HOW TO TRADE FOREX WITH MOVING AVERAGE INDICATORS

Forex trading without technical indicators is almost impossible, some traders trade forex only using technical indicators, and even become successful to make some good income. Moving average technical indicator is one of the most effective technical indicators of chart analysis. This post explains some simple techniques of using moving average indicator in forex trading. 

In the image below we can see three moving average indicators MA(4), MA(9) and MA(18). This is one of the techniques of trading with moving average indicator. The numbers 4, 9 and 18 are the periods of moving average indicators.

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In case of the above set up of moving average, a buy order is placed when the MA(4) crossing over the MA(9) and MA(18) from down. Crossing over the MA(9) by MA(4) is the first signal of bullish trend and crossing over the MA(18) by MA(4) is the confirmation of bullish trend. Sell order or short order is placed when the MA(4) is crossing over the MA(9) and MA(18) from up.

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Another technique of chart analysis with moving average is illustrated in image above, where two moving average indicators are illustrated, one is MA(4) and another is MA(50). Here the buy orders are placed when the MA(4) crosses over the MA(50) from down, and sell orders are placed when the MA(4) crosses over the MA(50) from up.

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Above image has four moving average indicators drawn on different periods. In this set up moving average indicators are MA(200), MA(100), MA(50) and MA(4). Here buy orders can be placed in every steps, where the MA(4) crosses over the MA(50), MA(100) and MA(200) from down. Even when the MA(50) crosses over the MA(100) and MA(200) from down a buy order can be placed. When the crossovers are from up a sell order can be placed.

The technique of exiting an order is when a buy order is placed at the cross over from down, the order should be closed when a cross over from up takes place. Similarly, when a sell order is placed at the crossover from up, the order should be closed when a crossover from down takes place

Moving average indicators are widely used to find entry and exit level in forex chart. They also helps in determining the strength of the trend.