Forex Moving averages are some of the most popular and widely used technical indicators. They are used in forex trading as well as trading in other markets.
However a lot of Forex traders and stock traders make mistake while using these.
In this video I have explained what are the common mistake traders make, a simple and yet effective trading strategy based on Forex Moving averages. Also I have spent 2 minutes to explain some other important points
Forex Moving averages can be used in 2 forms -
1. Exponential Moving Average (EMA) 2. Simple Moving Average (SMA)
According to me Exponential moving averages are more accurate than Simple moving averages since EMAs place more emhasis on recent price.
When it comes to moving averages, there are 2 ways to most of the traders use it - 1. When price bounces off the moving averages 2. When Forex moving averages crossover
According to me, Moving Average Crossovers don't give a profitable entry point and that is because crossover is a lagging signal. The forex price has already advanced too much by the time Forex Moving Average do a cross over
On the other hand, bounce from a moving average is very accurate. So a bounce from Moving Average is a good point to enter the trade.
Just to mention,a crossover should be used to understand the direction of the market.