FOREX TRADING TOOLS

Essentials

Trading in the FOREX market can be quite challenging for both novice and seasoned traders alike. This is why all forex traders with any level of success will augment their decision-making skills by using a number of Forex Trading Tools. These tools can help traders facilitate and determine profitable entry and exit points.

ESSENTIAL FOREX TRADING TOOLS

Tool #1

CHARTING SOFTWARE

Forex Charting Software is an analytical, computer-based tool used to help currency traders with foreign exchange (FX) trading analysis by charting the price of a given currency pair along with various indicators.

In Forex Trading, the most obvious place to start is with the charting software you’ll need to chart the various currency pairs you may be trading. Your choices range from the charting packages offered by your broker, to the famous (and free) Metatrader package, and all the way to paid charts such as Sierra, Ninja Trader, and Tradestation.

Tool #2

TECHNICAL ANALYSIS

Technical Analysis - Forex Tool 2020

Technical Analysis is described as: a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume – Wikipedia Traders utilize technical indicator tools to assess the opportunities that fall under their trade plan for taking a trade in Forex.

There are drawbacks that come with using trading indicators but most of them come with how traders use them. Indicators are not the “holy grail” nor do they have an “uncanny ability” to predict the next market move. They are a tool that can have a place in a well thought out and tested trading plan.

Traders will find they have favorite indicators they like to use which is important because you are able to expertly apply them due to the amount of time you use them. You must become an expert at whatever trading tool you use and any market including Forex, is not exempt.

Let’s look at one very popular indicator known as Trend Lines. One of the oldest indicators around and are used to not only to determine trend, but also strength of trend and can even be used for entry into a trade.

Number one is the bottom trend line, number two is a copy of number one applied to the top and forming a channel. You can see how price is bouncing off both sides of the channel. trendline forex trading toolDrawing trend lines is straightforward. You simply connect two or more higher swing lows in an uptrend and lower swing highs in a downtrend as you can see in the chart above. I find trend lines to be powerful and can set up some very good channel trades where you short the top and buy at the bottom. Of course you need a trade plan for this but start experimenting with trend lines if you are new to them.

Tool #3

CALCULATORS

Forex Online Calculators allow clients to make accurate assessments at the right time to make the most out of their trades. Online calculators save you time when performing basic calculations. Some of the most common online calculators used by traders include pip, margin, volatility and profit calculators. Currency converters are another popular type of tool that could also be considered a calculator.

Tool #4

FOREX SIGNAL

Forex Signal Trading is one of the most popular tools used by Forex investors to maximize their earning potential inside the Forex market. This tool includes identifying trends by analyzing charts. There are also indicators that you can use to do Forex signal trading.

Forex signal trading helps you, as the trader, on what is the good time to buy or sell a particular currency. Signal trading is usually done by brokers and analysts that you can hire to use signal trading. Signal trading can really give you the chance of acquiring huge profit in the Forex market.

Tool #5

COPY TRADING TOOL

One of the most interesting trading innovations of the past decade has been social or copy trading. Copy trading uses technology to duplicate the trades of successful traders you follow (who are also known as forex signal providers).

Every time they trade on their account, you can automatically copy their trades scaled for your risk preferences directly into your account. Keep in mind that most markets experience exceptional conditions from time to time and that should be taken into consideration when you take positions based on a signal.

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RISK WARNING

Trading in the financial markets (including trading on margin) provides a wide range of opportunities and enables investors ready to take risks to make high profits, but it carries a potentially high level of risk of loss at the same time. Therefore, prior to trading you should take into careful consideration whether such operations are suitable for you in terms of your level of knowledge and financial situation. Your due diligence and Forex Trading & Investments’ Education is therefore highly recommended.