Skip to main content

FOREX Tools

FOREX traders, whether they know it or not, have a wide array of tools available to them for analyzing the market as well as for buying and selling currencies. Due to the volume and volatility of FOREX, software tools are an essential aspect. Software can be utilized to automate some of the trading rules and protect against losses.

Information is vital to making rational and successful trades. The FOREX trader needs to know far more than just current exchange rates – that barely scratches the surface – the trader should be aware of historical data as well as current information about the political and economic conditions that could affect the volatile currency prices. Luckily, all of this information is provided for by the majority of FOREX brokers on their websites, so no in depth research is necessary.

Best Forex brokers in Malaysia

Eightcap Logo

Eightcap

4.6
Demo account Yes
Minimum deposit $150
Minimum deposit: $150
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider
expertoption logo

Expert Option

4.2
Demo account Yes
Minimum deposit $200
Minimum Deposit: $200
67% of retail investor accounts lose money when trading CFDs with this provider.
avatrade logo

Avatrade

4.5
Demo account Yes
Minimum deposit $100
Minimum Deposit: $100
Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
easyMarkets logo

easyMarkets

4.5
Demo account Yes
Minimum deposit $100
Minimum Deposit: $100
Between 74-89% of retail investor accounts lose money when trading CFDs with this broker.
Markets.com Logo

Markets.com

5
Demo account Yes
Minimum deposit $ 250
Minimum deposit: $ 250
73.9% of retail investor accounts lose money when trading CFDs with this provider.
Blackbull Markets Logo

Blackbull Markets

4.5
Demo account Yes
Minimum deposit $250
Minimum deposit: $250
Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Accurate evaluations of current political and economic conditions undoubtedly lead to successful FOREX trading. The ability to predict trends in the rises and falls of currencies permits the FOREX trader to profit, not lose, from currency movement.

Reactive trading and speculative trading are two fundamental trading methods that all FOREX traders employ at one point or another. Reactive trading involves the trader responding to changes in the political or economic climate whereas speculative trading involves the trader making buying decisions based off of his predictions on how the market will respond to current events. The latter method is the one usually used by FOREX trading, however both types of trade require up-to-the-second information and evaluation of current as well as historical conditions.

FOREX traders also tend to rely on both technical and fundamental analyses. Technical analyses depend upon historical charting to recognize long term trends and patterns over time. Fundamental analyses, on the other hand, rely on news information about political conditions, economic policies, trade patterns, interest rates, and unemployment rates. This kind of information needed for both types of analyses can be found on the Internet for the most part however a lot of online brokers do offer line new feeds and streaming rates for observing miniscule and almost instantaneous changes in the market.

The aforementioned tools are all available to help you decide which currencies are the best to buy or sell. More tools are available to help you reduce your risk while capitalizing on your profit. These include the Risk Probability Calculator, Pivot Points, and Pip value calculators.

The Risk Probability Calculator (RPC) is used to identify trades that have more possible gain then possible loss and also can help in targeting exit points to end the trade.

In order to predict the volatile movements of currency prices, Pivot Points can be used by FOREX traders. They are calculated as an average of the high, low and closing prices of the currency in question. Pivot Point Calculators indicate whether prices fall in the normal trading range or extreme trading ranges which can help you avoid losing a ton of money before you trade.

Finally, Pip value calculators are used to tell you the value of each pip – smallest currency unit – according to assorted sized lots. Pip calculators reflect the actual profit or loss that will result from movements in the FOREX.

After employing all of the necessary precautionary tools mentioned in great detail above, and deciding on a currency pair to trade, the trader logs on to his online account provided by his broker. He then enters the desired currency pair after which the current exchange rate appears on the screen. The amount of currency he wishes to buy is entered and some brokers, at this point, give you the option of specifying the amount you wish to risk. The trader definitely wants to enter in a number because this is the ‘stop loss rate’ that will be his safeguard against a spontaneous currency drop.

After the details of the trade are all taken care of, you are taken to a confirmation screen where you officially accept the price of the trade on the screen. The option of ‘freezing’ the quoted price may be given – in other words, the price of your transaction is exactly what you see on the screen without any slippage. After you accept the trade there is no going back and the deal is running.

Some advice for FOREX traders to adhere to is that you can enter a ‘take profit rate’ to automatically sell the currency when it reaches a certain level; which is incredibly convenient because otherwise you’d have to monitor the movement of the currency to decide when to close the deal. With a ‘take profit rate’ you don’t have to be anxious about missing the moment when the “right price” appeared. Just like the ‘stop loss rate’ in that you don’t lose too much money because when it hits a certain level you’re out.