Trading in the foreign exchange market can be quite challenging for both novice and seasoned traders. This is why all forex traders with any level of success will augment their decision-making skills by using a number of FX trading tools. These tools can help traders facilitate and determine profitable entry and exit points.
So, here is the list of Forex tools traders might need
Financial News-wire
It is not just about reading financial news or looking through Yellow Pages round the clock. The idea is to stay in touch with the most trusted and recognizable outlets in the niche of trading and finance.
The key reason to use this particular tool is to be aware of the international interest rate, which plays a vital role in currency valuation. Financial News-wire makes it possible to track economic and political situations across various nations, monitor current currency values, and more.
The best sources to consider are as follows:
- The Wall Street Journal
- Reuters
- Bloomberg
- Financial Times
- MarketWatch
Time Zone Converters
Trading hours can make a big difference for a trader despite the level. While major FX centers are located in different cities across the globe (London, New York, Tokyo, and Sydney), you need to stay tuned with the session overlaps when trading certain currency pairs (for example, GBP/JPY).
The idea is to know when trading sessions are open or closing down. Apart from benchmark releases or geopolitical events, the tool will be necessary even for technical traders who are eager to know the exact release time.
Economic Calendar
After you have collected all the essential news and trading factors, you need a place to keep and arrange all those pieces of information. This is where an economic calendar may help. The idea is to keep all the data easy and fast to access. When we say “data”, we mean the following:
- Central bank interest rates;
- Major economic releases;
- Geopolitical events;
- Economic statements and more.
A good idea is to choose a relevant color for each event depending on the importance. For instance, green color is for moderate releases while orange is for urgent and the most influencing events. Having an economic calendar will let you react faster.
There’s a great Economic Calendar by Investing. It is a trusted source that has all necessary filters for quick access to major events.
Calculators
From currency pip and volatility to profit and margin calculators – advanced online software makes the trading process simpler. As a rule, a chosen Forex broker delivers most of those tools. If for some reason, it does not, you may still find them on different websites provided free of charge. So, beginners may need:
- A pip calculator – it displays the pip value of a chosen currency pair you want to trade;
- A volatility calculator – it uses historical interest rate movement and adopts it to real-life conditions letting traders manage the risk;
- A profit calculator – a simple instrument developed to help beginners when defining their potential profit or loss in relevance to a specific trading position;
- A margin calculator – it calculates the margin required along with the percentage and the amount of currency needed to hold the position.
Trade Journal
Forex trading is all about analyzing, tracking, reporting, and evaluating. A trader will never be able to figure out the reasons of loss without detailed records of all steps made. While the easiest way is to learn how to trade from professionals, the most effective way is to learn trading from yourself.
A trade journal will let you keep a record of all trades you made. Apart from priceless insights, you will also be able to obtain particular trading habits and use them under real-market conditions.