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
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 than enough to make a living
trading the forex markets with the 5 EMAs Forex System.