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:
 |
Fioso intro Posted by: ilyanaLanai
Video duration: 23 seconds Fioso intro |
 |
BKTraderFx Weekly Commentary 12.15.07 Posted by: ilyanaLanai
Video duration: 234 seconds forex |
 |
BKTraderFx Weekly Commentary 12.07.07 Posted by: ilyanaLanai
Video duration: 230 seconds ommentary |
 |
Kathy Lien FX Analysis 12.4.07 Posted by: ilyanaLanai
Video duration: 314 seconds FX |
 |
BKTraderFx Weekly Commentary 11.30.07 Posted by: ilyanaLanai
Video duration: 306 seconds weekly commentary |
 |
BKTraderFx Weekly Commentary 11.24.07 Posted by: ilyanaLanai
Video duration: 304 seconds Weekly |
 |
BKTraderFx Weekly Commentary 11.16.07 Posted by: ilyanaLanai
Video duration: 295 seconds weekly trading session review |
 |
BKTraderFX Weekly 11.07.07 Posted by: ilyanaLanai
Video duration: 240 seconds weekly FX trading |
 |
BKTraderFX Guide to Netvibes Universe Posted by: ilyanaLanai
Video duration: 345 seconds Our special netvibes page |
 |
BKTraderFx Weekly Commentary 11.02.07 Posted by: ilyanaLanai
Video duration: 335 seconds Weekly discussion of FX trading setups |
 |
BKTraderFx Weekly Trade Review 10.26.07 Posted by: ilyanaLanai
Video duration: 371 seconds Review of our weekly trades |
 |
Stop Hunting BKTraderFx Posted by: ilyanaLanai
Video duration: 288 seconds Stop Hunting in FX |
 |
RSI Rollercoaster Posted by: ilyanaLanai
Video duration: 587 seconds RSI Setup |
 |
Boris Schlossberg - Trading is not Logical Posted by: ilyanaLanai
Video duration: 303 seconds Boris Schlossberg on CNBC Europe discussing the collapse of the carry trade |
 |
Boris Schlossberg -Dollar Dumping Done? Posted by: ilyanaLanai
Video duration: 131 seconds How much more sell off left in the greenback? |
 |
Boris Schlossberg - Fed needs to Cut Posted by: ilyanaLanai
Video duration: 179 seconds Becky Quick and I get into an argument on the housing fiasco |
 |
Boris Schlossberg Millionaire Traders Posted by: ilyanaLanai
Video duration: 318 seconds CNBC Foreign Currency Strategist discuss's his new book, co-written with Kathy Lien, called "Millionaire Traders: How everyday people are beating Wall St. at its own game." |
 |
Boris Schlossberg on CNBC Posted by: ilyanaLanai
Video duration: 248 seconds Senior Currency Analyst Boris Schlossberg on CNBC |
