Trend Line Trades

• One way to invest in the Forex market is to study price charts in search of trends. When you discover a valid price trend, you can enter in the direction of that trend for a high risk-to-reward ratio. To identify Forex trends, use a straight line drawing tool offered by your software. These tools let you place a perfectly straight line directly on a price chart anywhere you wish. If your program does not offer a tool like this, you can still visualize a simple straight line instead. For an uptrend to occur, you need to be able to draw or visualize a straight line that connects at least three consecutive low points on the price chart. For a down trend, the line should connect consecutive high points. Then, if the trend is intact, enter a trade in the direction of that trend as prices return to the trend line. If the trend continues, you will quickly earn a profit as prices bounce off the line.
  
  

Moving Averages

• Another simple but potentially effective Forex investing idea uses "moving averages." These are technical indicators you add directly to a chart. They appear superimposed on the chart. A moving average simply averages the closing prices of the last several bars on the graph, as per your preference. You can use a 10-period average, which averages the last 10 bars, or something longer-term, such as a 200-period average. For each price bar, the average re-calculates, and the line connects these different averages. One way to invest in Forex is to buy into a currency exchange rate when prices move above a moving average line that is already positively sloped. This indicates that prices are following the positive momentum of the most recent overall price action.
  
  

Candlestick Patterns

• If you use a candlestick chart, look at visual patterns that appear on the chart without use of additional indicators. A candlestick is simply a conventional bar chart, but the opening and closing prices of each bar are emphasized by a wider rectangular region in the bar, called a "body." This creates more obvious shapes to each bar. Candlestick patterns can consist of single candlestick or multiple adjacent candlesticks. One powerful pattern is the "engulfing" setup. The idea is to buy into the market when a candle's body extends both above and below the prior candle's body, and is the opposite color. A green engulfing candle indicates that prices have dramatically rebounded from the prior bar's downward direction. This two-candle pattern often leads to higher prices.
  
  

Combining Ideas

• The best Forex ideas usually combine multiple strategies into one trading system. You could, for example, buy into a engulfing pattern only when a moving average is already positively sloped. Or you could look for engulfing patterns to occur in an up trend, as defined by a trend line. The possibilities are endless, and you should rigorously study your ideas without trading real money until you are comfortable with how they work.