Buying and selling currency on the foreign exchange market every day can be challenging. However, the rise of digital day trading has given investors an incredible and diverse set of tools that, when deployed correctly, can help to deliver sustainable long-term results.
If you are just starting out or not quite sure whether your current strategy is up to scratch, here are a few tools that you really should start using to analyse forex markets.
Forex calendar
A basic but nonetheless valuable task for trading forex during any given week is studying key global events that can have an impact on financial markets. The forex calendar will keep you up to date with goings on in every region and market. It is filled with important economic data updates such as the release of employment figures, GDP rates, key indexes and more.
Pip calculator
When you first start out, it can be difficult to know whether you should execute a trade on a particular currency pair. That is where risk management comes in. You can assess the risk involved with a trade by using a forex pip calculator, which allows you to customise specific details and see the value of a currency pip in order to determine whether a trade is worth pursuing.
Technical indicators
You need to analyse the minutiae of price movements and other factors to trade forex effectively. Technical indicators, or “technicals”, allow you to identify opportunities to enter the market and to exit positions at the right moment.
There is a range of indicators, each with a different purpose – so you need to use a mix of them to inform your decisions. Some of the most popular indicators include the Oscillator, Relative Strength Index (RSI), Bollinger Bands and Moving Average Convergence Divergence (MACD).
You can use these tools to analyse the price and volume of major and exotic currency pairs before making trades. You should also read the latest forex broker news to see if there is anything you may have missed following your own forensic analysis.
Broker spread comparison
Having access to a tight dealing spread will make your forex trades more cost-effective so it may be a good idea to use a broker spread comparison tool that will filter the most competitive offerings available from third parties. This simple tool should give you quotes for pairs such as GBP/USD with just a few clicks.
Mirror trading functionality
Some broker platforms offer a mirror trading functionality that allows you to implement automated strategies that work for more experienced investors. That means you can peruse all relevant buy and sell signals and execute them within your account.
That is advantageous for beginners, but it is also useful for established and expert traders. Algorithmic strategies can often dovetail with personal preferences and risk tolerances perfectly, which can reduce some of the hassle of perfecting and implementing trades.
Forex markets are vast in scale with more than $6bn being traded every day, so make sure you have the right tool set to succeed.
