Forex signals are the signs that you get from your analysis that tell you when it is time to trade. There are a number of different ways that you can get forex signals and the use of moving averages is one of them. There are a number of ways that you can use moving averages and they are the most commonly used technical indicator on the market. One of the ways that traders use moving averages for forex signals is with the trends.
Moving Averages and Trends
The use of a moving average is an easy way to make a trend stand out. When you trade on the forex market trends are going to be one of the ways that you make money. By identifying a trend you can trade on the directional movement and ensure that you are making a profit. The problem that many traders have is that the trend is not that easy to determine. This is why they use the moving average to trade.
Moving Averages for Trend Lines
The one way that many traders use moving averages is to create trend lines. Trend lines allow you to easily see which way the trend is moving. You have to look for up and down trend lines when you want forex signals from the charts. Of course, when you use trend lines you have to use a confirmation tool as well. When you use a confirmation tool you will be able to confirm that you should be trading on the price movement.
Creating the Moving Average
When you look at using the moving averages you have to consider how you create the indicator. There is move to creating the moving average than simply adding it to your charts. There are a number of factors that you have to consider when you look at the creation of the moving average.
The first point you have to consider is the timeframe that you are working on. When you use a long-term chart you have to use a different moving average then when you use a short-term chart. If you do not change this then you are going to get the wrong trading signals from the indicators. The longer the timeframe of the chart the higher the parameters you need to use for the indicator.
When you apply the indicator to the charts you will be confronted with the default settings. These settings are generally the ideal settings for the hourly charts. However, you should always take the time to verify this. The parameters that you are setting will be the number of days that the moving average takes information from.
Using More than One Moving Average
When traders use moving averages to create forex signals they are going to be using more than one moving average. The parameters for the averages will be different with one being longer than the other. The signals that you are going to get with these two moving averages come when the two indictors cross. The way that the short indicator is crossing the long one will tell you which way you should be trading.
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