Behind any good trader is a set of tools that support different components of the strategy for any particular trade. Different tools help with different things from research, money management to executing trades. More detailed examples could be when to enter/exit your trades using technical analysis, to fetching the latest raw market information that will influence the market’s behavior. While these tools help minimize the risk to your capital, it does not remove the risk of you losing the money you have in your account.
Examples of some forex tools are:
- Forex Volatility – volatility will use historical data to see how much a currency pair has moved over the last period. If the pairs are not volatile, there is not profit in trading them.
- Time Zone Converters – This a quick and easy way to understand when markets are opening and closing around the world so you can prioritize and plan your time well.
- Economic Calendars – These are calendars filled with newsworthy and actionable data that move the forex markets. This data will be market specific, and will range from items like budget updates and major government speeches to jobs growth and trade deficit data.
- Position size – In trading you don’t want to take on too much risk, and so we don’t usually trade more than 2% of our existing capital on any one trade. Because there are a lot of moving components in entering and exiting each trade, position size calculators can do the difficult math for you.
- Pivot points – In order to know when to enter/exit a trade, we need to be able to calculate when a pivot point is expected so we can buy/sell.
- Trading platform – Your trading platform, either a desktop version or a mobile phone version is vital to being able to trade. Different platforms have different features and different levels of support from communities and brokers themselves, so finding something that is efficient, effective at getting you winning trades and easy for you to use is important.
A word of advice about trading robots. Trading robots are very effective at being a collection of tools, but they often lack the ability to digest and recognize trends from news data. This makes them less effective than any human trader who is in touch with the news for a select few volatile markets they have a track record with trading well. After you read this warning and you still want to trade with robots, I suggest that you have a good understand of how the forex market works, you have a good forex broker who has a good signals feed, and you have the time to supervise the robot so you can intervene as needed.
Update: I hope to find good examples of these tools in the next few week so that you can bookmark them and use them in your trading.