Trading in Foreign exchange can be tricky for both novice and professional traders. Therefore, forex traders with any level of expertise will increase their decision-making skills by using various FX trading tools. These tools can help traders figure out profitable entry and exit points. Forex trading tools can be accessed by paying a subscription fee or offered free of charge by a forex broker, a trading platform provider. These platforms also provide trading cues that can be helpful for novice traders.
Every person needs some skill to have excellence in a field and you need tools to get the sharpness. Similarly, a successful Forex trader will grow and get bigger profits only when they’re using the best quality forex tools. We will be discussing one of the most important tools of the forex market in this article.
Economic News Calendar Tool
One of the most important tools for the forex trader is the economic news calendar. It provides traders with the future market consensus, as well as previously released outcomes, for key economic data and important geopolitical events. It also usually gives details of the timing of central bank policy statements, monetary policymaker speeches, and elections.
Financial Newswire Access
Part of Economic calendar is Financial Newswire Access. Such newswire outlets give details about respected financial newswires and newspaper names as the Wall Street Journal, MarketWatch, Reuters, Bloomberg, and the UK’s Financial Times, as well as other lesser-known business publications and online resources.
Pip Calculator Tool
Working with the amount that is expressed in foreign currencies can be confusing if one is not familiar with the pip valuation system. A “pip” is the smallest trading unit for a currency pair, and it is usually worth a different amount depending on the base currency and the currency involved in the scenario. A currency pip calculator is a tool that enables the trader to determine the amount a pip is worth based on the size of their position in their local currency.
Broker Spread Comparison Tool
One of the most vital elements that spread sensitive traders examine before choosing a forex broker. A dealing spread is preferred by traders since getting in and out of positions can be less costly if a trade can be executed at better exchange rates, better than generally offered by the tighter spread.
Forex Time Zone Converter
The time periods that a trader wants to be active in the forex market can make a huge difference to their bottom line. The world’s major forex trading markets are in New York, Tokyo, London and Sydney, which all operate in different time zones. The business hours of these key trading centers can overlap. This converter can help to know when forex trading is most active and the market is most liquid. Trading activity, liquidity and market volatility are three important aspects which are necessary for a financial instrument to be traded effectively.
Forex Volatility Calculator
Another most important element which is necessary for successful trading is market volatility. Currency pairs that have a limited range are typically not the best currency pairs to trade with. Calculating volatility is not a trivial matter with the amount of currency pairs available to trade in. It is best if you leave calculation of volatility to a properly programmed computer. A good forex volatility calculator is capable of breaking down the historical volatility into different time frames, such as 1 week, 1 month, 3 months and 1 year.
The Currency Correlation Tool
As the exchange market is made up of various pairs of currency, so correlations exist between currencies which are calculable. The correlation can be positive or negative, with correlations typically being more prominent in some pairs than in others.
Forex Trading Platform
One of the most known Forex Trading Platforms is MetaTrader4. There is no competition available to this online forex trading platform. This comprehensive forex trading platform has numerous features that are necessary for the serious forex trader. It includes a complete technical analysis functionality that allows traders to keep record of currencies in real time and apply a number of different technical oscillators and other indicators to them. One of the various advantages of MetaTrader4 is that it is used to trade with most online forex brokers, and it has a wide community of traders using the software that can help if the trader runs into problems.
Keeping A Trade Journal
Taking notes and record of journaling trades is a valuable way to learn from trading. The recorded history of each trade, reason for its initiation and liquidation of trade can definitely help a trader get insight into trading habits. Also, this record can help a trader refine his trading skills. Learning from mistakes has always been important, so once done, stop committing those mistakes again in the future. These are some of the benefits of keeping a Trade Journal.
Most of the trading tools mentioned above can be obtained online freely. Trading regularly and profitably in the forex market can be a challenging venture, and the fact is that most retail traders tend to lose money in the market.
Nonetheless, with a detailed trading plan, the proper forex trading tools, and sufficient knowledge of the currency market, your chances of success as a forex trader can improve significantly.