Among one of the important concepts a new forex trader should know
is what a Moving Average means, how it's calculated and what its use as
a trading indicator is.
Moving Average is defined as a technical indicator that shows
the average value of a particular currency pair over a previously
determined amount of time. This means, for example, that prices are
averaged over 20 or 50 days, or 10 and 50 min depending on the time
frame you are using at the moment of your trading activity.
As an averaged quantity, MA's can bee seen as a smoothed
representation of the current market activity and an indicator of the
major trend influencing the market behavior.
The basic mechanics of how Moving Averages can tell you where
the forex market is moving (up or down), at the moment of your analysis
is by considering two different time frame Moving Averages and plotting
them on the forex chart. It is very important that one of these MA is
over a shorter time period than the other one; let's say one will be
over a 15 days period and the other over a 50 days period. Most trading
station software available by a number of brokers will let you do this
plotting and much more.
Recently there has been the realese of a new forex trading system called "The 5 EMAs FOREX SYSTEM".
This system will allow you to identify both entry and exit points with
incredible accuracy. He even claims you can convert $1000 into $1000
000 in just 24 months. He may be exaggerating a bit on this, but his
plan of action and use of moving averages is quite outstanding and
accurate.
Depending upon the exit strategy selected, the system generates
monthly returns of between 30% and 55%. Which is more tha enough to
make a living trading the forex markets with the 5 EMAs Forex System.
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