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:
 |
Greeks and Freaks Posted by: timprophet
Video duration: 753 seconds Stock market commentary by Tim Knight of Slope of Hope financial blog |
 |
Unstoppable Posted by: timprophet
Video duration: 632 seconds Stock market commentary for February 1, 2012 |
 |
SSDD Posted by: timprophet
Video duration: 672 seconds Stock market commentary by Tim Knight of Slope of Hope financial blog |
 |
Senso Unico Posted by: timprophet
Video duration: 535 seconds Stock market commentary by Tim Knight of SlopeOfHope.com |
 |
Finally! Posted by: timprophet
Video duration: 648 seconds Stock market commentary by Tim Knight of the Slope of Hope financial blog |
 |
Post-AAPL Post-FOMC Posted by: timprophet
Video duration: 900 seconds Stock market commentary by Tim Knight of Slope of Hope financial blog |
 |
Day 14 of Captivity Posted by: timprophet
Video duration: 521 seconds stock market commentary by tim knight of the slope of hope financial blog |
 |
Burning Out His Fuse Up Here Alone Posted by: timprophet
Video duration: 121 seconds model rocket, aerial camera |
 |
Drifting Higher Posted by: timprophet
Video duration: 693 seconds Market commentary |
 |
Earnings Galore Posted by: timprophet
Video duration: 669 seconds Stock market commentary |
 |
Reversi Posted by: timprophet
Video duration: 726 seconds Stock market commentary for January 17 2012 |
 |
Tug-of-War Posted by: timprophet
Video duration: 653 seconds Stock market commentary |
 |
The Slowly-Drying Paint Posted by: timprophet
Video duration: 634 seconds Market commentary |
 |
Well?!?! Posted by: timprophet
Video duration: 578 seconds Stock market commentary, as usual |
 |
Make or Break Posted by: timprophet
Video duration: 710 seconds Stock market update and commentary for January 10 2012 |
 |
New Zoo Review Posted by: timprophet
Video duration: 739 seconds Market commentary |
 |
Short Ideas for the New Year Posted by: timprophet
Video duration: 623 seconds Short-selling ideas for slopeofhope.com |
 |
Christmas Long Johns and Shorts Posted by: timprophet
Video duration: 397 seconds stock market trading ideas prophetcharts tim knight slope of hope |
 |
What the ETFs Are Telling Us Posted by: timprophet
Video duration: 557 seconds stock market commentary |
 |
Ugh! Posted by: timprophet
Video duration: 557 seconds stock market commentary |
 |
Superb Shorts Posted by: timprophet
Video duration: 525 seconds short idea suggestions |
 |
Ship a Rip Posted by: timprophet
Video duration: 609 seconds stock market commentary |
 |
Prometheus Posted by: timprophet
Video duration: 694 seconds Stock market commentary, just like always. What do you think? |
 |
Favorite Shorts Posted by: timprophet
Video duration: 538 seconds Stock market commentary |
 |
My Take on the Week Posted by: timprophet
Video duration: 694 seconds stock market commentary |
