Can you imagine anyone who wants to be a forex trader without having vital tools to aid their trade? These different tools have their functions for anyone who wants to yield maximum profits. It is one thing to know how to trade, and it is another thing to have tools in implementing the trading goals. Some of these tools are sophisticated and require one to perfect it before they can use them appropriately.
It will be strange to hear a trader with no idea about MetaTrader in the forex trading world, and it is one of the best forex trading platforms available. Most of these tools have new feeds, automated trading, customizations, and many others. Many starters have become professional in Forex trading due to constant practices with these tools. Without any further ado, let’s get to know more about these tools.
Different Forex Trading Tools
These different tools help traders to maximize their trading experiences, and here they are:
1. MetaTrader 4 and MetaTrader 5:
These two trading tools have numerous features for any trader to use in automating their trading signals. If you are the type who is busy with other activities during the day, the tools allow for technical analysis for the trader even in their absence. Every Forex trader enthusiast will understand how to use these tools based on their user-friendly interface.
2. Trade Journal:
One must know how to record daily trading activities to learn either they are making profits or not. A trade journey is an excellent tool for detecting the trade’s sole purpose, whether there was maximum profits or loss during the process. It is through this tool the forex trader can right his or her wrongs. By doing this, they gain more experience to avoid mistakes that will make them lose money in the future.
There are several calculators, and each of them has its functions:
i. Currency Pip Calculator
It is a tool for calculating minute movement in any currency pair exchange rate. Besides this one, determine the worth of the pip in the trader’s local currency. It could be in any lot sizes such as 1,000 currency units, 10,000 currency units, and 100,000 currency units. It depends on the trader making the trade.
ii. Volatility Calculator
The volatility calculator operates through a rate that has occurred in time past to make predictions for different currency pairs, and it could be either one week or one year. If you are lucky, you could find a calculator that can carry out numerous computations on volatility rates and help the trader control their loss.
iii. Margin Calculator
The calculator assists in maintaining margins in any trading account. Knowing the tool creates a required margin between the currency amount and margin percentage within a forex trade. Therefore, it is another essential tool for forex traders
iv. Profit Calculator
It is a vital tool to detect whether there is any profit during the trade. On the other hand, if the trade didn’t go well, it would let the trader see it. Everyone wants to trade because of the profits, not for the loss, and it is necessary to have a profit calculator.
4. Currency Converter
The converter helps in different computing currencies using the special exchange rates at the moment. For instance, if you are trading in dollars, you can convert your currency to Pounds sterling. Traders use it for sizing currencies and money management.
5. Correlation Matrix
It is merely the process whereby a currency pair relate to another currency. During the trading process, a scenario like this could happen. There are some currencies with strong correlations due to similar counter or base currency in the market, and they perform in diverse ways in trading. Traders use this to avoid unnecessary correlations in the market that will tie up their money that would have gone into other trades.
6. Time Zone Converter
Time zone converter assist forex traders in getting the exact time in different countries to know the right time to trade. It is essential to have this tool to avoid liquidation in the trade market. In the forex market, traders are only allowed to trade from Sunday afternoon to Friday afternoon. Different conditions affect the market’s volatility, such as trading volume, volatility, liquidity, and many others. Traders have to be aware that the time zone is a severe determinant factor in making huge profits.
7. Financial News Wire
Different happenings or events in the world also affect the value of various currencies. Most traders follow these events by listening to the news on BBC, CNN, and other media. As a result of this, they can analyze various trade markets where they can invest their money. For instance, you are using the time zone; if there is a disaster in that country, it will affect their currency.
In every country, the central bank release interest rates monthly to show the country’s economic growth. In addition to it, national elections, job employment, and the GDP of a nation can also influence trading’s marginal profits. For this reason, adequate technical analysis is carried out to avoid loss of income.
8. Economic Calendar
Economic news calendars are for traders who like planning their trading every week. The tool has a detailed list of the different economic releases in the past, such as policy statements, national elections, central bank interest rates, and many others. If there is any high point in trading, it will reflect on the trading market. It will not be sensible for a trader to ignore this if they want to gain in any trade. For instance, if there is a red event, it indicates the Central Bank Governor has made a vital speech that can affect the market.
Forex trading tools are vital applications that traders should use to gain geometrical profits. It is one thing to have it, and it is another thing to use it effectively. The key to successful technical analysis is through the use of these tools. Being an expert with these tools isn’t something that happens overnight, but with constant practices. You can become a professional forex trader if you could be patient and learn these tools.