Understanding the signals is very easy Just by understanding Simple moving average signal we can earn lot of money in this market. Lets understand for indian forex market USDINR pair, how to trade.
Moving averages are lagging indicators that are overlaid on the price chart and are used primarily to help traders identify a trend’s direction, provide support or resistance, and generate trade signals. A simple moving average (SMA) is a chart overlay that provides a smoothed average of the closing prices or opening prices for a particular period. A simple moving average is calculated by adding together a specific number of
bars’ or candles’ closing prices and dividing that sum by the total number of time periods to get an average price. The formula for a five-period moving average is SMA = (C1 + C2 + C3 + C4 + C5) / 5
Longer-term averages also are used to generate signals in several ways. If the close is above or below
a particular moving average, a buy or sell signal may be generated. A moving average cross is formed by using two separate averages that are based on two different time frames that then are used both to confirm trending price action and to generate trade signals.
When the shorter-term average crosses below the longerterm one, it is a sell signal and the trend is presumed to be down; similarly, when the shorter-term average crosses above the longer-term one, it is a buy signal and the trend is said to be up. Similarly, if price is above the moving averages, the trend is said to be up, and if price is below the moving averages, it is down.
Understanding this:, lets see the cross-over points in the about diagram & trade it
1st trade signal is up trend and the cross over indicates its a Buy signal at 48.86 & Sell signal at 48.68
48.86 - Sell
48.68 - Buy
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0.18 - Profit i.e. (18 paisa for a single trade)
- lets consider on an average everybody succeed to get the movement of 15paisa
- For lot size of 10 that is investment of 10,000 rs net profit earned is 1350/- ruppes in a single trade
2nd trade signal is down trend, at the cross over point it is showing the sell signal first and then buy signal
48.68 - Buy
48.75 - Sell
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0.07 - Profit
- lets consider on an average everybody succeed to get the movement of 5 paisa
- For lot size of 10 that is investment of 10,000 rs net profit earned is 450/- ruppes in a single trade
So for successful 2 trades in a day with 10 lot size amount earned is 1800/- rs. that is 5.5% with a single day. It's the potential of forex trading market
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