It is an exciting prospect to have a career in foreign exchange trading (also known as forex trading or currency trading). ZERO Market’s research team has joined forces and listed some most useful Forex trading tools for our dear customers.
Forex trading tools are divided into two main categories: infrastructural components and composed of analysis. This then can be further categorized as fundamental analysis and technical analysis.
Trading Platforms
A reliable and fast trading platform is essential. It allows traders access to financial markets, to trade forex or other financial assets such as shares, commodities, indices and cryptocurrencies.
The most popular trading platforms among retail traders are MetaTrader 4 (MT4) and MetaTrader 5 (MT5).
The MT4 platform was first introduced in 2005. Its great functionality and mature trading community make it still relevant in 2021. Access to the MT4 community is a boost to customer’s trading knowledge and a place to learn quickly. MT4 allows for automated trading strategies using Expert Advisors (EAs), also known as trading robots. In comparison, MT5 is newer with more charting functionality, but MT4 uses fewer system resources.
Fundamental Analysis Tools
Similar to the stock market, the Forex market responds to macro news such as economic data. Therefore, it is essential to need a real time economic calendar. An economic calendar helps traders to track and prepare for significant economic releases, for example, interest rate decisions, job data, inflation numbers, and GDP growth.
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Technical Analysis Tools
Technical analysis plays a key role for traders to determine market entry or exit point. An indispensable technical tool is moving averages, an indicator displays price trends for a certain period of time. There are two commonly used types of moving averages: Simple Moving Average (SMA) and Exponential Moving Average (EMA). SMA allocates same weight on the price at every time period, whereas EMA allocates more weights to the current price.
Another must-have technical analysis tool is the Relative Strength Index (RSI). RSI is a momentum indicator that oscillates between 0 and 100. It provides overbought or oversold signals as well as divergence signals. Generally, convergence near overbought space 70 is considered a sell and near oversold space 30 is considered a buy.
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