Most beginners take their first look at a forex chart, and scratch their head in confusion.

"How in the world could anybody take a look at those seemingly random chicken tracks and learn how to make money with them?"

When someone comes to me as an absolute beginner, I first teach them about the basics of chart reading such as support and resistance. This brings some structure to their analysis, but they really seem to light up when I show them the power of a moving average.

Simply put, a moving average is just what it sounds like... An average of price over a certain period of time that "moves" along with that time as it elapses. One of the most common and widely followed moving averages would be a 20 period moving average. This is an average (normally of the closing price) of the last 20 "periods" or bars on the price chart.

I could spend hours telling you why 20 period moving average is important, but for the beginner this is more information than you need to start Forex trading online. Literally, all you need to know is that this moving average is a roving barrier to price. If the market is moving up, then falls back down into the area where the moving average is, the odds are high that the market will attempt to a reversal. If the market is weak, and then rallies backup to test the moving average, the odds are high that the rally will lose steam and begin to fall back down touch the lows once moving average "resistance" is tested.

This simple "rebound effect" is the core strategy behind many forex trading system. Moving averages are available on just about every free charting service, and this is really the only indicator that I have used throughout my ten year trading career.

So remember, a "MA" acts as support or resistance when tested by price. When support or resistance is tested, the odds are high that a reversal will be attempted by the market. If that reversal attempt is successful, often the market will begin to trend away from the MA". These trending moves are where the bulk of many traders profits will be realized. What a market trends, it offers those who learn forex trading a rich "risks to reward" opportunity. (simply put, on a trade like this you might risk $100 with the expectation that if the trade works out well you could profit by $300 to $500 or more...

It is these and many other high risk/reward scenarios that I look for each and every trading day

Bo Yoder is a professional trader, author, and consultant to the financial industry on matters of trading and risk management. Bo is a frequent contributor to domestic as well as international trading publications, and can be seen writing for Technical Analysis Of Stocks And Commodities, Traders, and Active Trader Magazine.

In addition to his consulting, Bo is a featured speaker internationally at seminars and industry Expos' on matters of risk management and trader development. His first book and "Mastering Futures Trading" was published by McGraw-Hill in 2004, and his latest book "Optimize Your Trading Edge" was published in the winter of 2008.

His latest project is intended to help the latest generation of Forex traders radically increase their capital so that they may have the "ammunition" needed to pursue their trading careers. For more information on this innovative and proprietary trade management strategy, please visit: [http://www.cashbomb.me]