As traders, we have many things to take into consideration. We have to implement many different factors and indicators in our analysis in order to succeed in this business, regardless of if you trade short or long term. These can include fundamental indicators , technical indicators , or both. I have seen many traders, especially new ones, that overload their charts with all sorts of lines and indicators, that then become a burden for traders instead of helping them.

Charts should be easily understandable and the indicators should be simple to interpret. Simple indicators work better because more traders use them, increasing the possibility that trades based on these indicators will go the right way. One of the simplest indicators is the moving average MA.

You just wait until the price gets close to it and then decide whether to buy or sell. They act as cushions for the price, providing support and resistance. There are four types of moving averages; simple, smoothed, exponential and linear weighted. Personally, I use three or four moving averages on my charts. As we said above, we should keep it simple even when it comes to moving averages, so I use round numbers for them.

I use the 50 simple MA, simple MA, smoothed MA and smoothed MA. Sometimes during strong trends and in the smaller time frame charts, I throw in the 20 exponential MA as well. They can be applied to the opening or the closing price of a candle, but it is advised that you apply them at the closing price.

The numbers for the moving averages show the number of candles used to calculate them. For example, for the 50 MA in the hourly chart, the closing price of the last 50 candles has been calculated. Because all brokers offer this indicator with their platform, you just need to know how to use them for trading.

For a review on candles: Candlestick - Forex Trading Strategies. A moving average is a useful tool for indicating a trend. If the MA is below the price, we are in an uptrend.

Moving Average Cross Strategy — Forex Trading Strategy

If it is above the price then we are in a downtrend. If the price is below and then moves above the moving average, we can consider a change in the direction of the trend.

It broke the 50 MA on the fourth month, which indicated that an uptrend might have begun. About a week later it broke the MA, confirming the uptrend.

These are fake outs that we should be aware of and this is another reason why we should use more than one moving average.

Another safer way to spot trends using the moving average strategy MA is the cross over. In this strategy only two moving averages are used, usually 10 and 20 MAs. We know that the smaller MA moves faster and it is bound to cross over the other MA once a trend begins, hence the name of the strategy. In our case the green line crosses the red one.

When this happens the trend is confirmed and we should enter in the same direction. Both strategies we explained above are lagging ones and moving averages work well on them, but I'd like to use MAs as leading indicators.

Moving averages are very useful tools for providing resistance and support to the price on an uptrend or downtrend. Again, it is better to use at least moving averages for this strategy; because once one MA is breached another one comes into play. Instead, it makes a move up, corrects for some time, then it resumes the up move again.

For a recap on support and resistance: Support and Resistance Levels - Forex Trading Strategies. Quite often corrections are bigger than our equity. This means that if we want to buy in an uptrend, we should wait for the correction to be over. But how do we know when the correction is done? It works best when we add another indicator like Stochastics or RSI to this strategy.

During the uptrend on the daily chart, the price has made several corrections, retracing to the 50 or MAs. At the same time, the stochastichs have reached the oversold level.

We should place the stop a reasonable level below the MA, depending on the pair and on the timeframe. It would be safer if these corrections corresponded with the price touching a moving average on another timeframe chart. The weekly chart above shows the same pair during the uptrend. We see that the price touches the 20 exponential MA at the same time that the corrections seem to be over on the daily chart.

Some traders use daily charts, while others use weekly ones.

Forex Scalping Strategy With Exponental Moving Average

When they correspond it makes the resistance even stronger, because both groups buy the pair, therefore sending it higher. Then when the trends get weaker, these MAs are broken and the bigger period MAs do their job, so we should be careful when we decide to open positions after the trend has slowed. When the trend slowed, the 50 and simple MAs, as well as the smooth MA provided resistance. We can say the same thing for trends that begin slower but pick up the pace later.

In the beginning the longer period MAs provide support, but when the trends get stronger the smaller period MAs take their place. We can see this in the very beginning of this chart, where the 20 and 50 MAs acted as resistance in the beginning, but turned into support after the price moved above them. Is FX Market Leaders free to use? How do I start?

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Get Market Opportunities Before Everyone Else. Trading Moving Averages - Forex Trading Strategy As traders, we have many things to take into consideration. The break of 50 and MAs confirmed the uptrend.

Later we see 3 fake outs of the 50 MA, but the MA has held the uptrend intact Another safer way to spot trends using the moving average strategy MA is the cross over.

The trend is confirmed when the green MA crosses the red MA Providing support and resistance Both strategies we explained above are lagging ones and moving averages work well on them, but I'd like to use MAs as leading indicators.

Support and Resistance Levels - Forex Trading Strategies Quite often corrections are bigger than our equity. Frequently Asked Questions Is FX Market Leaders free to use? Frequently Asked Questions Is FX Leaders free to use? Learn more about Forex Foreign Exchange Market FX Leaders Trading Guide Top Recommended Forex Brokers Daily trader's Insights How to choose a Forex broker Forex Trading Strategies How to use free Forex signals.

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