The Best Trading Tools for Untested Forex Traders

untested forex traders
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Are you dabbling in the forex market as a way of raising capital for your small business? If so, you are one of many untested forex traders out there. In this post, we’ll give you some suggestions that can help you surge ahead of the pack.

Forex, in case you don’t yet know, is short for “foreign exchange.” It refers to the trading of the world’s currencies in hopes of making a profit.

There are several reasons to choose to trade forex instead of other stocks. First, the forex market is the largest market, in terms of daily transaction volume. Further, it is open 24 hours a day. This makes it highly accessible. What’s more, it offers significant liquidity.

Finally, forex trading can be highly profitable, even for untested forex traders.

 

RELATED ARTICLE: HOW MUCH RISK SHOULD YOU TAKE AS A FOREX TRADER?

 

Everything You Need to Get Started

Using the right tools will increase your performance and productivity, whatever you’re engaged in. For untested forex traders, the right tools are indispensable.

One of the first choices you’ll have to make is what online trading site to use. CySec-regulated online brokers such as TradeFw are among the best. That’s because their legal documentation is transparent. They provide all the information untested forex traders need regarding the safety of their capital.

 

 

The Trading Platform

The first tool untested forex traders come in contact with is the trading platform itself. This is also the most important tool you’ll use. Your trading platform will allow you access to the forex market.

MetaTrader4 (MT4) is the most popular trading platform, especially for untested forex traders. It offers a variety of features, including intuitive charting, one-click trading, and analysis tools.

What’s more, you can customize the platform’s technical analysis indicators. In short, this platform offers a number of benefits, including flexibility. This will be important as you begin to develop your trading strategy.

 

The Forex Calendar

After choosing your online trading site and accessing the platform, the next step is gathering useful information. The Forex Calendar is a free tool that offers fundamental updates on the forex market. It lists economic news and upcoming events that are likely to affect the market.

For instance, you’ll want to watch the US non-farm payrolls (NFP), a statistic which changes on a monthly basis. Both experienced and untested forex traders have learned to pay attention to this number.

 

Technical Analysis Tools

The best brokers use technical analysis tools to predict market movements with a high degree of accuracy. Untested forex traders who are smart learn to read and understand the graphs, charts, and indicators that are available to them as well.

To that end, many online trading sites offer daily technical analysis of the forex market. You can learn to base your strategy on the latest numbers.

 

Additional Platform Plugins

Online brokers and trading platforms offer you a wide array of tools. However, it is always best to check various forex news and information websites.

These can provide useful online apps, spreadsheets, or functions you can add to programs such as Microsoft Excel. They will allow you to create your own trading routine and strategies.

For example, you’ll find plugins for the MT4 platform that will allow you to compare live charts, find patterns, and more.

 

The Various Types of Transactions

As a beginning forex trader, you’ll need to become acquainted with the following types of trades:

Spot Transaction

This is an agreement to trade a currency at the current exchange rate. It is a quick, simple trade that usually settles within a couple of business days, without creating a long-term contract. The strategy for spot trading is simple: Buy low, sell high.

Forward Transactions

Forward transactions, on the other hand, involve buying or selling currency for settlement after at least three days, at a predetermined exchange rate. The buyer and seller basically agree to trade at a particular time and exchange rate, no matter what the exchange rate will be at the later date of the transaction. Traders can arrange forward transactions, also called “currency forwards,” for up to a year in advance.

By using forward transactions, the trader is protected against currency fluctuations for the term of the contract. You can use these to make use of favorable current exchange rate at a future date.

Futures Contracts

Futures contracts have a predetermined currency amount, interest, and maturity date. These transactions constitute an agreement to buy or sell currency in the near future, usually within three months. They come standardized and are traded on futures exchanges such as the Chicago Mercantile Exchange.

Options Transactions

Options transactions are similar to futures, in the sense that both are fixed currency transactions that will take effect in the future. Currency options give the holder the right to buy or sell from the option writer a fixed, stated amount of one currency in exchange for another currency at a fixed exchange rate. This is called the strike price.

There are two types of options transactions: American and European. Traders can exercise an American option at any date before expiry. Conversely, traders can exercise European options only on a precise date. This type of transaction also protects against the risk of exchange rates fluctuations.

 

What It Comes Down to for Untested Forex Traders

Given the volatility of the forex trading market, traders need many tools to keep up with it all. Fortunately, there are plenty of great online brokers and platforms that offer amazing features to help anyone become a successful forex trader.

Even untested forex traders can learn to use the market’s volatility to their advantage. What’s more, as a beginning forex trader, you’ll soon learn that everything you need is just a few clicks away.


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