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:
 |
FB Facebook Technical Analysis Forecast Fibonacci Posted by: lambro39
Video duration: 712 seconds join the live trade room, order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
SLW Silver Wheaton CHK Chesapeake Energy Trade Analysis Posted by: lambro39
Video duration: 610 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
Gold Short $30 in favor in 2 days - The Power of Rules based Trading Posted by: lambro39
Video duration: 272 seconds order trade system here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
DOW Forecast Trade Strategy Big Picture Posted by: lambro39
Video duration: 448 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
Day Trading Futures GOLD & emini Russell GC TF Positive Expectancy Posted by: lambro39
Video duration: 477 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
Gold Futures GC, GLD, ABX, SLW, GG, AUY Position Trade March 2012 Posted by: lambro39
Video duration: 546 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
Gold Futures sell-off Update Posted by: lambro39
Video duration: 461 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
GOLD Forecast - Price Targets Posted by: lambro39
Video duration: 577 seconds http://www.thetradin gauthority.com/ |
 |
Trading a Statistical Edge - Momentum and Fibonacci Posted by: lambro39
Video duration: 192 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
Gold Update Posted by: lambro39
Video duration: 188 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
Option Strike Targets - 24 Stocks, BAC RGLD ATI BUD UTX CHK WPRT COL IP LRCX... Posted by: lambro39
Video duration: 858 seconds http://www.thetradin gauthority.com/ |
 |
Gold Futures Targets & Forecast Trade Signals Posted by: lambro39
Video duration: 332 seconds http://www.thetradin gauthority.com/ |
 |
S&P Nasdaq 2012 Forecast Targets - Futures Posted by: lambro39
Video duration: 531 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
GOLD Big Picture Price Targets & Forecast Posted by: lambro39
Video duration: 528 seconds http://www.thetradin gauthority.com/ |
 |
USD/CHF FX Forex Currency Fibonacci Targets & Forecast Posted by: lambro39
Video duration: 330 seconds http://www.thetradin gauthority.com/ |
 |
Gold GC Futures Forecast Trade Strategy Posted by: lambro39
Video duration: 329 seconds http://www.thetradin gauthority.com/ |
 |
Muliti Market Futures Forecast & Targets - GOLD NQ YM ES emini Posted by: lambro39
Video duration: 595 seconds http://www.thetradin gauthority.com/ |
 |
Fibonacci & Ratios in the Market Posted by: lambro39
Video duration: 425 seconds http://www.thetradin gauthority.com/ |
 |
Citigroup C Price Analysis & Targets Posted by: lambro39
Video duration: 722 seconds order trade systems here: http://www.thetradin gauthority.com/enrol l/combo/ |
 |
DOW $INDU Big Picture Analysis Crash Targets Posted by: lambro39
Video duration: 381 seconds http://www.thetradin gauthority.com/ |
 |
ES emini Position Trade Targets & Forecast Posted by: lambro39
Video duration: 179 seconds http://www.thetradin gauthority.com/ |
 |
S&P ES emini Fibonacci Forecast Trade Strategy Posted by: lambro39
Video duration: 403 seconds http://www.thetradin gauthority.com/ |
 |
Silver Fibonacci Analysis First Majestic AG SLW SSRI PAAS HL Posted by: lambro39
Video duration: 633 seconds http://www.thetradin gauthority.com/ |
 |
DOW $INDU Big Picture Analysis Posted by: lambro39
Video duration: 285 seconds http://www.thetradin gauthority.com/ |
 |
DOW $INDU Big Picture Analysis NFLX & AAPL Posted by: lambro39
Video duration: 802 seconds http://www.thetradin gauthority.com/ |
