To successfully trade foreign exchange (forex or FX), you must have the right tools available. Beginners can take advantage of online tools and apps when they start investing in foreign exchange. Using forex tools can enhance your productivity and improve your trading performance as you make your trades independently. From forex calculators to live news applications, let’s take a closer look at the most important forex trading tools for beginners.
Trading Platform to Invest in Forex
A trading platform is perhaps the most important tool for beginners investing in forex. This is a software system that allows users to trade foreign currency pairs online and manage their accounts through a brokerage. On the online platform, investors can access financial markets to place trades, monitor them, and interact with other traders in real time.
These platforms usually come with a wide range of other features for forex trading, making it easier to access all the tools you need in one place. These tools include real-time data feeds, technical and fundamental analysis tools, order execution tools, and educational tools.
Forex Pip Calculator
New forex traders might not understand how much capital they should risk per trade. As a newbie, you might close your position too quickly and lose profits. That’s where a forex pip calculator comes into play. This tool can help estimate the risk per trade. Pip means point-in-percentage and is the lowest degree of change at which currency prices fluctuate.
A forex pip calculator allows you to input your lot size, account currency, currency pair, and leverage ratio. It will calculate the value per pip in your base currency, helping you decide whether a trade is worth it.
Charting Tools
Forex charting software is another essential tool for beginners. This helps traders to visualize their foreign exchange trading analysis. On a forex chart, you can view the interactive prices for different currency pairs, technical indicators, and overlays.
With a charting tool, you can see real-time price movements and identify patterns, trends, and support and resistance levels. It also shows historical price movements, which will guide your decisions. Trading platforms, analysis platforms, and trading social media networks usually come with charting tools.
Economic Calendars
Forex traders need to remain up to date with the latest news and geo-political events, which is where economic calendars come in. These events can lead to price fluctuations of other currencies and affect your trade. In an economic calendar, you can see the dates of different events, GDP data releases, interest rate announcements by Central Banks, and more. Economic calendars provide consensus expectations, actual data, and past figures. Other data include inflation rate, unemployment data, balance of trade, retail sales data, and manufacturing indices.
Trading Journal
A disciplined forex trader should have a trading journal to record their trading decisions, strategies, and mistakes. You can record your trading activity in the journal, including strategies and their results. It can include the date and time of the trade, position size, entry and exit points, outcome of the trade, charts used to determine the trade, and more. When keeping a forex trading journal, be thorough and honest, and pay attention to your emotions when trading.
Live News App
It’s essential to use a forex news app when trading, as this gives you full updates on the latest news, market data, and trading signals. Sometimes, a live news app is combined with an economic calendar. Some forex news apps come with real-time quotes, trading signals, technical analysis patterns, financial news, and analytics. Live currency pair tracking and forex analysis can also be used.
Market Heatmap Tool
As a beginner, you can benefit from using a market heatmap tool. This is a visual tool that offers a comparison of the relative strengths of different currencies across multiple timeframes. By looking at it at a glance, you can view the entire forex market and spot the strengths and weaknesses in individual currencies.
Market Sentiment Tools
The forex market can change based on how traders and investors view the outlook for the market or the economy of the currency’s country. A forex market sentiment tool can help you identify the market direction, predict movements, and gauge emotional and psychological attitudes. It provides sentiment analysis, letting investors know how others feel about the market.
Backtesting Tools
Whether a beginner or an experienced trader, you need a forex backtesting tool or software. This tool allows you to test your trading strategy based on historical data. If you have a forex strategy but are unsure how it would perform, consider using a backtesting tool. The tool will stimulate trades and check how it would react to your strategy. So, you can test your strategy without risking any capital.
Start Your Forex Journey With the Right Tools
Forex trading has improved drastically over the past decade, increasing the number of available trading tools investors should use. When using a regulated trading platform, you can access different tools in one place. Tools that are not available on the platform can be downloaded as apps or websites. All in all, you should equip yourself with the right tools to make your forex trading journey easier.
