There’s no doubt that the forex market is a huge financial entity, and one that sees an estimated $6.6 trillion traded globally each day. However, this is also a fast-paced and volatile space, and one that remains constantly at the mercy of macroeconomic and geopolitical factors.
To help negate these factors and the inherent risk associated with forex trading, there are a myriad of tools that you can use to trade forex more effectively in 2021.
Below, we’ve listed some of the most commonly used tools and provided some information on how they help traders in the forex market.
1. The MetaTrader 4 & 5
If you’re focused primarily on forex trading, the MetaTrader 4 (MT4) is quite possibly the single most important tool in your investment armoury.
Launched back in 2005, the MT4 has managed to enjoy enduring popularity despite the subsequent release of the MetaTrader 5 five years later, with the latter designed to target an array of other assets such as stocks and commodities.
Using these tools, you can also develop and utilise expert advisor (EA) software to automate your trades and trading signals, improving efficiency and optimising the volume of your orders over time.
The MT4 also offers access to real-time trading functionality and fully customisable charts through a single interface, making it easier than ever to process data quickly and execute orders that optimise your chances of financial success.
2. Forex Calculators
At its core, forex market transactions are driven by a number of calculations, with real-time currency conversions offering a relevant case in point.
In fact, there are a number of specialist forex calculators that can be used at different stages of the forex journey, starting with a pip calculator. The pip represents the smallest whole unit of movement in a currency pair’s exchange rate, and this calculator helps you to determine its value based on the precise position size.
There’s also a margin calculator, which is crucial in the field of forex. Margin refers to the percentage amount required to open and maintain a forex position in your trading account, with a dedicated calculator used to compute the required margin in each individual circumstance.
You can also use a profit calculator as a trader, with this simple tool allowing you to determine a trading position’s profit or loss at various exchange rate levels.
3. A Trade Journal
Finally, we’d also recommend using a trade journal when trading forex over an extended period of time.
In simple terms, this allows you to keep accurate records of each individual trade that you make, creating a clear history of your activity and an invaluable insight into your success or failure over time.
To keep the most detailed records, you should include a brief explanation of the trade’s motivation and its profitability (or otherwise), along with the signals used to execute the order.
Make no mistake; a detailed trade journal can help you to review individual trades and learn directly from your mistakes, while enabling you to copy successful orders and use these to inspire growth in the future.