A Complete Guide To Trading Tools For Beginners In Forex
If you’re a newbie stepping into the world of forex trading, you might have been confused and overwhelmed with the number of forex trading tools that you need to select from for your personal trader’s toolkit. But having the right set of trading tools in your arsenal is very essential for exploring and trading in the fast-moving currency market with ease. Being a beginner you will have to research well for choosing the best set of forex tools as they will play a key role in giving you a seamless trading experience. We have done that research on your behalf and brought this complete guide to forex trading tools which you can refer to while adding new tools to your toolkit. Read in article more about nas100 profit calculators.
What Are Trading Tools in Forex?
Trading tools consist of many essential and advanced tools that help someone in carrying out the process of trading. In fact, each and every element or feature that one needs for placing and executing trades in the forex market can be referred to as a forex trading tool. Some of these tools are an essential and inseparable part of the trading activity and one cannot simply access the forex market in the absence of these tools. On the other hand, some trading tools are totally optional and can be added to the toolkit for the convenience of the trader or can be left out if they are not keen to use them for trading on a daily basis.
Choosing the essential set of forex tools is quite easy but one has to do extensive research to find the best ones for them from the wide range of options available in the market. Talking about the not so essential but advanced trading tools, using them or not using them is totally your call as a trader. But some of these tools are very popular and can be a valuable addition to your trader’s toolkit as they add more ease and sophistication to your overall trading experience. Read in article more about interest based trading.
Types of Trading Tools in Forex:
There are many types of trading tools that are used by millions of forex traders on a global level. This include:
- A Trading Software or Trading Platform: This is the first and foremost trading tool that you need for navigating the forex market. One simply cannot start with trading in the absence of this essential tool as they need it for accessing the international currency market.
- Technical Analysis Tools: All tools that a trader needs to use for technical analysis of the market falls into this category. This includes charting tools giving a visual presentation of real time price data, technical indicators and more.
- Fundamental Analysis Tools: Fundamental analysis tools are used by traders to assess the impact of economic factors and news releases on the market trends. Tools like economic calendar and newswires providing you with latest news updates can be a good addition to your toolkit.
- Tools for Calculations: Forex trading involves many simple to complex calculations for properly planning and executing your trading plan or strategy. Hence forex calculators are another type of tool that is added as a part of the trading tools on forex trading platforms.
- Tools for Forex Automations: This is a type of tool that allows traders to automate the trading process with the help of automated trading softwares, expert advisers or forex robots. Automated trading tools are one of the greatest innovations in the history of forex trading. But this is one type of tool that is totally optional and can be avoided if a trader prefers to engage in manual trading only.
- Tools for Copy Trading: This is another type of tool that can be used for automated trading but through copying the trade positions of another trader of your choice. Again this trading tool is optional but can be a valuable addition if you are unable to trade on your own and want to get some help from an experienced trader.
Best Trading Tools for Forex Beginners
Metatrader 4 Trading Platform
Like we mentioned earlier, a trading software or trading platform is an essential tool for forex trading. There are many popular and advanced trading platforms that you can choose from for trading. But to mention the most popular and beginner-friendly platform, the name that tops the list is MetaTrader 4 or MT4 platform. MT4 is one of the oldest trading platforms and has become the standard for forex trading. MT4 has a wide range of trading tools that you would need for trading in the forex market from candlestick charts built-in indicators. The user-friendly interface and powerful trading tools makes the MT4 a complete package for forex traders. So, we suggest adding it to your toolkit for learning and trading forex as a newbie.
Demo Trading Account
Demo trading account is simulation of an actual trading account, allowing you to practise trading without the risk of losing real money in the learning process. They can be opened for free with any forex broker of your choice and they will look identical to a real trading account. You get the real time market data for demo trading experience and the only difference you see is that the demo account will be funded with virtual money by your broker. The profits and losses are just for giving you an idea about the possible trading results which makes it an ideal place for planning and testing your strategies.
Another set of forex trading tools that can benefit beginners is forex trading calculators. They are specially designed calculators for performing specific functions that are essential for entering and executing trades based on your trading plan and risk management policy. They perform many basic to complex calculations ranging from pip calculations to position size calculations. They will give instant and accurate results for all the calculations once you enter the required values and details needed for each calculation. Doing these calculations manually can be quite confusing and time-consuming for a beginner. Even experienced traders will struggle to do these calculations when they trade in huge volumes. So, make sure to practise using these forex calculators as they are easy to use and convenient for all types of traders. Most forex brokers and trading platforms will give you free online forex calculators as a part of the trader’s toolkit on their website.
Let’s have a look at some of the most useful trading calculators you can use for essential calculations.
- Pip calculator: Used to calculate pip value for the base currencies you trade with.
- Conversion rate calculator: Used to calculate the exchange rate of currencies.
- Position size calculator: used to calculate the optimal position size for your trades based on your account balance and risk tolerance.
- Profit calculator: Used for calculating the trading results in terms of profits/losses.
Economic calendar is an essential tool when you are trading in the volatile forex market. There is a high chance of getting caught up in sudden volatility caused by news releases and you must be prepared for that while trading. Make sure the forex broker or trading platform that you choose provides an economic calendar for getting latest updates about important economic events related to the forex market. This will help you to adjust the timing of your trades as timing plays a key role in forex trading.
Copy Trading Software
This is an optional tool which has become very popular among beginners trading forex. Copy trading tools can be used for copying the trade positions of an expert trader. This allows you to get the benefits of trading without trading yourself. You simply join a copy trading platform, follow a trader and copy their trades. But you need to spend some time choosing the best traders and monitoring your account from time to time as copy trading does not guarantee profitable trading results all the time.
Advantages of Using Trading Tools
- Makes the trading process easier and faster.
- Useful for levelling up your trading skills.
- Useful for market analysis and planning
- Aids in improving the efficiency of your trading system.
- Automated and copy trading tools give you an effortless trading experience.
Are forex trading tools free?
Some of the trading tools can be accessed and used for free by joining a trading platform but some of them come with a cost.
Can I trade forex without trading tools?
Many trading tools are essential for trading and you cannot trade without them. But some tools are optional and using them depends on your preference.
How to learn more about trading tools and how to use them?
Opening a forex demo account and practising with the trading tools is the best way to learn more about them.
How to choose the best trading tools as a beginner?
Research and compare the choices you have and see which one would be most suitable based on your trading plan and preferred trading style.
A Guide to Islamic Forex Accounts for Halal Trading
We all know that the forex market is the largest trading market in the world with millions of traders engaged in buying and selling of international currency pairs on a global level. This includes people with different nationalities and religious beliefs. However, for Muslims, trading in the forex market becomes a little more complex with the forex swap rates breaching the rules of Islamic finance. But since the forex brokers are trying their best to make the forex space inclusive for all types of traders, the idea of Islamic forex accounts came into practice. Opening an Islamic forex account allows Muslim traders to engage in halal trading without breaking the religious laws.
Today we will be giving you a comprehensive guide to Islamic forex accounts, so that you can easily dive into the forex world and reap profits with halal trading.
What is Islamic Forex Account?
Before we get into the details of Islamic forex accounts, we need to know why a regular trading account won’t be ideal for a religious trader who wants to comply with the rules of Islamic finance. The reason is that the traditional forex trading involves the use of interest or Riba, in the form of swap rates or rollover fee applied in the case of overnight trade positions. And any kind of financial transaction having the element of interest is considered haram as per the Islamic finance laws. Receiving or paying interest for any type of economic activity is strictly prohibited in Islam.
This means a Muslim trader trading on a regular account won’t be able to keep his/her trading positions for more than a day as overnight positions will always result in swap or rollover fees. To address this issue, Islamic forex accounts were introduced by forex brokers. An Islamic forex trading account complies with the principles of Islamic law, also known as Sharia law. It is designed for Muslim traders who want to trade in the Forex market without violating Islamic law.
The main feature of an Islamic Forex account is that it does not charge or pay any interest on trades held overnight. Instead, it charges a flat fee, which is agreed upon in advance. This is because in Islam, earning or paying interest or Riba is prohibited, and is considered a form of exploitation. Islamic finance is gaining momentum worldwide, and so are the Islamic forex accounts, which abide by the Shariah law.
How to Open an Islamic Forex Account?
Opening an Islamic trading account is a simple and straightforward process. The first step is to choose a broker that offers Islamic or swap free trading accounts. Many of the leading forex brokers offer Islamic accounts, and the process of opening an account is similar to that of a regular trading account. The only difference is that you need to select the option for an Islamic account during the registration process.
Once you have selected the Islamic account option, you will be asked to provide some basic information, such as your name, address, and contact details. You will also be required to provide some identification documents, such as a passport or driver’s licence. Once your account is verified, you can fund it and start trading. There are many popular Islamic forex brokers offering halal trading conditions for Muslim traders. You just need to compare the available options and move forward by choosing the best one for yourself.
How Trading Conditions Change in an Islamic Forex Account?
Trading conditions in an Islamic forex trading account are similar to those of a regular trading account, with a few key differences. The main difference is that an Islamic account does not involve the incidence of interest on overnight trades. But the forex broker may charge some other fee or mark up on spreads to compensate for their loss of interest. This fee is typically charged on a daily basis, and is based on the size of your trade and the duration of your position. The fee is designed to cover the costs of maintaining the position, and is not considered interest or Riba.
The fee will vary depending on the Islamic forex broker or trading platform that you choose for halal trading. Many of these brokers do offer a swap-free day allowance where no extra charges will get deducted for keeping overnight positions for a specific duration. The fee will be applied only when your trades last over this specified number of days and would vary based on the currency pair you trade with.
What Can I Trade With an Islamic Account?
An Islamic forex account can be used to trade all the major currency pairs, as well as many of the minor and exotic pairs. In addition, it can be used to trade other financial instruments, such as commodities, indices, and stocks. However, the type of assets that can be traded may vary depending on the broker and the type of account you have. One thing to note here is that some brokers do impose restrictions on which currency pairs you can choose as trading instruments on Islamic trading accounts. For instance, some brokers don’t allow trading with exotic pairs on an Islamic trading account. It is important to check with your broker to see which of the currency pairs are available for trading in your Islamic account.
Advantages of Islamic Forex Account
- Sharia Compliant: Islamic forex accounts comply with Sharia law, making them suitable for Muslims who are prohibited from engaging in any activities that go against Islamic teachings.
- No Interest/Riba Charged: Islamic forex accounts do not charge any rollover fee or swap rates, making them ideal for traders who wish to avoid any form of interest-based trading. Since Islamic trading accounts are designed to comply with Sharia law, there is no usury involved in the trading process.
- Flexible Trading Conditions: Islamic trading accounts offer flexible trading conditions and account features, making it easy for traders to customise their trading strategies and achieve their investment goals.
- Transparency: Islamic forex accounts provide transparency in trading, ensuring that all trades are conducted in a fair and ethical manner, with no hidden charges or fees. You can also try out different trading styles such as hedging or EA trading if the broker allows you to do that on your Islamic trading account.
Limitations of Islamic Forex Account
- Limited Availability: Islamic forex Accounts are not widely available, and not all brokers offer them, making it difficult for some traders to access them. Also some brokers have limited these services to certain regions only. You can see that many of the Islamic trading accounts are only offered to traders belonging to a country where a majority of the population is Muslims.
- Higher Spreads: Islamic forex accounts may charge higher spreads than traditional accounts, as brokers compensate for the lack of interest or swap fees.
- Restrictions on Certain Trades: Islamic forex trading accounts may have restrictions on certain trades, as they must comply with Sharia law, which prohibits some types of trading.
- Limited Leverage: Islamic Forex Accounts may have limited leverage compared to traditional accounts, as brokers must comply with Sharia law, which restricts the use of leverage.
- Special Requirements: Islamic Forex Accounts may have special requirements, such as proof of Muslim identity or adherence to Islamic banking principles, which may deter some traders from opening these accounts.
In conclusion, Islamic forex accounts offer a Halal way of trading in the foreign exchange market. It is important for Muslim traders to abide by the Sharia laws and regulations while engaging in any kind of financial activity including trading. The primary goal of Islamic trading accounts is to open a doorway for Muslim traders to engage in forex trading with peace of mind, knowing that their trading activities are in line with their religious beliefs. It is crucial for Muslim traders to choose a reputable broker that offers Islamic forex accounts and read the terms and conditions thoroughly to stay safe. Even with the limitations, we can surely say that Islamic forex accounts provide a great opportunity to Muslim traders who are keen to participate in the forex market while adhering to the principles of Halal trading.