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:
 |
Gerald Celente on China Posted by: clearasvodka
Video duration: 124 seconds How much are foreign companies dependant on the growth model of China? http://www.chinah ush.com/2012/04/21/h ow-much-are-multinat ional-companies-depe ndent-on-china/ |
 |
Made of Paper Chinese Homes Posted by: clearasvodka
Video duration: 361 seconds Vanke City Property Development Inc. http://www.china. org.cn/business/2012 -03/26/content_24984 849.htm Look familiar???????? |
 |
Gold History Store Posted by: clearasvodka
Video duration: 175 seconds Precious metals store called Gold History. The brand is a popular producer of gold & silver items for gifts, collectables and investments. Year of Dragon Lunar Coins Coins of the World Ingots, bars & jewelry ****Recorded on mobile device (Sorry for the poor quality & audio) |
 |
Street Barber Posted by: clearasvodka
Video duration: 47 seconds Cut & Shave for 10 yuan Need a cut & shave on a budget? Many street corners in Chinese cities have outdoor independant barbers that will fix you up on the cheap. Same goes for most of Asia, India, etc. In most American cities the authorities would have a fit, right? Hey, I wonder if this gent is paying his taxes to the Chinese Communist Party? |
 |
Construction Site, Jiangsu Province of China Posted by: clearasvodka
Video duration: 404 seconds Jiangsu Province build site for high rise housing development. A brief look into one of the hundreds of housing projects designed to provide urban housing for China's growing needs. |
 |
Chinese New Year 2012 Posted by: clearasvodka
Video duration: 147 seconds Happy New Year 2012 Year of the Dragon A cold & lonely Chinese New Year in northern China... |
 |
Bestsellers in China Posted by: clearasvodka
Video duration: 205 seconds Top selling books in China today. *Video shot using mobile device. |
 |
GLD & SLV Posted by: clearasvodka
Video duration: 357 seconds Gold & Silver prices fall a fourth day on worries about Europe's crisis among other actions taken behind the scenes. There is some speculation that the gold seized by the U.N. (a.k.a the United States) from Libya (Gaddafi's Gold) was dumped in the market. Who knows? The rocky ride continues. BUY AND HOLD. |
 |
2001 Panda & Chinese Housing Bubble Posted by: clearasvodka
Video duration: 558 seconds 2012 Chinese Panda Coin http://news.coinu pdate.com/chinese-go ld-and-silver-panda- coins-1090/ Chinese Housing Bubble just beginning. 2012 should be a real depressing year for real estate. http://www.chinad aily.com.cn/usa/busi ness/2011-12/14/cont ent_14263507.htm |
