Read on to find out the best tools beginners need to start forex trading.
Foreign exchange trading can be a tricky business. When it comes to choosing what tools will be the most effective in your forex trading journey, there are a few aspects to consider. Whether you are a brand-new trader or a seasoned veteran, some of these tools will always be handy to help you not only find the diamonds in the rough but also stay focused on your goals.
How to Choose Trading Tools
The first thing you need to do is to look over your trading platform and see what tools they offer. Oanda, for example, offers many of the tools on this list, and it is up to you whether or not you use them.
There are only two things to remember when evaluating trading tools: The tools should be easy to use and understand as well as accurate. The best way to find out if a tool ticks these boxes is to use it for a little while and test it out.
Reliable News Sites
The first thing you will need is a small collection of reliable news and financial news websites, such as Bloomberg or WSJ. These should span the U.S., Europe, the Middle East and Asia, at the very least, and provide you with all the financial news you need for the day.
Having multiple sources will also ensure you don’t miss any big news as well as being able to clarify something if multiple sources confirm it.
Notebook
A notebook may sound old-school, but it is one of the most useful items in your toolkit. You should get into the habit of keeping track of all your trades, such as when you did them, the price, what you bought, etc.
A notebook will also help you stay on track and remember where you are and where you want to be. It’s much easier to have a path and some direction when you have it written down in front of you.
Economic Calendar
Another tool that is often built into a trading platform is an economic calendar. It is easily one of the most useful tools you can access, allowing you to see every important financial event happening across the globe.
Considering that economic events and announcements often affect the markets, it is essential that you know what is happening and when it is happening.
Copy Trading
Copy trading is not necessarily a tool but something to look out for. Many pros or platforms will allow you to copy trades and use them as your own. This is especially useful for beginners who want a few clues on where and how to start.
Time Zone Converter
While the forex market may be open 24/7, there are definitely certain times of the day and days of the week that show increased activity. A time zone converter allows you to always know the time anywhere in the world and, therefore, will enable you to make a proper strategy around those times.
There will also be many occasions where a trade will be time-sensitive; the last thing you want to do is miss out because you got your time conversions wrong.
Volatility Calculator
Like all types of trading, forex isn’t immune to volatility. While you can never be 100% safe from risk, a volatility calculator will take all of the historical data of a currency pair and use it to determine how volatile it is over a particular time frame.
This is particularly helpful if you are a new trader, as you don’t need to do a ton of research into a particular economy or currency pair; the calculator will do the work for you.
Correlation Tools
Beginner traders will often not be able to spot the correlation and the associated problems associated. In simple terms, you may think you are hedging your bets and lowering risk by training multiple pairs, but there is a good chance those pairs move up and down together.
The correlation tool will help you avoid trading too many pairs that move up and down together and instead will help you spot pairs that move differently and therefore give you better risk protection.
Also read:
- What Are Forex Signals and How Can You Use Them to Make Money?
- How to Minimize Risks When Investing in Crypto
- Can Crypto Fit into an ESG Portfolio?
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