FOREX MOVING AVERAGES
Forex moving averages offer a smoothed out price movement over a certain number of periods. They are often used to offer signals as the markets trades up and down.
In the simplest form the trader will by the forex symbol when the price moves above the moving average, a simple 20 period average, and sell when the price cuts below the moving average.
Another method to trade is to buy the forex symbol when the faster moving average(red,20) crosses above the slower moving average(blue,30). A sell signal would then be triggered if the faster moving average falls below the slower moving average.
The moving average is a reasonably accurate method. Other types of moving averages may give a greater weight to the most recent periods. The two most popular are the weighted and exponetial moving averages.
Although we have chosen to use 20 and 30 moving averages any period is fine as long as it suits your trading style.