may be the most popular technical indicator because they are easy to understand.
After all, a 10-day Simple Moving Average is calculated by just taking the closing prices of the last 10 days, adding them together and dividing by 10. We can then plot those daily numbers on the chart to smooth out the market movement and get a better feel for the mood of the market. Many new traders run into problems as they use the market price crossing the Moving Average or a crossover of two Moving Averages to enter and exit the market. Typically they find that their entry and exit are late and very often find themselves with a losing trade. However, the use of Moving Averages can be of great help in determining the direction of the trend or for showing possible support and resistance levels. Here is a daily chart of the EUR/USD with a 200-day Simple Moving Average plotted on it.
We can see two things with the chart. The first is how the market has a tendency to find support or resistance on a move to the Moving Average. Those three points are noted by the circles on the chart. So if we are buying pullbacks in uptrends or selling rallies in downtrends, the use of a Simple Moving Average can help us better time our entry. We can also see the price activity that I have highlighted in the rectangle as a good example of how Moving Averages can be of great help in noting strong trending moves. The EUR/USD was moving up, was above the 200-day Simple Moving Average and the Moving Average was also moving up. When you have all three points working at the same time like the activity in the rectangle, you have a strong trending move. We would want to buy in an uptrend and sell in a downtrend. This simple technical indicator has a lot of value it today’s trading environment, but we just have to be sure we understand its strengths and weaknesses to better judge its effectiveness. Good luck with your trading!
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Read more: DailyFX – The Use of Moving Averages http://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2010-01-08-1531-The_Use_of_Moving_Averages.html#ixzz0c2i4KCPq
Posted by Aaron Chen on January 12th, 2010
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div style=’font-style:italic’ class=’byline’>by Mark Walters
The trading of foreign currencies is an exciting opportunity to earn money. Lots of people already know this, but they don’t know how to get started with it. If that is the position that you’re in, then you should seriously consider enrolling on a forex trading system course. The last thing that you want to do is go head first into the world of forex trading without having a clue what you’re doing.
So, do you know what forex essentially is? Just saying currency trading probably doesn’t mean a lot to most people. Every time a holidaymaker travels to another country and exchanges money, they are trading foreign currencies. This is a small scale example, but it’s one that everyone can relate to.
The value of one currency against another is constantly changing. You might trade your 100 USD for some amount of Euro one day, and the next day you might be able to trade those same Euro back for more than 100 USD. It could also be less. The fluctuations are usually not that fast, but you get the idea.
However, though the value of a single currency doesn’t change too much over the course of a day, the large number of currencies and the sheer volume of money being passed through the market (as much as $1.5 trillion daily) mean that there is still big money to be made. Of course, this can also make it a very risky market so a strong forex trading system course will give you the information you need to help you stay in the black.
There are a lot of things to take in when it comes to learning your way around forex. At the very least, you need to develop an understanding of how the market works and you need to know how to make use of the tools and software at your disposal.
You can either take on-line courses or go to a location that offers hands-on training for your forex trading system course. There are literally hundreds of course providers out there that can get you started in forex trading for a small fee.
Sadly, amongst the many reputable forex trading system courses, there are also some who charge extortionate fees for useless or out of date information. So, be sure to check the credentials of both the institution offering the course and the instructors, make sure that they’re coming from a successful forex background.
