Since its establishment in 1944, the forex market reached a record high in April 2019, with global trading hitting $6.6 trillion (£4.6 trillion) per day, according to the Bank for International Settlements. Because of this impressive trading turnover, global market locations, and around-the-clock trading, the popularity of forex trading continues to rise. However, the sheer size and success of the market tends to be a little overwhelming for beginners. This is why if you want to be a successful forex trader, you can use these different tools to help your decision-making process and facilitate profitable trades, just like the countless seasoned and novice traders before you.
Economic News Calendar
Typically offered by forex brokers and financial news websites, an economic news calendar provides key economic data and relevant geopolitical events that will affect the valuation of a nation’s currency and impact future market consensus. Usually, it includes central bank policy statements and speeches of monetary policymakers and government officials, aside from other important economic announcements like the Gross Domestic Product, Unemployment Rate, Interest Rate Decision, and Consumer Price Index.
These economic releases are coded to show whether they have a significant impact, light impact, or no impact at all. If these factors have a significantly high or low impact on the market, the currency pair associated with them will move more and be more volatile. Meanwhile, if they have little to no impact, the currency pair will have small or non-existent movement.
Forex heat map
As a trader, you need to monitor trends and movements of currency pairs, and you can do that using a forex heat map. You can use it to spot strengths and weaknesses in individual currencies and identify additional trading opportunities that you may have not considered while planning.
Though the charts may look a lot simpler than other tools, this ability to make sense of market information in such a vast trading landscape gives forex heat maps their practical value. If you were just looking at currency price quotes, for instance, you might have to sift through dozens of currency pairs, in different points in time, to identify significant movements. Forex heat maps do away with this process and present the information clearly. Plus, the forex heat map by FXCM lets you view market information over the last week, the last month, the last 60 days, and even the last 90 days. This way, you can have a better idea of the movements of forex pairs over different points in the past. This can help you better identify trends and create your forex strategy accordingly.
Pip and Currency Calculators
Calculating and managing foreign currencies might be tedious and confusing. You can easily determine the current exchange rate and the equivalent of the amount using a currency conversion calculator.
This process can be especially puzzling if you are not that familiar with the pip valuation system used in forex markets. This article by The Balance notes the importance of a pip, which is the smallest price move a currency pair can make. With a pip calculator, you can easily calculate the amount it is worth based on its position in your chosen currency. You simply have to enter the details of your position, including the currency pair, size of the trade, and position size parameters.
Traders also make use of trading robots to automate their process and identify when to enter and exit a trade. These tools can relieve you of the added psychological element involved in the field, assisting you to make better decisions. Each robot has a particular use, depending on the kind of trading you want to pursue. Hi Lo Exit and Scalper are good for profitable, smaller transactions, while Ichimoku caters to the needs of expert traders taking advantage of long-term price fluctuations.
For traders, most of these forex tools are widely available online, via brokers and websites. Do not let intimidation get in the way of your goals, as there will always be resources available to guide you in your trading journey. Remember, with a comprehensive plan, the right tools, consistency in trading, and enough knowledge about the market, you can be a successful forex trader!