7 best trading tools for 2021

Forex trading is complicated, but there are ways for you to make it easier on yourself, as well as more profitable. Of course, that includes things like studying the market and learning how to read the charts, but we are not talking about that today. Let's look at some of the best forex trading tools in 2020

Today, we are talking about having the right forex trading tools at your disposal. These tools will help you do various things, such as:

• Keep a trade journal

• Calculate volatility, margin, profit, and more

• Calculate currency conversions

• Keep an economic calendar

• Get financial news instantly

• and more.

As soon as you start trading forex with these tools at your side, you will quickly realize why they are so popular. They can give you the edge you need to make good trades and avoid bad ones. They will help you analyze the markets, set up parameters for choosing trades, and do a lot of other useful things that will increase your odds of making a profit.

What to look for in forex tools？

Of course, not just any tool will do. You need to look for tools that display certain characteristics. Here is what you should look for:

1) Reliability

Most tools that trading platforms or broker websites include are likely reliable. However, you should test them to be sure.

2) Functionality

Naturally, you need a tool that can do what it was created to do and function without problems under normal circumstances within the forex market. Functionality and consistency are crucial, as you need to know that you can rely on your tools at all times.

3) Affordability

Lastly, you shouldn't pay a fortune for your tools, especially if there are much cheaper solutions out there that do the same thing. You should look for functional and reliable tools, but if you can pay less for obtaining them, that will certainly help. After all, your goal is to make money, not waste it.

What kind of tools do you need？

The last important question before we start talking about the actual, specific tools that you could consider is deciding on what kinds of tools do you really need. Many of them will depend on your trading style and the methods you use for money management.

A day trader and a trend trader will not use identical tools, as the former needs short-term technical indicators and chart patterns, while the latter is likely going to be more interested in long-term moving averages and charts.

So, keep in mind that your strategy matters a lot. But, with that said, there are some tools that will be of use to most traders, regardless of their preferred trading style.

Those would include things like:

1) Charting software

Charts are among the most useful things in your arsenal when it comes to forex trading. With them, you can track market performance, notice patterns, examine the history of specific currencies, and even analyze the market in real-time. This type of software often includes other technical indicators and trading signals as well, all of which are helpful for successful forex trading.

2) Copy trading servicesCopy trading is a relatively new thing in the trading industry, as it has only been around for about a decade or so. This technology allows traders to duplicate successful trades of others and use the same methods for tackling the market. Whenever a successful traders trade on their accounts, you can copy the trade automatically. Of course, they would not be identical but scaled to suit your own risk preferences and other settings. These are very useful tools for those who look up to a professional trader.

3) Trading platforms

Of course, there is also the matter of a trading platform. These platforms often contain some analysis tools of their own, most of which have order entry abilities, and can track the market changes in real-time. This is certainly convenient for tracking the market changes as you are placing your order.

Another thing that they often have is a financial news feed, which can also help you decide what move to make. Then, there is a highly-customizable, sophisticated trading software that allows you to set up different parameters and use them for automating your trades. That way, you don't have to worry about missing an opportunity that you would consider good enough to enter a position.

Best of all, it is also very easy to find a platform that comes with its own mobile version, so you can also trade on the go.

4) Calculators

Last but not least, there are all kinds of online calculators that can help you save a lot of time when calculating your next move. Those can include things like margin, pip, profit, and volatility calculators, as well as your typical currency converters.

Best forex trading tools

With that out of the way, let's get into the tools themselves. These will be some specific tools that we recommend for helping you trade forex in 2020.

1. MetaTrader 4 and 5

At the top of the list, we have MetaTrader 4 and MetaTrader 5. These are trading platforms that offer a lot of tools of their own that can help you create your own version of EA (Expert Advisor) software. As a result, you can automate your trading to a pretty large extent, so that you don't have to analyze every situation yourself.

MetaTrader 4 — or MT4, as it is also called — gives you access to a built-in editor, and a compiler with access to a free library of software, created by users themselves. It will provide you with fresh articles, and all the help you need for making successful trades and learning the software.

Simply set up the parameters and wait for the software to generate a trading signal.

MetaTrader also offers two different types of trading orders:

• Pending Orders

• Market Orders

The first ones, Pending orders, are executed when the price reaches a predefined level. Meanwhile, Market orders can be executed in one of four modes:

• Instant execution

• Request execution

• Market execution

• Exchange execution

MetaTrader offers great real-time trading functionality, and the number of charting and other tools for technical analysis is rather impressive. Even its interface can be customized in a way that will suit you best. Meanwhile, there is also no lack of community-created add-ons that you can include.

However, be aware of the fact that MT4 and MT5 were created to act as stand-alone systems with the broker. There are software bridges created by third parties that can allow you to integrate MT with other financial trading systems, however, although MetaQuotes Software really did not like this.

2. Trading journal

Next up, we have a trading journal. This kind of a tool, while simple, is very important for traders, particularly when it comes to new traders who are still learning the ropes. The reason for this is that traders need to learn about their own trading habits.

Once you start trading forex, you will likely have a lot of trades in a relatively short amount of time. That will make it impossible for you to remember every detail of every trade, so the best thing you can do is write it down in a trading journal.

That way, you can keep accurate records with as many details as you like, and gain insight into your trading decisions. Include explanations for why you initiated the trade, which signals you used to decide when to enter a position, how it all went down. Anything that you think might help you notice a pattern in your trading behavior, and improve it, should go into the journal.

That way, you will see where you made a mistake, and you will know exactly why you made that mistake. That way, you can simply avoid the same mistakes in the future, and work on bettering yourself.

3. Financial News Wire

As you probably know already, there are plenty of things that can influence forex prices and make them go up or down. Things like interest rates, economic numbers, and alike can all cause people to buy or sell, and the price to grow or drop. This is why it can be crucial to keep track of all the fresh news and use them in your trades.

Interest rates are the most influential on forex, according to some analysts. They are set by the countries' central banks, who are also the entities with the most control over their currencies. Benchmark interest rates are released every month, which is when their influence on forex prices is the strongest.

Apart from technical news, there are also geopolitical events that you may want to keep an eye on. This can include major economic releases like GDP, or things like national elections. Most importantly, keeping an eye on the news allows you to react instantly, and in some cases, even predict the price change before it starts, if you are quick enough.

And, even if you are a long-term trader, you should still keep an eye on the news, as they can help you predict what to invest in, as well.

4. Economic calendar

Then, there are things like economic calendars, which are very useful for traders who like to have their entire trading week planned out. You can use your calendar to list important events so that you would not forget about them and only read about them in the news. This could include all the major events we talked about in the news section, like central bank policy and interest rate statements.

Simply create a calendar for yourself, listing when these events will take place so that you would know when to keep an eye out for them, as well as price changes. You can also add the expected number and the previous number, which will help you notice things like deviations from what you had expected, and help you figure out how good your understanding of the market is. Also, remember to add how much each event impacted the currencies you are interested in, and in what way. This can also help you determine how the market will react to similar news in the future.

5. Calculators

We have mentioned several types of calculators earlier, so let's take a look at each of them and how they can help you out with your trading. You can usually find most, if not all of them, on your broker's platform, so do look them up.

Volatility calculator

This is a type of calculator that uses the data regarding how the currency changed in the past, to help you determine its potential moves in the future. Provided that there are no major unexpected influences, such as big announcements or geopolitical events, most currencies tend to 'repeat their history,' meaning they would drop or jump in a similar way and at the similar time. By knowing the currency's historical volatility, you can use this calculator to predict its movement, and use that to your advantage.

Pip calculator

Pip is the smallest unit of movement in a currency pair's exchange rate. A pip calculator can, therefore, allow you to determine the exact amount of worth per pip. To do this, it uses the local currency's position size.

The calculator can display a specific currency pair's value based on a standard-lot (100,000 currency units), mini-lot (10,000 currency units), or a micro-lot (1,000 currency units).

Margin calculator

Next, there is a margin calculator, which you can use to determine the amount needed to open a position in a trading account and maintain it. It uses several aspects for its calculations, such as the contract size, the specific currencies in the pair, your accounting currency, and alike. In return, it gives you the required margin, the margin percentage, and how much you need in order to hold a position.

Currency converter

A currency converter is, obviously, a calculator that allows you to calculate the value of one currency in the form of another, based at the prevailing exchange rate. You simply choose a currency you wish to convert, the currency you wish to convert it to, and the amount. This can help speed up the process of calculating equivalent currency values and alike.

Profit calculator

Next, there are profit calculators, which are very simple tools that allow you to determine whether a trading position would result in a profit or loss at different levels of the exchange rate.

• 6. Time zone converter

Another very useful thing to have and use is a time zone converter, which is important, as time zones can mean a big difference. As you may know, the leading forex trading centers are placed all around the world. You've got the ones in New York, Tokyo, London, and Sydney, all of which are in different time zones. Even so, some of them have their trading sessions overlap, and these overlaps could be the most liquid moments of the day.

• 7. Correlation Matrix

Lastly, we have a correlation matrix. Basically, this is a tool that helps you determine how the exchange rate of one currency pair impacts that of another. That way, you can keep track of one pair's behavior, and predict how the other one might follow. A set of currency pair correlations is what we call a correlation matrix.

There are some pairs that correlate rather strongly, due to some common elements that may impact both of them. As a result, when you see the more volatile of them move, you can expect that the other one will start moving as well, and invest accordingly.

• Conclusion

There are plenty of tools that can help you be more successful when trading forex, and most are pretty easy to use. When it comes to forex trading, the thing you need the most is experience and information. The experience is on you, but these tools can help you with gathering information and determining the best course of action at any given moment.