This is the simplest Forex trading system. The beginners usually start with this system. It is easy to use, it gives clear entry signals but at the same time this system can't bring significant profits. It is the simplest system of trade on Forex - usually beginners start from it. As we have already mentioned moving averages are the most widespread indicators for Forex trading.
The first strategy. To our chart, let's apply a moving average with the big period.
We'll perceive the situation in which the price is higher than the average one as a bullish trend.
The situation in which the price is lower than the average one will be identified as a bearish trend.
Accordingly, the signal to buy occurs when the price crosses the moving average from the bottom upward.
The sell signal or the signal of reverse of the trend occurs when the price crosses the moving average from the top downward.
On the chart you can see the sell and buy signals.
The second strategy. Let's study the next strategy, which is a simplified version of the previous one. To the chart we add two moving averages with a different period.
We open a buy deal when the moving average with a shorter averaging period crosses another moving average with a longer averaging period from the bottom upward.
If the first moving average is crossing the second one from the top downward, we sell the currency pair.
In other words, instead of the price line crossing the long-term period moving average, we use the short-term moving average. On the chart you can see the sell and buy signals.
You can also see that the second strategy has a greater delay than the first one.