THE global foreign exchange (forex) markets are booming. According to its most recent December 2019 figures, BIS estimates that forex trading equated to $6.6 trillion per day – a number that’s certain to have increased on the back of the growth in stocks over the past few years, and the extreme forex volatility we are currently seeing.
Behind such significant numbers lie legions of forex traders – all constantly trying to find the best way to maximise their returns and track their trades. To ensure they can do that, there are a number of tools available they can use. Here are four of the most crucial.
Arguably the most important tool in any forex trader’s arsenal is their trading platform. Take MetaTrader 4 from FXCM, for instance. This tool is a great option for people making money from CFD trading, as well as traders wanting the most accurate and up-to-date charting capabilities to make the most well-informed and lucrative trades.
A trade journal is another tool that is an absolute necessity for traders. It helps you track different trades and whether they constituted losses or gains. You may also want to note why you made the trade and why it was liquidated too. With all this information, you can regularly go back and check over your trading habits – crucial for identifying positive patterns and improving your approach.
An economic calendar allows you to chart and understand upcoming financial events such as central bank interest rate decisions and indicator releases (jobless figures, growth rates, and so forth). Armed with this information, you can make better-informed trades by coinciding them with upcoming events and using your knowledge of the wider economy, related business news, and historical price moves to make an informed guess at which way prices will shift.
If you’re continuously working with foreign currencies, then a pip calculator can be a great tool to have by your side. These let you see pip values (the smallest movement unit for currency pairs) based off the size of your position in the local currency.
This tool lets you understand historical levels of volatility in a currency’s value. Currencies tend to move in similar patterns, barring any economic or geopolitical events, so knowing their regular toing and froing can make your trades more accurate.
Tools are very much the bread and butter of any forex trader, and with the examples above, you should have everything you need to boost your trades.