Trading forex for the very first time is a novel experience for every beginner. It can be tougher than you imagined it to be or you might be surprised by how simple it can get once you decode the concept of trading. Those who invest their time to learn about the currency market in detail will be able to deal with the challenges of trading in an efficient manner. There are several tools developed to assist traders and some of these tools are an inseparable part of the trading process.
There are also some tools that you can add to your trader’s toolkit to enhance speed and accuracy. In this blog, you will get a list of tools that you should use as a first-time forex trader.
The Role of Trading Tools in Forex
Forex trading is different from any other job or profession as you don’t really need any kind of qualification or specific educational background to participate in currency trading. But you should have the relevant skills and knowledge to make money from trading. You will be attempting to make profits by buying and selling currencies. The decision to buy or sell a currency is taken by analysing the market situation and anticipating potential price fluctuations as the exchange rates keep moving.
There are a lot of tools that you need to use for accessing the decentralised market and carrying out analysis. You won’t be able to initiate the trading process without the essential tools at your disposal. So, the tools that you choose for trading forex play a key role in your performance and success as a forex trader. They help in enhancing your proficiency and being proficient is the first step towards profitability in forex.
Best Forex Trading Tools
- Forex Trading Platform
It is not possible to get started with trading without opening an account on a forex trading platform. A trading platform is a powerful software that lets you connect with the currency market and execute trades from anywhere and anytime on your system/ device with an internet connection. You also need to find a forex broker as they are the gateway to access the currency market and implement your strategy in solid trading conditions. The trading platform itself contains all the other tools that a trader needs and beginner-friendly platforms like MT4 would be perfect for first-time traders.
- Charting Software
Japanese candlestick charts are the most preferred chart type used by forex traders and you can also add some reliable indicators to the chart for getting valuable insights. You can customise the charts and also select suitable timeframes for analysis. Most trading platforms come with in-built charting tools that you can use for technical analysis. But you can also install advanced charting software to get more options to choose from.
- Forex Trading Calculators
Forex trading calculators are algorithm-based tools that perform all trade-related calculations on your behalf and provide accurate results within split seconds. There are different types of trading calculators to find different values needed for making trading decisions and they are available for free on different trading platforms.
- Pip Calculator – A Pip calculator is a simple tool used for pip conversion. With this tool, you can calculate a specified number of pips for different currencies into your preferred currency. Pip can be considered as the basis of all trading activities that happen in the forex market. One pip is 0.0001 for all currency pairs but the pairs including Japanese Yen are different as for such pairs 0.01 is one pip. The currency price movements are so small that they are stated in decimals.
Since different currencies have different values which keep constantly fluctuating, it was very difficult to measure and express the price changes with precision. Thus, Price Interest Point or Percentage In Point, which is abbreviated as pip became the standard unit to keep track of currency price movements. By knowing the accurate pip value, you can make informed trading decisions and manage your trades easily.
- Currency Converter – As you can guess from the name, a currency converter is a basic tool that converts an amount from one currency to another. This is not a calculator but it applies real-time exchange rates for currency conversion, saving your time and effort. Traders need to convert all the amounts, with paltforms such as USD to MXN, to their account base currency to make sound trading decisions and a currency converter is useful.
- Margin Calculator – It is an important tool that you should use before opening a position. It tells you the amount of funds that have to be kept in your account for opening a trade and keeping it running. A Forex margin calculator tells you the required margin once you enter your trade size, leverage ratio and currency pair being traded.
- Profit Calculator – A forex profit calculator will give you the details of gains in the base currency of your account. If you have opened multiple positions in a day, then using a profit calculator, you can calculate the overall profit or loss that you have made in the currency of your choice. This tool will come in handy especially when you are maintaining a journal, as you will exactly know how much you have made.
- Economic Calendar
Since the forex market and currency rates can be impacted by a number of global economic events and key economic data releases, you need to stay updated about them while trading. The tool that can help you in this is an economic calendar that tells you the date and time of Central Bank meetings, economic data releases and more along with a forecast about how it will affect different currency pairs.
- Tools For Learning
One tool that all traders can use for learning is a forex demo account which allows you to practise freely without worrying about losses. Apart from this, there are many other tools that you can depend on for educating yourself about the currency market and trading techniques. There are a lot of forex forums and platforms, where you can get reliable information and interact with other traders.
- Social Trader Tools
The last tool I want to add to this list is for those beginners who want to make some profits while they are still learning to trade. By joining social trading and copy trading platforms, you can simply copy an expert trader and benefit from their expertise without trading by yourself.
Conclusion
With that, I am concluding this list of tools that you should use as a first time forex trader. One thing to keep in mind while selecting your trading tools is that you don’t need a ton of tools to get the results you want and using a limited number of reliable tools would be the best approach for a beginner.
