Moving Averages - Traders Using Them For Bigger Profits in Forex

Moving averages are a simple tool that any forex trader should use and here we will look at how to use them correctly in your forex trading strategy for bigger profits.

Let's first look at what they are the logic behind them and the best time periods to use.

1. Moving Averages Aims and Definitions

Moving averages come in various forms, but they all have the same aim:

To help traders identify trends smoothing out the day-to-day price fluctuations and show the average price over a set period time.

The calculation is simple:

The closing price is simply added up and divided by the period of the moving average.

2. The Logic

Prices tend to rise slowly over the long term and short term extreme price spikes ten to be a short term reaction caused by the greed and fear of the participants. These price spikes never last long and prices return to the longer term average.

3. The Best Averages to Use

Moving averages are useless in short term time frames but very useful in longer time frames after years of trading these are the moving averages we find most effective.

The 40 day moving average

Can be used for identifying longer term trends and trailing stops can then be placed behind this level.

18 - 20 day moving averages

Can be used for getting into existing trends - this area in a strong pull trend is the ideal place to look to enter new positions.

Confirmation

You do not simply use a moving average to enter a position on a dip like many traders do this is hoping or guessing and you need to remember the moving average is giving you an idea of value and the trend and should not be used in isolation.

When see prices dip to a moving average or break one and you want to take a trading signal, make sure you confirm your trading signal with momentum indicators.

We have discussed this in our other articles so look them up.

Moving averages are a simple yet effective way for forex traders to use and if used correctly and you use the right time periods you will find them an essential trading indicator you can use in your forex trading strategy for bigger profits.

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My Experiences With Forex Automated Trading Software

I got a couple of more requests from people recently wanting to hear my feelings and take on forex automated trading software. I suppose a lot of that is because anyone who has ever tried to make money online in any way shape or form can relate to it.

Two years ago I found myself in a situation where I was desperately looking for an opportunity for self employment. I'm sure you know that just from typing in making money online or work from home on any reputable search engine you'll get maybe more returns than any other phrase. This makes sense because anyone who enjoys their computer and using the internet would on top of that love to be able to make money doing it. Being a nave "noob" as they are called, I fell for a handful of get rich quick schemes before landing on the forex market.

This seemed to be a reputable oasis of sorts from the majority of scams and lemons out there. On top of that, the forex market especially attracted me because I admire any opportunity which you can take pride in. The more you put into learning about the forex market and studying the market, the better you will do. My college roommate's brother also clued me into it one night when I was visiting and told my former roommate and myself of how well he was doing.

My roommate who was himself in a similar situation in need of money and interested in working from home and I together decided that we would give the forex market a serious go. We checked out a number of books on the subject, traded bookmarks for learning sites we would come across, and basically turned preparing for this new career of ours into our day job. We both registered online for forex demo trading accounts and began trading with virtual money. We shared advice and "tips" with each other and after a couple of months we both found ourselves with a decent number of winning trades under our belts. We were ready to make the jump into real trading.

I threw down a few thousand dollars and eased into the market, making only small trades here and there. I was overly cautious at first, but I was gambling with my life savings at that point so I suppose it made sense. I slowly grew more confident and made a bit more money, at least enough to live on. I wasn't looking to get greedy and risk it all at that time.

It was about this time, several months in and about a year ago now that I heard about forex automated trading software. My friend and I asked his brother his advice and he admitted he had never tried it. Eager to have an accurate signal generator on my side to put my mind at ease, my friend and I decided to try the products which looked to be the best in the market. As they all offered money back guarantees, I figured what's the harm in testing them out. Well, a handful of these programs were utter garbage, sloppy interface and all. To make matters worse, it was a headache trying to get my money back on a couple of them.

We did, however, find a couple of winners in the pile of lemons. When I say winners I mean I nearly tripled my profits in my first month of implementing a couple of these programs. I ran their signal generators against each other and used that average to trade with and it worked like a charm. These programs offer free constant updates so they are constantly getting better.

Since then, my friend and I have each continued to grow our auto forex enterprise. We continue to monitor the forex automated trading software market for new products at http://www.forexautotradingreviewed.com and test and review them against the uniform campaigns we ran with the original programs we tested. Please take these reviews with a grain of salt, we recommend using the 8 week return policy in testing out a couple of these before you make your final decision. Once again, happy trading.

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