Just like a plumber without a pipe wrench and channel locks, it is hard to imagine a successful trader without such forex trading tools software as trade journals, time zone converters, financial news-wires, and more. They all have an impact on the strategy you choose and must never be underestimated.
In our today's guide, we will review the five essential Forex trading tools for those who only get started.
What Forex Trading Software for Beginners to Choose
With so many sophisticated trading instruments and software, not using them is a crime for newbies. Of course, it is great to have them all in the pack delivered by MetaTrader 4 out of the box. On the other hand, beginners may look for Forex trading software free on different websites or right here in this article.
So, here is the list of Forex tools beginners might need when only getting started:
- Financial News-wire – your access to major economic and financial outlets such as The Wall Street Journal, Bloomberg, and more.
- Time Zone Converters – to know exactly what is the best trading time for a particular asset or commodity.
- Economic Calendar – contains vital data including released outcomes and future market consensus.
- Calculators – to come up with accurate pips, volatility rates, and other crucial metrics.
- Trade Journal – when a trader keeps regular and accurate notes of his or her actions, it ensures priceless insights as well as the ability to realize the nature of mistakes or success.
Now, let's dive deeper into details and explain how the above-mentioned Forex trading tools for beginners may come in handy.
Fundamental Forex Trading Tools Explained
Brokers offer some of the instruments as a set of trading tools already integrated with the trading platform you chose. However, it does not mean you are obliged to stick to them. Numerous websites offer Forex software for free. As a rule, they hardly differ from those offered by a broker. Whatever you choose, keep an eye on the following:
Forex Trading Tool #1 – Financial News-wire
As we have mentioned earlier, it is not just about reading financial news or looking through Yellow Pages round the clock. The idea is to stay in touch with the most trusted and recognizable outlets in the niche of trading and finance.
The key reason to use this particular tool is to be aware of the international interest rate, which plays a vital role in currency valuation. Financial News-wire makes it possible to track economic and political situations across various nations, monitor current currency values, and more.
The best sources to consider are as follows:
The best bet is to connect to their RSS feeds to be notified of the important news.
Forex Trading Tool #2 – Time Zone Converters
Trading hours can make a big difference for a trader despite the level. While major FX centers are located in different cities across the globe (London, New York, Tokyo, and Sydney), you need to stay tuned with the session overlaps when trading certain currency pairs (for example, GBP/JPY).
The idea is to know when trading sessions are open or closing down. Apart from benchmark releases or geopolitical events, the tool will be necessary even for technical traders who are eager to know the exact release time.
You can read all about trading according to time zones in our article about forex trading sessions.
Forex Trading Tool #3 – Economic Calendar
After you have collected all the essential news and trading factors, you need a place to keep and arrange all those pieces of information. This is where an economic calendar may help. The idea is to keep all the data easy and fast to access. When we say "data", we mean the following:
- Central bank interest rates;
- Major economic releases;
- Geopolitical events;
- Economic statements and more.
A good idea is to choose a relevant color for each event depending on the importance. For instance, green color is for moderate releases while orange is for urgent and the most influencing events. Having an economic calendar will let you react faster.
There's a great Economic Calendar by Investing. It is a trusted source that has all necessary filters for quick access to major events.
Forex Trading Tool #4 – Calculators
From currency pip and volatility to profit and margin calculators – advanced online software makes the trading process simpler. As a rule, a chosen Forex broker delivers most of those tools. If for some reason, it does not, you may still find them on different websites provided free of charge. So, beginners may need:
- A pip calculator – it displays the pip value of a chosen currency pair you want to trade;
- A volatility calculator – it uses historical interest rate movement and adopts it to real-life conditions letting traders manage the risk;
- A profit calculator – a simple instrument developed to help beginners when defining their potential profit or loss in relevance to a specific trading position;
- A margin calculator – it calculates the margin required along with the percentage and the amount of currency needed to hold the position.
Of, and you will also need a currency converter. You know what it is for, don't you?
Forex Trading tool #5 – Trade Journal
Forex trading is all about analyzing, tracking, reporting, and evaluating. A trader will never be able to figure out the reasons of loss without detailed records of all steps made. While the easiest way is to learn how to trade from professionals, the most effective way is to learn trading from yourself.
A trade journal will let you keep a record of all trades you made. Apart from priceless insights, you will also be able to obtain particular trading habits and use them under real-market conditions.
Read more about trader's philosophy in our article money management in trading.
To sum it up
In this article, we not just highlighted some of the essential Forex trading tools for beginners but specified vital instruments that can be used at zero cost. They can be freely obtained either from your broker together with the trading platform or separately Forex related websites.
Successful trading is always a challenge especially when we speak of continuous and profitable actions. However, the described tools are still able to put the process at ease blended with sufficient feedback and knowledge of the financial market.
Stay tuned! Also read about:
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.