A true professional is only as good as their tools, as the saying goes. Even with all the experience and prior knowledge in the world, staring all day at a naked chart with no indicators or guide marks will get you nowhere. Tools such as a trading journal, an economic calendar or a volatility calculator, to name a few, will help you make sense out of all the numbers and graphics on the screen.
Besides, the forex market is volatile and prone to sudden shifts, so it is wise to equip yourself with the proper tools. If you have already covered the basics of forex and want to take it to the next level, here are four tools that will help you dominate the traditional currency markets.
The volatility calculator is one of the most essential fx tools that you need to use. As mentioned above, the forex market has a tendency to be volatile, and this tool will help you not get confused.
As the name suggests, this particular tool shows you which currencies are more likely to be volatile by analyzing previous patterns, as well as providing a historical perspective of all forex market shifts.
Time Zone Converter
The forex market is open 24 hours a day and is split between three major markets around the world. Theoretically, this provides the trader with the opportunity to work all day long. Realistically, it is physically impossible to do this without neglecting basic human needs.
Most of the times, when one market closes, another one opens. But there are occasions when two trading sessions overlap, giving traders the occasion to work on two markets simultaneously. Experts consider this to be the perfect time to trade because, effectively, you are working at double capacity, increasing your chances to strike good deals. That is why you need a time zone converter if you want to be truly effective because you will be able to see which markets are open to business and for how long.
Just like accountants have books and every ship captain had a trusty pilot detailing their journeys in a boarding journal, a forex trader needs to have a comprehensive journal of his past deals, market observations and future plans. You can either download one from the internet, or you can do it the old- fashioned way, by taking notes on a physical notebook.
We are all flawed and tend to add a positive filter to our memories, so that is why it is wise to take notes of your professional activity as events unfold (or at least at the end of your trading session). Keeping a journal will not only help you keep track of your past trading deals but could also serve as an effective tool for self-criticism and improvement. Moreover, by noting every little detail down, no matter how insignificant it might seem at that moment, you will eventually notice market or volatility patterns that could aid you in future forex ventures.
One thing you have to remember is to keep it organized. Create separate sections for the pairs you are trading, loses, wins, time frames, what went wrong (if it’s the case) and what you could have done to prevent it.
Another tool that will help you navigate this volatile market, along with the volatility calculator, is an economic calendar. In forex, instead of analyzing stock and bonds, you need to follow eight major economies (The Big Eight, as insiders call them) – United States, Japan, United Kingdom, Switzerland, Canada, Australia, New Zealand and the Eurozone, mainly Germany, France, Italy and Spain.
The reason why every forex trader should use this tool is that occasionally, the market is more volatile than usual. That is due to fundamental announcements, large events that spell out a country’s current economic situation. This involves anything from data about employment rates, interest rates, banking minutes to changes in economic policies or political events that influence the forex market directly.
Obviously, these events will determine your agenda for the day (or week) – how you trade, in which time frame and what currencies pairs are the most appropriate for you to invest money in. Remember that in forex, like in any other fields, information is power. If you intend to make a living out of forex trading, always staying up to date is essential.
After learning the basics of forex trading, adding a few trusty tools to your arsenal is the next big step. A volatility calculator will help you calculate which currency pairs are more volatile. The timezone converter will keep track of which markets and open for business, and if you can trade in two markets simultaneously.
Continuing on, an economic calendar will keep you up to date with the latest relevant economy news that directly influence the trading market. Finally, after all is said in done, a trading journal is the perfect place to note everything, from market observations to past trading deals and future strategies. Using these tools in conjunction with one another will give you an edge over other forex traders.
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