Selecting the proper tools for online Forex trading is one of the most important steps in any trader’s career. Proof for the importance of trading tools comes from the fact that many traders define themselves by the tools and systems they use for trading signals.
Forex Trading Tools Define Traders
Examples of trading tools that define traders include:
Elliott Wave analysis traders
Candle Stick analysis traders
Turtle traders with trend following tools
Artificial intelligence or neural net traders
Volume trend traders
EMA traders with chart trending tools
These examples show that there are a large number of Forex trading tools available with success stories for each one of them.
Key Forex Trading Tools for Every Trader
There are five basic tools that every Forex trader needs no matter what system they plan to use.
- Charts for all market data that could impact their currency pairs. Even though Forex traders are typically interested in short-term trading, it is important to have historical charts to understand interrelationships between markets you are trading and other major markets.
Almost all Forex brokers offer reasonable charting for basic analysis.
- Real-time quote screens with signal triggers. Until a trader fully automates their system, they will manually have to make adjustments to currency movements that they are witnessing real-time. Whether it is to stop out of a trade or to add more to a trade, or to even identify potential trades, having real-time quotes with signal triggers is critical.
- Real time news aggregator for the currencies you are trading and for relevant economic news. The trick with this kind of information is not to react to the immediate news, but to make trades that anticipate eventual reactions. For example, when a country elects a popular socialist leader, the immediate impact may spike the currency. The reaction over the next several days or weeks will probably drop the currency significantly. Trade the longer term reaction and not necessarily the first reaction.
- Trend analysis tools for charts and data. These tools could include candlestick formation analysis, stochastic analysis, moving average analysis, volume analysis, or thousands of other forms of analytical decision-making tools for financial markets. Over time, traders will usually find the few tools that they have the greatest success with. Once you identify the signals that produce regular profits, you can begin to build an automated system.
- Automated trading development tools. The top trading houses in the world have either moved toward automated trading or are moving aggressively in that direction. Automated trading does not take the human element entirely out of trading. Forex trading is best executed when you have developed automated trading tools that allow human interaction to check analysis and confirm trades.