Whether you are a rookie or an expert at trading, the forex market regardless of your level of success can be a formidable competitor. Therefore, most FX traders rely on forex tools to carry out their trading decisions in order for them to end up at the right side of the movements in the market. These tools enable traders to propel ahead of their competitors and reach a level of excellence which otherwise would have been achieved by investing a lot of time. And as we know “Time is money”, it is especially true for the forex market. So, to optimize your time and resources in a smart way, and unlock massive value for yourself in this industry, it is recommended that you try your hand at the forex trading tools.
The secret to fueling your growth in the forex market through tools is to have the right ones that not only augment your performance when they are used alone but also when they are matched up with other tools. So, you should consider getting a set of tools that are compatible with one another. FX tools can either be purchased or a currency trading expert can provide you with their subscription. This is dependent upon your personal preferences. However, coming up with a list of tools which will be perfect for you is an onerous task. So, if you find yourself in a rut, then worry no more! As today we will be sharing with you a list of tools Fuad Ahmed deems to fruitful and believes that they will enrich your forex strategy by a tenfold while keeping your trading outcomes from coming out awry.
So, without further ado, let’s take a look at the forex trading tools you should consider acquiring to up your trading game.
1. Economic news calendar
No matter which school of thought you follow for placing your trades, looking into the news of a country is absolutely indispensable. A market as dubious as the FX market requires you to be vigilant any time you place a trade. The volatility associated with this market is no secret. However, there are certain times when the market is even more volatile than usual. The reason behind this is more often than not the fundamental announcements that reveal where a particular country stands economically. A few instances are inflation reports, oil prices, banking minutes, etc. The economic news calendar gives traders an unparallel insight into future consensus.
Following the economic news for a forex trader is as important as it is for a non-swimmer to wear a lifejacket while taking a leap from a cliff into the ocean. Shirking from such important information can send traders back to square one with monetary scars as a parting gift.
2. Pip calculation tool
For new entrants in the forex market, it could be a bit tricky to comprehend the price of a foreign currency if one is unaware of the pip valuation system. Wikipedia defines pip as a unit of change in an exchange rate of a currency pair. To simplify, pip indicates the lowest trading unit for a specific currency. It more often than not has a varying price based on the base currency and the counter currency.
The pip calculation tool makes it easier for traders to determine the price of a foreign currency by turning it into the trader’s local currency. If a trader were to calculate this price manually, a single trade would end up costing him a huge amount of time.
3. The currency correlation tool
Since the forex market is comprised of quite a lot of currency pairs, prior to making the trade it is crucial to determine the correlation between the base currency and the counter currency. The correlation can either be positive or negative and in some cases, it is more intense than it is in the rest. If the correlation is negative the tool depicts that the currency pairs will move in opposite directions, however, if it is positive then the tool is suggesting that the price would move in the same direction.
4. Time zone convertor
Forex trading happens globally, which is why when one market closes another one opens up. However, there is a certain time period where the timings of two markets overlap. This is when the market is at its highest activity and liquidity. By harnessing a time zone convertor tool, you will be able to assess the markets that are open and sometimes even reap profit from multiple markets.
5. Trading journal
Last but not the least, one of the handiest tools to give you a grasp over the forex methodologies is your very own personal trading journal. Like we discussed this in the last article, Fuad Ahmed is of the view that the best way to go about the trial and error technique is to analyze the trades you have made, their outcomes and the time and money that was on the line. If you are not using your past experience to progress, then you can stay rest assured that the investment is going in vain. While failures are customary in the forex market, the wisest way to handle them is to learn from them.
Although some traders avoid utilizing a trading journal because they believe it is inconvenient, which is far from the case, online versions of a trading journal are now available since pretty much everything has now gone digital. So, now you don’t have to rely upon the good old pen and paper.
These online journals while reduce the risk of losing important information jotted down in a diary, don’t help you remember information as much as writing down in a diary does. But you should make use of whatever works for you.
With no surefire techniques to make money, it isn’t uncommon for forex traders to be grappling with different practices prevalent in the foreign exchange market. However, every professional needs a set of tools to help him reach an unmatchable level of success and while tools may not guarantee a trader to become a billionaire overnight, they sure help enhance one’s chances of success as a forex trader.
The above list of tools by Fuad Ahmed will help a trader unlock immense value for himself in the FX market.