Forex trading has become increasingly competitive in the past few years. With new traders joining the market every day, the forex market has seen considerable liquidity and at the same time it has also opened the doors for limitless opportunities. However, to benefit from this lucrative market, you need to have sound knowledge and invest in the right forex trading tools. The top forex tools for traders can help you analyze the forex market better. Therefore, in this article we are going to talk about the best forex trading tools that you can use and the good part is they are free of cost.
Economic Calendar
The economic calendar is a tool that lists upcoming economic events or significant news releases for various countries, along with the expected level of impact each event is likely to have on the market. It is one of the most useful trading tools for forex traders to stay informed about upcoming events that can impact the currencies they trade.
The calendar typically shows the date and time of each event and the expected outcome of it on the currencies. This information can be helpful for traders to make informed decisions on when to enter or exit trades, as well as to adjust their trading strategies to take into account the expected level of market volatility that may occur as a result of the event. It can also give an insight on future trends of the market.
Currency Converter
A Currency Converter is a tool that allows traders to easily convert the value of one currency to another, based on the current exchange rate. This tool is particularly useful for forex traders, who need to convert one currency to another in order to take a position in the market or to calculate their profit or loss.
The Currency Converter tool typically requires a trader to enter the currency they wish to convert, the final currency they want and the amount they wish to convert. The tool then uses live exchange rate data to calculate the value of the amount in the desired currency. Some currency converters also include historical exchange rate data, which allows users to see how the exchange rate has changed over time.
It can be extremely helpful to keep an eye on the changes and fluctuations in exchange rates, and to make better-informed decisions about when to enter or exit trades.
Margin Calculator
A Margin Calculator is one of the widely used forex trading tools used in the forex market to calculate the amount of margin required to open or hold positions. Margin is the amount of money that a trader must have in their account in order to place a trade, and it is expressed as a percentage of the total value of the trade.
The Margin Calculator typically allows the user to input the currency pair you wish to trade, size of the trade and the leverage you wish to use. The tool will then calculate the amount of margin required for the trade, based on the current market price of the currency pair and the specified leverage.
For example, if the margin requirement is 2% and you are trading $10,000, you would need to have $200 in your account to open the trade.
This tool allows traders to easily determine how much money they need to have in their account in order to open a trade and maintain their open positions.
PIP Calculator
A PIP Calculator is a tool that can be used to determine the value of a pip for a given currency pair. PIP stands for “percentage in point” and represents the smallest movement in the exchange rate between two currencies. The pip value can vary depending on the specific currency pair and the amount of the trade, and a PIP Calculator can be used to quickly and easily calculate the value of a pip for a trade in real-time. This can be useful for deciding the appropriate level of risk as well as the potential profit or loss on a trade.
Moving Average Cross Indicator
A Moving Average Cross indicator (also called a MA Cross) is a technical analysis tool that is used in the forex market to identify changes in a currency pair’s trend. It is based on the idea that when the moving average of a currency pair’s price crosses above or below another moving average, it signals a change in the trend of the currency pair.
The Moving Average Cross indicator typically plots two moving averages on a currency pair’s price chart, one with a shorter period and the other with a longer period. When the shorter-term moving average crosses above the longer-term moving average, it is considered a bullish signal, indicating that the currency pair is likely to continue rising. On the other hand, when the shorter-term moving average crosses below the longer-term moving average, that would be the sign of a bearish move, and you will see the currency pair going on a downward trajectory.
Traders often use the Moving Average Cross indicator in combination with other indicators to confirm the signal and make their decisions. The most common combination is with Relative Strength Index (RSI) or Stochastic indicators.
It’s worth noting that the Moving Average is a lagging indicator, it can be less useful in volatile market conditions, and some traders might use other indicators to compliment it.
Pivot Point Calculator
A Pivot Point Calculator is another technical analysis forex trading tool that is used to calculate key levels of support and resistance for a currency pair based on the high, low, and closing prices from the previous trading period.
The Pivot Point Calculator typically uses a simple mathematical formula to calculate a series of pivot points, including the central pivot point, which is the main level of support and resistance, as well as three additional support levels (S1, S2, S3) and three additional resistance levels (R1, R2, R3). These levels can then be plotted on a currency pair’s price chart to help traders identify key levels of support and resistance for the current trading period.
The Pivot Point Calculator is commonly used by traders to identify areas where the price may reverse, these levels can act as targets for stop loss or take profit. This tool is widely used as a way to identify possible price reversal points or to confirm trends or patterns.
Volatility Calculator
This is one of the most useful tools for traders, which help them in measuring the level of volatility of a currency pair. Volatility refers to the amount of uncertainty or risk associated with the changes in a currency pair’s value. High volatility generally means that a currency pair’s value can fluctuate dramatically over a short period of time, while low volatility means that a currency pair’s value tends to change only slightly over a longer period of time.
The Volatility Calculator typically uses historical price data to calculate the volatility of a currency pair over a specified period of time. The calculation can be done using different methods, the most common one is the standard deviation, which measures the deviation of the currency pair’s price from its average price. The result of this calculation is usually represented as a percentage or a decimal value, which can be used to compare the volatility of different currency pairs.
Currency Strength Meter
A Currency Strength Meter (also called a CSM or currency meter) is a technical analysis tool that is used in the forex market to measure the relative strength of different currencies. The tool typically plots a series of lines or histograms that represent the strength of each currency against a basket of other currencies.
A Currency Strength Meter works by comparing the performance of each currency pair over a specific period of time, using indicators such as price action, moving averages, or other technical indicators. It then assigns a value to each currency, which reflects its relative strength compared to the other currencies being monitored.
Traders can use this information to identify which currencies are strengthening or weakening, and to make informed decisions about which currency pairs to trade. By identifying which currency is strong and which one is weak, the trader can try to profit from the relative strength of one currency over the other. Also, it can be used as a confirmation signal when trading a certain currency pair or as an indication of the overall market sentiment.
Conclusion
Forex trading tools can be helpful in many ways irrespective of your level of expertise. These tools for forex trading can help you predict the future course of the currencies, track the historical changes in the currency pairs, eventually helping you buy and sell at the right time. However, before you consider using any forex tools for trading, it is wise to determine your trading style to ensure a better use of these tools.
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