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:
 |
Selling Gold Option Credit Spreads for Income, Writing Calls and Puts on futures Posted by: ExpoFutures
Video duration: 505 seconds Selling Gold Option Credit Spreads for Income, Writing Calls and Puts on futures http://www.expofu tures.com http://insidefutu res.com/author/408/A rman%20Vahdatinia.ht ml |
 |
Wheat and Grains Futures and Options Trading Tutorial Information on Russian Drought Posted by: ExpoFutures
Video duration: 238 seconds http://www.expofutur es.com Expo Futures and Options Futures Trading Tutorial Wheat and Grains Futures and Options Trading Tutorial Information on Russian Drought. Buying and Selling call and put options involves risk of financial loss. Not a Recommendation to Buy or Sell. |
 |
How to trade Gold using option spreads, selling options on futures vs gold coins Posted by: ExpoFutures
Video duration: 238 seconds http://www.expofutur es.com Expo Futures How to trade Gold using futures option spreads, verticals, ratios, selling options on futures. Selling options for capital gains and income. Trading gold futures options vs. trading gold coin or gold coins. Call options and put options mentioned. Out of the money options used also. |
 |
Unsystematic Risk vs Systematic Risk Goldman Sachs Headline Risk vs Market Risk Expo Futures Posted by: ExpoFutures
Video duration: 161 seconds Expo Futures shares a brief Educational presentation of the the difference between Unsystematic Risk vs Systematic Risk using the Goldman Sachs recent headline and sell off vs the total markets behavior. Also useful to know when trading options or selling options, because commodities and indices are liquid and may be slightly less volatile than a single company. http://www.expofu tures.com |
 |
March 2010 Chart of the Day Price to Earnings ratio sp500 Posted by: ExpoFutures
Video duration: 230 seconds Expo Futures Futures and Options Trading |
 |
OBV On Balance Volume indicator Technical Analysis Trading how to tutorial Posted by: ExpoFutures
Video duration: 279 seconds http://www.expofutur es.com Expo Futures Futures and Options Trading OBV On Balance Volume indicator Technical Analysis Trading how to tutorial Video for Educational Purposes Only and not a recommendation to buy or sell. Speak to your financial professional before doing any investing. |
 |
2 9 2010 stock market index futures technical analysis gold crude oil euro dollar selling options Posted by: ExpoFutures
Video duration: 258 seconds http://www.expofutur es.com Expo Futures Futures and Options Trading Video for Educational Purposes Only. Not a Recommendation to buy or sell. There is risk of loss in trading options and futures. Ask about selling options strategies. Futures and options trading tutorial available. |
 |
How to find option symbols using web based and Firetip platforms- Expo Futures Posted by: ExpoFutures
Video duration: 432 seconds http://www.expofutur es.com How to find option symbols using web based and Firetip platforms- Expo Futures Expo Futures Futures and Options Trading |
 |
12.15 stock market index futures update crude oil gold silver technical analysis moving averages Posted by: ExpoFutures
Video duration: 247 seconds http://www.expofutur es.com 12.15 stock market index futures update crude oil gold silver expo futures technical analysis |
 |
Gold in Dollars vs Gold in Euros, Futures trading tutorial Platform Posted by: ExpoFutures
Video duration: 171 seconds http://www.expofutur es.com Unemployment Report today rattles currencies and metals. Video for Educational purposes only. Futures trading tutorial Platform |
 |
12.3.09 Spx to Gold Ratio, SP500 in Real Terms Posted by: ExpoFutures
Video duration: 205 seconds http://www.expofutur es.com educational videos for our investing lifestyle. 12.3.09 spx to gold ratio, SP500 in Real Terms |
 |
12.2.2009 sp500 to gold ratio, stock market in real prices vs nominal prices (spx to gold) Posted by: ExpoFutures
Video duration: 145 seconds http://www.expofutur es.com sp500 to gold ratio shows stocks actual performance in "real terms" instead of nominal terms. |
 |
11.30 options education stock market index futures technical analysis expo futures out of the money Posted by: ExpoFutures
Video duration: 272 seconds http://www.expofutur es.com Educational Videos for our clients and for the Investing Community. Enjoy! |
 |
11-20 stock market index futures technical analysis trading crude oil es9z esz9 expo futures broker Posted by: ExpoFutures
Video duration: 182 seconds http://www.expofutur es.com Educational Purposes only, not a recommendation to buy or sell. Expo Futures Futures and Options Trading |
 |
tour of firetip trading platform Posted by: ExpoFutures
Video duration: 557 seconds tour of firetip trading platform |
 |
How to place a bracket order when trading futures-Futures Trading Platform Tuturial Posted by: ExpoFutures
Video duration: 56 seconds Futures Trading Platform Tuturial Learn how to use bracket strategies when trading futures at http://www.ExpoFutur es.com. This video will instruct you on how to utilize Bracket Orders within our Advanced Trader. Assessing risk, and implementing prudent trade practices is easily aided by our state of the art trading technology. Expo Futures Futures and Options Trading |
