Moving averages-forex

[expensif]

Hi! I heard/read somewhere that moving averages can't be used for trading forex. This is bull, isn't it?


What moving average should I use when i want to hold my trades for about 1-7 days? Is a 30-day moving average suitable? Are there any rules to follow when choosing a moving average?

Thanks.

 

[Rhody Trader]

MAs can be used in forex. I don't personally do so, but some markets do have nice trending tendencies (USD/JPY comes to mind).

30 days strikes me as being much too long for a 1-7 day hold.

 

[expensif]

Thank you for your replies!

 

[888]

200 day moving average VERY important on FX charts,(all time charts, 1, 5, 30, 60, daily etc.) . The bulls live above 200 , the bears live below 200 . Note how price wants to shoot up when it crosses above 200 and wants to dive when it crosses below 200.

JPY prefers 8 and 29 EMAs , CHF prefers 10 and 29 EMAs

Also use stochastics to back up EMAs.

If you have volume ability, also use volume indicator.

 

[Over the Top]

GammaJammer is quite correct that there is no readily available volume data for FX, but there is the possibility within some charting packages to use tick pressure as a proxy.

While I don't find this proxy volume for FX as useful (or as inevitable) with FX as I do with stocks, it is an additional tool and shouldn't be over-looked.

 

[samtron]

There is no central market place.

GJ

Hi GammaJammer,
What confuses me is, if there is no central market place, how are forex price levels generated?
Where do all these online forex shops get the prices they display?
Do you know of any online resources that explain the setup?

 

[Mornington Crescent]

1-7 days hold ?
you may have to be more specific when push comes to shove.
it wont be up to you to choose.
look at the crosses to want to trade and see what they sensibly allow you to hold for.

whatever you choose try an ma of half or quarter cycle.
so if your cross has a 4 day cycle from high to high, try 2day and 1 day ma's.
or both .....

 

[jonnyy40]

I asked Mytrack where they got their spot prices and they said 'from the forex exchange' which gave me a hollow laugh.I'm looking forward to Gamma's article.

 

[JumpOff]

200 day moving average VERY important on FX charts,(all time charts, 1, 5, 30, 60, daily etc.) . ....

Are you recommending a 200 day MA on the chart, regardless of time frame you are trading,
or do mean,
If you are trading a 5 min chart, put a 200 bar (each bar being 5 minutes) MA on it.

JO

 

[KRONOS]

JumpOff,
B) is right one, for sure IMO those "days" come from an ancient trading history so bars/candles is the meaning on any non-daily chart IMO

 

[nine]

Unless you're trading fx futures, this is wrong I'm afraid. Volume indicators on fx charts are absolutely bogus. They're a totally made up thing and bear zero resemblance to the volume actually going through the market. No-one has access to the volume statistics at this level of detail, even the banks. This is because the volume resides in several different places. There is no central market place.

GJ

In fact, even with futures the volume is not as simple to interpret as it is with stocks. I believe that this is because of the ability of traders to operate in both futures and cash markets - one example being to take a large cash position and then drive the thinner futures markets up (which drags cash up) before u unload the cash position and then the futures position dropping the market back down.

In my experience the best use of volume was to look for evidence of such manipulation and then attempt to scalp the gain that it offered.