visit http://www.ForexAcce lerator.com |
 |
Forex - Euro/USD Trade Posted by: BillPoulos
Video duration: 375 seconds Expert trader Bill Poulos looks at the Euro/US Dollar pair, and a trade that could have been made. For more information, visit http://www.ForexAcce lerator.com |
 |
Forex - CAD/USD Trade Posted by: BillPoulos
Video duration: 142 seconds Expert trader Bill Poulos looks at the Canadian Dollar/US Dollar pair, and a trade that could have been made. For more information, visit http://www.ForexAcce lerator.com |
 |
The Fibonacci Method - AAPL Posted by: BillPoulos
Video duration: 257 seconds Learn how to trade using the Fibonacci method with stock maverick Bill Poulos as he makes an example out of AAPL. For more information, visit http://www.stocktrad ingtutor.com |
 |
Forex - JPY/USD Trade Posted by: BillPoulos
Video duration: 112 seconds Expert trader Bill Poulos looks at the Japanese Yen/US Dollar pair, and a trade that could have been made. For more information, visit http://www.ForexAcce lerator.com |
 |
Forex - SWF/USD Trade Posted by: BillPoulos
Video duration: 320 seconds Expert trader Bill Poulos looks at the Swiss Frank/US Dollar pair, and a trade that could have been made. For more information, visit http://www.ForexAcce lerator.com |
 |
Forex - GBP/USD Trade Posted by: BillPoulos
Video duration: 284 seconds Expert trader Bill Poulos looks at the Great Britain Pound/US Dollar pair, and a trade that could have been made. For more information, visit http://www.ForexAcce lerator.com |
 |
Forex - AUD/USD Trade Posted by: BillPoulos
Video duration: 329 seconds Expert trader Bill Poulos looks at the Australian Dollar/US Dollar pair, and a trade that could have been made. For more information, visit http://www.ForexAcce lerator.com |
 |
Day-by-Day Forex - Euro vs. US Dollar Posted by: BillPoulos
Video duration: 533 seconds Go on a day-by-day forex expedition with market master Bill Poulos as he trades the Euro/US Dollar pair. For more information, visit http://www.ForexAcce lerator.com |
