The Most Effective Forex Tools Every Trader Must Know About

August 28, 2022
trading tool

You can find various tools for forex traders available in the market, which can help them to enhance their winning chances through trading. One such tool is the economic calendar which lists all the significant economic announcements throughout the week. The list covers every aspect of the event, such as the time and date of the release, economic report type and the currencies which are likely to be afflicted by the announcement. Apart from listing the outcomes of the report, an economic calendar displays the value of the previous releases and analyst consensus reports. The majority of economic calendars even represent the degree and level of potential volatility just after when the report was released.

The economic calendar is a useful tool for all market participants as it helps to find the events that have a great impact on the currency pairs. Besides, it also offers traders to get certain insights into the level of volatility existing in the market. Therefore, one can say that traders can use an economic calendar to come up with the most brilliant trading ideas for maximizing profits. Apart from economic calendars, there are various other tools as well that can enhance your trading performance:

Time Zone Converter

It is one of the most effective forex tools, which is available for traders free of cost. This tool is beneficial for traders in multiple ways. It lets market participants monitor the opening as well as closing times of various markets worldwide. Additionally, it is also useful to forecast the volatility of various currency pairs. The best thing about the time zone converters is that they make the functioning of economic calendars easier as the tool allows traders to convert times across various time zones as well as stay ahead of recent economic news conveniently.

Trading Journal

Most market participants maintain a trading journal to keep a record of their previous trades. They do not have to spend a penny to make this happen; all you need is to keep a journal (either notebook or Excel sheet). Although most traders consider maintaining a journal a boring task, it can prove to be beneficial in the long run. The traders can add or remove the items according to their preferences. They can find the currency pairs from which they have gotten the maximum profits and the ones from which they have suffered severe losses. Thus, they are able to focus on those pairs which are lucrative for them.

Trader Sentiment Indicator

The most useful trader sentiment indicator is the one that displays the number of buyers and sellers in the market. It is yet another significant forex tool that helps traders make the most effective decisions regarding currency pairs. Regular checking of trader sentiment is helpful for traders to get knowledge of recent biases within the market and to find the potential reverse points.

Forex Calculators

Forex calculators are one of the greatest forex tools available in the market and are of various types, as discussed below:

Pip Calculator

It is a basic tool for traders to compute the pip value in dollars for a specific currency pair.

Margin Calculator

A margin calculator is a handy tool for those interested in leverage trading. All you need is to specify the certain currency pair they prefer to trade, lot size and leverage level. The calculator will automatically compute the margin to open the trading position.

Profit Calculator

The profit calculator is a useful tool to forecast the potential profits and losses for one currency pair. The traders must specify the trading account’s currency, lot volume and opening price. The result will represent the potential loss or gain; the calculator is an effective tool for selecting an ideal risk/reward ratio.

Heat Maps

Heat maps are another forex trading tool to help traders visualize the movements of various currency pairs. This is simple to analyze; the pairs whose value has risen significantly are displayed in full-green color. And, the ones which have risen slightly are presented in light green color. They are practical in nature as they let traders identify the currency pairs with the most fluctuations during a specific time period.

Currency Correlation Matrix

It is one of the essential tools for traders to find the positive or negative correlation between various currency pairs to make effective trading decisions. It is a useful risk management tool so that traders can prevent making mistakes to minimize their risk exposure.

Author lerin