Whether you are a beginner or a seasoned trader, you need the right trading tools to help you augment your decision-making skills if you want to achieve any level of success. Most of these tools are offered free of charge by trading platforms, forex brokers, or websites that specialise in forex and financial news, while others are paid for by subscribing to a service.
Economic News Calendar Tool
Off all the trading tools, an economic news calendar is among the most popular and useful for forex traders. It lists all future fundamental economic news releases that will have a bearing on a country's currency valuation. An economic calendar provides traders with relevant geopolitical events, future market consensus, as well as previously released outcomes. It also lists the timing of elections, monetary policymaker speeches, and central bank policy statements.An economic calendar will also tell you the degree of impact that the upcoming release is likely to have. Whether it will have large, medium, light, or no impact at all, as well as information on the details and impact of previous releases. So, before you begin your trading week, make sure to check your economic calendar for upcoming events and their predicted impact.
Financial Newswire Access
If you want to succeed in the financial markets, then you will find the financial newswire amongst your most important trading tools. It will help you keep your eyes and ears on vital economic news disseminated by a wide range of financial publications.Interest rates play a role in the valuation of a country's currency. That is why news from monetary policymakers and central banks around the globe should not pass you by. Policy statements, official press conferences, and reports of speeches from the central banks are quickly published on financial newswires, and having access to such will give you an edge in the market.Vital economic news such as adverse geological events, events in natural resources, political situations, and employment levels all have an effect on the valuation of currencies. Ignore a financial newswire to your detriment.
Calculators
Calculating volatility, profits, margins, and pips can be a headache without the right tools. Forex calculators come in handy to help you quickly determine these metrics and streamline your trading experience. There are several key calculators that should be available to your through your broker
Volatility Calculator
The volatility calculator helps traders employ money management strategies by reducing their position sizes at times of high volatility. It computes historical volatility in real-time for each currency pair using past information on exchange rates for several timeframes which can range from one week to one year.
Currency Pip Calculator
The pip calculator displays the pip value. It comes in handy when you want to determine the value of pips on your trading position in local currency.
Profit Calculator
As exchange rates fluctuate in a currency pair, so will your profit and loss in your trading position. A profit calculator helps you compute your position’s profit or loss with changing exchange rates.
Currency Converter
A currency converter uses the current exchange rate to display the value of one currency relative to another. Just input the units of one currency, and it will convert it into the other at the current exchange rate. By calculating the equivalent currency value, you can easily size your positions and manage your money
Margin Calculator
Margin calculators will quickly compute the margin percentage, the required margin, and the amount you need to maintain a trading position, depending on the contract size, accounting currency, and the financial assets you are trading.
Time Zone Converter Tool
The time zone you choose to trade can have an influence on your profitability. A time zone converter tool is incredibly useful to your trading when you want to monitor market overlaps among the four major trading centers of London, Tokyo, Sydney, and New York.An overlap of trading sessions among any of these four trading centers comes with a spike in volatility, liquidity, and trading volumes in some currency pairs. Knowing which pair to trade, and the best time to trade it can be a game-changer in your trading efforts.
The Currency Correlation Tool
If you want to determine historical interconnectedness between the exchange rate movements of different currency pairs, the currency correlation tool comes in handy. Correlation coefficients values range from -1 to + 1. When a currency pair has a correlation coefficient of +1, it is said to have a perfect positive correlation, while a pair with -1 has a perfect inverse correlation. A pair with 0 has no correlation, meaning it moves randomly. Positively correlated pairs move in the opposite direction with negatively correlated pairs. For example, the Swiss Franc has a positive correlation with the Euro. So, the USD/CHF will have an inverse or negative correlation to the EUR/USD, which means these currency couples will typically move in the opposite direction.
Broker Spread Comparison Tool
This tool comes in handy when selecting a forex broker. It allows you to examine the typical dealing spreads of different brokers. If you are a spread sensitive trader, such as a scalper, this kind of assessment is integral to your trading strategy.A broker with tighter spreads offers better exchange rates, which reduces the cost of entering and exiting trading positions. Wide dealing spreads can increase the cost of trading and can mean the difference between a winning trade and a losing one.
A Trading Platform
The kind of a trading platform that you choose to use as your forex trading tool can mean the difference between your success and failure. Here are some features of a good trading platform.
•It should incorporate order entry abilities
•Have real-time market data feeds
•Offer real-time trading functionality
•Should have charting and technical analysis tools
•Have a forex mobile app
•Provide high-quality economic data and financial news feeds
•Incorporate a technical analysis software
•Should be customisable to let you automate trades on set parameters
A Trading Journal
Finally, probably the most important of all the trading tools discussed, a trading journal. This is an important trading tool that allows you to document your trading history, learn from your mistakes, hone your trading strategy, and gain valuable insights from your past trading behavior. Always keep a trading journal. Every pro does! .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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