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:
 |
For more information on this, visit the blog at blog.tipster.ca ... Posted by: TipsterOnForex
Video duration: 230 seconds For more information on this, visit the blog at blog.tipster.ca and read the post from March 4, 2012. |
 |
Trendline Trade in MetaTrader MT4 Posted by: TipsterOnForex
Video duration: 495 seconds Tipster Trendlines for MT4 Draws lines for you, drag the lines, turn on the EA, it will place trade for you based on sloped lines. Entry, stop, and targett are adjusted at each new bar. Visit blog.tipster.ca |
 |
Tipster Trendlines v2.1 Posted by: TipsterOnForex
Video duration: 591 seconds Trade directly from your Amibroker charts. This AFL code allows you to draw three lines on the Amibroker chart and place an error free trade. You must have Amibroker 5 or better, IBController (from Amibroker website), Trader WorkStation (TWS) and an Interactive Brokers (IB) account. |
 |
How to trade from work Posted by: TipsterOnForex
Video duration: 306 seconds This short video shows you the steps you need to take to trade from work without IT knowing what your doing. Why stop at trading? Chat, surf, email, cruise porn, browse, its just like having your own prox server. |
 |
USDCAD Forex Trade Posted by: TipsterOnForex
Video duration: 321 seconds A trade using Tipster Trendlines, Amibroker code for trading from the charts |
 |
How to Trade From the Charts Posted by: TipsterOnForex
Video duration: 321 seconds This video shows you how to trade from the charts. |
 |
Risk Management with Amibroker and IB Posted by: TipsterOnForex
Video duration: 630 seconds Explains how to use the Tipster blog risk management code for Amibroker. See blog.tipster.ca for more info |
 |
Trade from the charts - Amibroker Posted by: TipsterOnForex
Video duration: 414 seconds This video explains how to install and use my code to trade from your Amibroker charts. Code is available at http://blog.tipster. ca/2008/08/tipster-t rendlines.html |
 |
SDS Update - Trading with Trendlines Posted by: TipsterOnForex
Video duration: 244 seconds Watch the video! |
 |
Trading with trendlines - SDS Ultra Short Posted by: TipsterOnForex
Video duration: 403 seconds Watch how this system enters orders with no errors, using Amibroker. |
 |
NASDAQ Scan and Short Interest Posted by: TipsterOnForex
Video duration: 550 seconds watch the video! |
 |
Applications you need to trade Posted by: TipsterOnForex
Video duration: 597 seconds Amibrokers interface to TWS, and a couple of stock picks |
 |
NASDAQ Scan and short interest Posted by: TipsterOnForex
Video duration: 342 seconds Amibroker exploration to find trending stocks with high short interest to prvide some fuel! |
 |
Trading Forex, Nasdaq, and TSX with no input errors Posted by: TipsterOnForex
Video duration: 522 seconds Placing trades with Amibroker for stocks and forex using Interactive Brokers TWS interface. Trade the TSX, NASDAQ, and Forex without input errors! |
