Home

FX Forum

FX Traders Chat

Forex Information

OTA

 To be a successful forex trader it is vital that you have a forex trading system.
Your system and strategy for trading is your road map to profits. PRO FINANCIAL FX offers several unique forex training courses and strategies with full online support, easy to follow training videos and mentoring for up to a year. Discover how a trading system can earn you exponential profits in the forex.

 FREE Forex Training

One of the most basic and widely used indicators in a technical analyst's tool box, moving averages help traders verify existing trends, identify emerging trends, and view overextended trends about to reverse. Moving averages are lines overlaid on a chart indicating long term price trends with short term fluctuations smoothed out.

There are three basic types of moving averages:

• Simple
• Weighted
• Exponential

  A simple moving average gives equal weight to each price point over the specified period. The user defines whether the high, low, or close is used and these price points are added together and averaged. This average price point is then added to the existing string and a line is formed. With the addition of each new price point the sample set drops off the oldest point. The simple moving average is probably the most widely used moving average.

  A weighted moving average gives more emphasis to the latest data. A weighted moving average multiplies each data point by a weighting factor which differs from day to day. These figures are added and divided by the sum of the weighting factors. A weighted moving average allows the user to successfully smooth out a curve while having the average more responsive to current price changes.

  An exponential moving average is another way of "weighting" the more recent data. An exponential moving average multiplies a percentage of the most recent price by the previous period's average price. Defining the optimum moving average for a particular currency pair involves "curve fitting". Curve fitting is the process of selecting the right number of periods with the correct type of moving average to produce the results the user is trying to achieve. By trial and error, technicians work with the time periods to fit the price data.

Because the moving average is constantly changing based on the latest market data, many traders will use different "specified" time frames before they come up with a series of moving averages that are optimal for a particular currency.

  For example, a trader might create a 5-day, a 15-day and a 30-day moving average for a currency and then plot them on his or her price chart. He might start out using simple moving averages and end up using weighted moving averages. In creating these moving averages, traders need to decide on the exact price data that will be used in this study; meaning closing prices vs. opening prices vs. high/low/close etc. After doing so, a series of lines are created that reflect the 5-day, 15-day and 30-day moving average of a currency. Pivot Point Theory – why does it exist and does price actually “see them”?
How does the “Time of Day” effect price around Pivots? (This is step one in any system), Time of Day! We discuss the best strategy to trade Pivots based on the current time.
Pivot Point Breakout vs. Reversal – these are the only two options when trading around the Pivot, how do you know which to choose?
MACD – an old friend if used properly.
Pattern Confirmation – do not confuse this with “Pattern Overlap”, this is a unique confirming tool! (hint: we trade one currency based on another currency's chart) WOW!
Custom Pivot Points – most trade the Daily pivots, however do not discount the weekly pivots and the new Custom Pivots!
Daily Pivots
Weekly Pivots
Timed Pivots
Live Pivots – that's right, dynamic pivots.
   Forex Trading System