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.