Choosing the best trading forex tools will heavily depend on your trading style and how you manage your money. If you are a day trader, you may prefer to use short term technical indicators when buying or selling; however, if you trade the trends, you could focus on long term charts and moving averages when establishing your positions.
Luckily, these days most of the necessary tools one needs to trade forex profitably come free on the best forex trading platforms.
When choosing the best tools, there are a few factors to consider. These include reliability; even though most of those available on trading platforms should be reliable by default, it still doesn’t hurt to test them out, especially when it comes to copy trading, which will offer you the necessary confidence of how reliable a trader performs. Then there is functionality. The tool has to perform its intended task satisfactorily under different market conditions. And finally, affordability given that most of the tools are added on trading platforms or broker websites for free, but others charge a fee.
Without much ado, let’s go over a few necessary tools to aid your forex trading journey.
The first thing you need to win at forex is utilizing an excellent trading platform. Here, non-is better than MetaTrader 4 and MetaTrader 5 that feature several tools one can use. These platforms allow one to tap into expert advisor software to automate trading and even generate trading signals. MetaTrader, with its proprietary technology, offers real-time trading functionality combined with technical analysis and charting tools. Its interface can be customized to serve various purposes. Thanks to many years of excellent service, it has built up a strong community that has devised several useful add-ons.
Time Zone Converter
As a forex trader, your bottom line is heavily influenced by the time periods you choose to be active. Some of the world’s major forex trading centers are based in New York, London, Tokyo, and Sydney, all of which operate in different time zones. However, these centers’ business hours sometimes overlap at specific periods during the day, and these overlaps offer the most liquid markets for some currency pairs. Therefore, having a tool that shows a graph of when the forex market is open in different centers is a powerful tool given than liquidity, trading activity, and market volatility are three vital factors that are key if you are to trade a financial instrument effectively.
As a trader, you should keep an accurate journal of how you trade, which helps you learn your trading behavior. Leaving comments on why a trade was initiated and why you liquidated it can offer valuable insight into your trading habits. This way, you can hone your trading skills by learning from past mistakes.
As a trader, you need access to multiple calculators to aid your currency trading journey. Thankfully all of them are freely available on your broker’s platform. Some of the most vital ones you need include a volatility calculator, which will show the volatility of a currency pair over several time frames based on its historical performance over the periods. Some calculators will derive the implied volatility from the option prices. This calculator helps you know when to increase or reduce your position size based on market volatility.
The currency pip calculator tells you the smallest whole unit of movement in a currency pair’s exchange rate and helps one determine the amount a pip is worth based on their position size in the local currency.
A profit calculator will help you know the profit or loss you will incur based on a trading position at different exchange rate levels.
The margin calculator will help determine the amount of margin required to maintain a trading position. The currency convertor will determine the value of one currency relative to another based on the current exchange rate.
In conclusion, these are just a few useful tools that you can utilize as a forex trader. Most of them are freely available online via forex brokers, news outlets, while others can be downloaded from developer websites. To be consistently profitable while trading isn’t easy, but with a well-thought trading plan, the right trading tools, and the necessary knowledge of the currency market, your chances of success increase significantly.