Like all trades, forex trading also requires certain specialized tools. These tools help a trader to trade seamlessly. Most forex trading has moved online. While this has made trading easily accessible even from the remote corner of the globe, it also has made the trade faster which requires instantaneous decisions. The right tools will help you to be more organized, be better informed and make better decisions.
News and calendars
Websites and newsletters catering to economic, forex, and financial news are used both by traders and analysts alike. Interest rates-related news from each country’s central bank, policy statements, and speeches from the policymakers along with the geopolitical and economic developments in a country critically impact the currency and the exchange rates.
Economic News Calendars are very useful, as they provide the trader with the economic data to point at future market trends as well as results of earlier impacts. They also provide news on banking, economic policies, socio-political situations, or even elections.
Currency pip calculator is a crucial tool in forex trading as forex trading is done in ‘pips’ (the lowest trading unit for a currency pair). The pip calculator allows you to determine the value of a currency against a currency of your choice. The trader has to simply enter the details like the currency pair, amount, size of the trade, position and the pip calculator calculates the pip value. This tool is crucial to keep a tab on the amounts and positions in your account.
Currency correlation tools
Currencies are valued and traded in pairs. As the forex market is made up of different currencies, traders benefit from a statistical correlation between different one currency with respect to another, that is provided by a currency correlation tool. It also indicates if the currencies will move together or apart. A positive correlation is represented when the values of the pair go up, whereas a negative correlation depicts the values moving in the opposite direction.
Time zone converters
The major forex trading centers like New York, London, Tokyo, and Sydney are situated in different parts of the world and thus operate in different time zones. The markets trader might choose to trade might make a considerable difference to the profits so a tool which depicts the time in a different time in the financial capitals of the world is very useful. The forex time zone converters differ from a normal one as it is also programmed to calculate the market volatility of the chosen markets. It can also break down this information into weekly, monthly, quarterly or annual data.
There are many popular trading platforms and you need to choose what suits you best. Look for capabilities and features which will help you trade seamlessly like providing technical analysis, market overview, charting currency pairs in real-time apart from an efficient trading function. You should also look for a platform that allows you to trade online with your broker and a broad user community that can help you in case of trouble.
You must keep a record of your daily trade. Trade journal tools help you track all your trades in great detail so that you can review them, learn from mistakes and improve your trading or form a strategy from a successful trade.
Comparison tool for broker’s spread
The broker’s spread is simply the difference between the buying price and the selling price of a currency. As a trader, you should want to know the spread as it will affect your trading. A tighter spread has a lower trading cost and will allow you to get in and out of positions easily. This is not preferable for traders who would like to hold on to a position for long. A wider spread increases the trading cost of trading and is not for you if you are a scalper or liquidate a position as soon as you get some profit.
Most of the mentioned tools are available online for free. You can also get them from your broker. Just remember that getting the popular or recommended tools will not make you a successful trader. It is better that you select yours according to your trading plan and psychology.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.