Want To Make Better Trading Decisions? Use These Forex Calculators & Tools

The Forex market, also known as the currency market, is a unique and huge market with a massive daily turnover of $6.6 trillion. Earlier, forex trading used to be limited to big companies and institutional investors, but now anyone can participate in forex trading, all thanks to online trading platforms. There are plenty of resources available for traders nowadays, which can be overwhelming for new traders. It's like having too many options, which can be a bit of a problem. But in this article, we will sort out the top 5 trading tools you can use to make better trading decisions. These tools include Charting Software, Economic Calendars, forex calculator, Trading Journals and Trading Signals. Let’s learn about them one by one!

Want To Make Better Trading Decisions? Use These Forex Calculators & Tools

Charting Software—Trading Platforms

There are a number of trading platforms offered by forex brokers these days, but MetaTrader 4 and MetaTrader 5 still run the show. Both these platforms are complete in themselves. They provide advanced features, real-time data, various types of orders, multiple timeframes and automated trading features that allow traders to personalise their trading experience the way they want. MetaTrader 4 is the older trading platform and was released five years prior to MetaTrader 5, but it has still not hampered its popularity in any way.

The MetaTrader platform is particularly important because it has significantly democratized access to forex markets, allowing individuals to participate with tools that were once reserved for institutional investors. With a user-friendly interface and support for a wide range of financial instruments, it plays a crucial role in enabling traders to make informed decisions. MetaTrader 4 is the older trading platform and was released five years prior to MetaTrader 5, but it has still not hampered its popularity in any way.

Beginners usually prefer to start with MT4, while MT5 is more favoured by seasoned traders because of the advanced features that professionals mostly need. For instance, MT4 offers 30 built-in technical indicators, 24 analytical tools and over 2,000 free custom indicators. On the other hand, MT5 has 38 technical indicators and 44 drawing tools.

If we talk about automated trading, MT4 uses the MQL4 programming language, while MT5 uses MQL5 to develop Expert Advisors (EAs). However, it's essential to remember that programs designed for MT4 cannot run on MT5. Both platforms provide a comprehensive set of tools, but the only problem is that the automated strategies you create for MT4 won’t work on MT5. Therefore, you should be very clear about your choice of trading platform.

Economic Calendar

An economic calendar is a useful tool irrespective of which strategy you are using for analysing the markets. It’s the calendar that contains macroeconomic news and events that are scheduled to be released. In any reliable economic calendar, you can find the events listed along with the time of their release, the currencies they are going to impact or the broader impact they would make on the market. Some websites make the economic calendars highly interactive by giving them a touch of colours to signify the intensity of the impact a news or event could cause. While some traders prefer to enter the market just before the release of high-impact news, some make sure to avoid trading in such a scenario to avoid the risk that comes with market volatility. The thing is, whenever a high-impact new release, it creates upheaval in the market. Some traders see it as a good opportunity to make significant profits, but it’s also true that with high rewards come greater risks. So, no matter if you are a news trader or not, checking the economic calendar every day should be an irreplaceable part of your trading day.

Forex Calculators

It doesn’t matter which system or strategy you use, if there’s one thing that sets successful traders apart from those you can’t make consistent profits, then it’s risk management. There are plenty of tools that can assist you in controlling risk in your trades. You could use a stop loss order, take profits or use the right position sizing to manage the risk of loss. And if you struggle to place SL or TP at the right levels or can’t determine your position sizing, you can always use a forex calculator to make risk management easier. 

Here are some popular forex calculators you can use to simplify your trading;

  • Pip Calculator — To determine the value of a pip for a currency pair.
  • Margin Calculator — To identify the initial margin needed to open a position.
  • Swap Calculator — To figure out the interest paid or received during rollover at the end of the trading day.
  • Lot Size Calculator — To determine the lot size you should trade to make a certain amount of profit.
  • Profit and Loss Calculator — To find out the amount of profit and loss made by the traders in their respective currencies.

By using these forex calculators, you can estimate your trading costs, determine potential profit or loss, and understand and manage your risk exposure. All of this will ultimately help you make more informed trading decisions.

Time zone converters

The forex market is open all the time, except for weekends. It operates in different trading sessions, such as Sydney, Tokyo, London, and New York, and you can use the Forex Market Time Converter to check whether a particular market centre is open or closed. There are also overlapping sessions when two markets are opened at the same time. This is when the liquidity is quite high, and the volatility in the price movements is low. Understanding when the volatility is high or low is crucial to make the right trading decisions. Therefore you should always keep track of the market. Also, many beginners believe that since the forex market is round the clock, they can trade at any time of the day. Instead, you should prefer to trade when there is high market activity and avoid trading when the market is quiet.

Additional Tools

Trading Journal: Keeping a trading journal is important if you want to improve your trading performance. A trading journal is all about noting down each and every detail of your trade. That doesn’t mean you should pick a notebook and a pen and start writing down your daily experiences. You can also create an Excel sheet or use it any other way you prefer. The only aim is to track your daily performance. Sure, you can always check trading history to accomplish this purpose, but creating a trading journal helps you be consistent. You can understand your psychology, strengths and weaknesses in your trading strategy. This is a good way to learn from your past trades. Even though you can not rectify the mistakes you have made in the past, you can prevent yourself from repeating the same in future trades.

Trading Signals: Many traders find trading signals appealing, especially those new to the market. No doubt, trading signals can be useful as they tell you when to enter the market, exit, and where to place your stop loss or take profits, but you can’t trust all the trading signals. You have to be cautious when believing any forex signals because, mostly, these signals don’t work. If you have found a reliable source, you are good to go, but if your goal is to become a professional trader, there are no quick fixes. You should invest time in learning about the market and work on developing a trading plan. This plan should include strategies for managing risk, specific Forex trading strategies, and the trading style you want to follow (like scalping, day trading, or longer-term investing). Doing this gives you full control over your trading, and can focus on identifying high-probability trading opportunities. Remember, becoming a successful trader requires dedication and a well-defined approach.

Wrapping Up

Forex is the biggest financial market that demands patience and consistency. To succeed in forex trading, you need to have a solid trading strategy and be aware of the right tools to make your strategy even more effective. When you're new to trading, it can be difficult to understand everything right away. But as you keep going, you'll see how important forex tools are and how they help you with your strategies. The forex tools that we explained above can be used by each and every trader as they are extremely important in guiding them about making informed trading decisions. So, if you are struggling to find out where to get started, you should definitely consider these tools.