Forex Trading - A Simple 1-2-3 Step Process For Using Moving Averages To Find the Trend
Finding a healthy trend in the forex is the first step to making money. There are many ways to identify trends, but one of the quickest and simplest is just to use moving averages. In this example, I will show you how to find a trend using a 6-period simple moving average and a 23-period simple moving average.
1. The 23 SMA should be sloping sharply.
The more sharply the 23 SMA is sloping, the stronger the trend is. Strong trends are very, very good.
You would like to see the 23 SMA at a 45-degree angle. This indicates that we want to be trading in this market, and we want to be trading in the direction of the trend.
2. Prices should be mostly above (or below) the 6 SMA.
We have already touched on this a bit, but the reason we want price to be on the trending side of the 6 SMA is that it tells us that the current price is trending even more than is has been in the past 6 periods.
This indicates that the trend is no where close to ending, and it might, in fact, just be beginning.
3. The 6 SMA should be basically parallel with the 23 SMA.
You want to see this parallelism (is that really a word?) because it indicates that the short-term price is still as strong as the long-term price.
Toward the end of every trend, the price will not be as strong. Which moving average is going to be the first to reflect this weakness?
That's right! The 6 SMA. Why?
Because the 6 SMA only averages the last 6 closing prices, it is going to reflect price changes faster.
And as a trend ends, the 6 SMA starts to bend back toward the 23 SMA. This is the first indication that the trend may be ending.
We don't want to be trading a trend that is about to end, so you want both simple moving averages to be moving sharply in the same direction.
Forex Robot Trading - Why Traders Continually Lose With Automated Forex Software
The industry in online Forex trading packages is huge, these packages cost around a hundred dollars and promise an income for life, with no effort but the result for traders is losses as these systems never re-produce the track records they claim, let's look at why.
The track records are always better than the worlds top fund managers can achieve and the cheap software programs do it with less drawdown. The logical question to ask is - if these programs really so perform, why have banks and brokers, not sacked their top dealers ( on multi million pound salaries) and replaced them with a cheap software package?
The answer is because there is a big differene between making a claim and backing it up with evidence of real results. The fact is the cheap software packages, never produce a verified track record of gains.
If you look at most, you will see the word "simulation" in the disclaimer which means - the vendor has simply obtained their results, knowing all the closing prices, by going back across closing data. Anyone can make money, if they have the price in advance but that is not the real world of Forex trading.
Other vendors give you results, they say are true but there is never an independent clarification of results and do you really, want to rely on figures from the person selling the system?
These systems are get rich quick schemes which traders will continue to buy, just like the buy horse racing and betting systems and just like these systems, they don't work. If everyone could get an income for life without effort, the whole world would trade for a living, there would be no recession or credit crunch and we would all buy financial freedom cheaply.
If these packages worked 95% of traders wouldn't lose money but the good news is anyone can learn to trade as Forex trading is simple but you must make an effort and have the mindset to succeed. Spend a few weeks, learning to trade Forex correctly and your efforts will be well rewarded, with a great second or even life changing income and leave the Forex robots to the 95% of losers.
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