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:
 |
Ninja vs T4 (CTS) Posted by: Trader618
Video duration: 363 seconds T4 is almost identical to Ninja ZenFire and X Trader. The speed at which market updates are received, is excellent (50ms) T4 dom performaces are impressive. Many functions keep this dom far superior However, I would prefer the possibility to have a real static dom |
 |
Ninja ZenFire vs Strategy Runner TT feed after the FED announcement Posted by: Trader618
Video duration: 199 seconds SR TT feed is not fast as Ninja but it's very stable, and the price doesn't lag or freeze during fast market condition |
 |
Strategy Runner TT feed vs Ninja ZenFire Posted by: Trader618
Video duration: 153 seconds Not bad! SR with Trading Technologies data feed is close to Ninja ZenFire performance The price updates in 175 milliseconds. The best thing is that in fast market condition the platform doesn't lag and the connection is very stable |
 |
X Trader on Emini SP - Still the fastest trading platform ..with Rithmic LLC ( Zen Fire) Posted by: Trader618
Video duration: 101 seconds X Trader worth the cost |
![X Trader vs GST TT feed - It\](http://i.ytimg.com/vi/VuOnOagGXPg/2.jpg "X Trader vs GST TT feed - It\") |
X Trader vs GST TT feed - It's not the same thing.... Posted by: Trader618
Video duration: 100 seconds Well, Strategy Runner on TT is not bad at all, but X Trader is still on another planet |
 |
TransAct ES - Unfiltered data Posted by: Trader618
Video duration: 147 seconds Tried to zoom... |
 |
TransAct Scalping ES - Unfiltered data Posted by: Trader618
Video duration: 42 seconds TransAct Scalping ES - Unfiltered data |
 |
TransAct ESU8 New Unfiltered Data Feed 3 Posted by: Trader618
Video duration: 55 seconds TransAct ESU8 New Unfiltered Data Feed |
 |
TransAct ESU8 New Unfiltered Data Feed 1 Posted by: Trader618
Video duration: 108 seconds New TransAct data feed from the CME Exchange |
 |
TransAct ESU8 New Unfiltered Data Feed Posted by: Trader618
Video duration: 186 seconds TransAct has changed the data feed |
 |
X-Trader ESZ7 Demo VS X-Trader ESZ7 Real Posted by: Trader618
Video duration: 204 seconds The demo version lags about 1 second and the bid ask columns are updated slowly |
 |
X-Trader Demo VS X-Trader Real Posted by: Trader618
Video duration: 202 seconds Big difference...the demo is unreliable Demo on the left... Real on the right |
 |
TransAct vs X Trader on CME - ER2Z7 Posted by: Trader618
Video duration: 181 seconds Once again X-Trader data feed is more speed than TransAct feed on CME exchange. However TransAct has the same speed on Eurex exchange |
 |
TransAct vs X Trader on CME - ESZ7 Posted by: Trader618
Video duration: 211 seconds X trader has a more fast connection to the CME exchange |
 |
TransAct vs X Trader on EUREX - DAX Posted by: Trader618
Video duration: 153 seconds No speed difference on Eurex exchange |
 |
ZEN FIRE ESU7 Posted by: Trader618
Video duration: 80 seconds Market Depth |
 |
ZEN-FIRE NINJA ER2 Posted by: Trader618
Video duration: 106 seconds DOM & CHART Mini Russell 2000 |
 |
ZEN-FIRE NINJA Posted by: Trader618
Video duration: 185 seconds Depth of Market |
 |
DOM Comparision Posted by: Trader618
Video duration: 95 seconds TransAct Vs. Strategy Runner |
