Becoming a successful trader in the fast moving forex market is not an easy thing to do. It takes a great amount of time and effort to generate profitable trading results with logical speculation. A trading plan or strategy is the foundation for earning profits from favourable currency rate fluctuations that happen in the forex market. But this plan or strategy cannot be executed until and unless you work on your analytic skills as they are crucial to make the right trading decisions at the right time. Now as per TorroCapital review, in case you are a beginner, then you would probably bewondering how you can develop the relevant trading skills in order to be successful as a trader.
Thankfully, there are several forex trader software and tools provided by trading platforms that can be used to make trading easier such as, economic calendars, forex calculator, indicators, charts, etc. We can freely use these trading tools for upgrading our skills with ease. Today we will be learning about the 5 best forex trading tools that you should use to trade better in the year 2023.
- Forex Trading Calculator
The first and most important forex trading tool that all of us need in our tool kit is a forex trading calculator. Almost every forex broker and trading platform will offer you a free online calculator for performing the essential calculations that are relevant to trading. A forex trading calculator will have different sub calculators to perform different functions and calculations that are needed for making day-to-day trading decisions.
Performing these calculations manually or by using a regular calculator can be a time consuming and confusing process for an average beginner. Even experienced traders won’t want to spend a whole lot of time on these small calculations when they can use that time for other important tasks such as market analysis and trade planning. Hence, using the online forex trading calculators would be feasible and ideal for getting accurate results in no time. That way, we will be able to focus on other aspects of trading without worrying about the calculation part.
Each forex trade calculator is programmed and designed to perform a different function and a trader should be able to use them properly for executing their trading plan or strategy with perfection. Now, let’s have a look at some of the forex trading calculators that you will find on an online forex trading platform.
- Pip Calculator: As the name suggests a pip calculator will tell you the value of one pip in the base currency you wish to trade with. Calculation of pip values is very important in forex trading as they measure the smallest change that can happen in a currency’s exchange rate.
- Exchange Rate Calculator: Fluctuations happening in exchange rates of international currency pairs is the very essence of forex trading. Hence, an exchange rate calculator can be used to quickly calculate the conversion rates of different currencies.
- Profit/Loss Calculator: As a trader, you will have to calculate the trading results in terms of profit or loss for each and every trade. So you can use a profit/loss calculator as a tool to plan your trades based on the possible results.
- Forex Risk Management Calculator: Forex risk management calculator is actually a position size calculator which can be used as a tool for risk management in forex. You will use this calculator to determine the position size for each trade and that also decides the risk per trade that you are willing to take. So, you will be able to minimise the risk by limiting the position size. Risking not more than 2% of your account size is ideal to limit your account drawdown in case of a loss.
- Charting Tools: Like we said earlier analytic skills are crucial for spotting ideal trade setups and planning trades based on your trading strategy. Technical analysis of the forex market using price charts is ideal for recognising short term or long term trends for a particular time frame. The most common type of charts used for forex trading is Japanese candlestick charts. Candlestick charts are powerful visual tools that present the market situation in a comprehensive manner.
You just need to learn reading these charts as the patterns that get formed by each candle indicates the price movement happening for a particular currency pair. Traders who take short term positions for scalping or day trading should be analysing charts for a shorter timeframe such as minute charts or hourly charts. Similarly, swing traders and position traders will find daily and weekly charts more suitable for a better analysis.
- Technical Indicators: Technical indicators are one of the most important forex trading tools for analysing the market situation as they give more clarity about the information that we see on the price charts. Just watching the price movements on a naked chart may not be enough for us to determine the ideal trade setup. But technical indicators use mathematical formulas to derive precise information from price changes, volatility and trade volume.
Hence most of the traders in the currency market add popular indicators like moving averages, RSI, MACD, Fibonacci retracements and more to their charts for getting a clearer picture of the market situation in real time. You should not be using too many indicators for analysis but a combination of a leading and lagging indicator would be ideal for a better analysis.
- Forex Economic Calendar: Not all traders rely on technical analysis for making decisions. Some of us prefer to use fundamental analysis as economic data releases and other global events have a great amount of influence on the currency pairs. Even traders using technical analysis should keep an eye on the news to avoid being caught up in the volatility caused by data releases and other news events. Traders who are fond of trading the news will be greatly benefited from this forex tool.
A forex economic calendar will give you all updates about key economic data releases such as GDP, CPI, inflation reports, interest rate decisions, non-farm payrolls, unemployment rate and many more. You can also customise and filter the calendar to only see the information that is relevant for your trading instrument. An economic calendar is a great forex trading tool for fundamental analysis as it is automatically updated and covers all financial news happening around the world.
- Copy Trading Tools: The fifth and last tool on our list of best forex trading tools of 2023 is copy trading tools which is also known as social trader tools. Copy trading is a popular trading style which allows complete beginners and novices to access and explore the forex market with ease. You will have to join a reliable copy trading platform for using this powerful forex tool in order to trade better.
You will be able to benefit from the expertise and experience of another trader by following them for copy trading. Their trade positions will get automatically copied to your trading account in real time and it’s a good way to get some market exposure without trading on your own. You just need to choose a trader for copying based on their track record or trade performance on the platform.
Social trader tools also allow us to learn as we get to interact with experienced and profitable traders on social trading platforms. You will also get to see their trading history in detail which can be used as a reference for developing your own trading system in future. So, copy trading platforms and copy trading tools are one of the most innovative trading tools that requires a minimal effort from you.
With that, we come to the end of our list of best forex trading tools that you can use to trade better in 2023. It is important to note that all trading tools may not be 100% perfect or reliable in all situations. They are designed to assist you in your decision making process and make trading forex easier for you. They are useful for minimising the time and effort that would be needed to perform these functions manually. The first-time traders should take some time to get familiar with all these forex trading tools and practise well on a demo account to get the best results in the end.
We hope you were able to learn something new from this write-up and do let us know your thoughts about these tools in the comment section.
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