In addition to possessing extensive market knowledge, a profitable trading approach requires utilizing trading tools. Without these tools, it is almost impossible to avoid potential losses. You may use the majority of these tools for free. If you don’t understand them, you should familiarize yourself with them. You will not be able to use these tools properly if you don’t know them.
Here are some of the trading tools you should know.
1. Economic Calendar
Keep an eye on the economic calendar since it will help monitor inflation, unemployment, GDP growth, and industrial production news. You can know when an economic statistic is issued if you have the economic calendar since it is usually instantly updated. This will help you beat the competition in the market.
This tool is free on the internet and the brokers’ websites. You can opt to use the one that is effective according to you. Forecasts can be different; therefore, you should consider using different calendars to compare. You also need to understand order flow trading for maximum results.
2. Position Size Calculator
The position size calculator is another important tool. You can use the position size calculator instead of wasting time doing math using your hands. It is mostly useful for forex traders. It helps you know the amount of margin to invest based on the leverage level, the instrument, and the volume.
Traders focus on currencies such as the Turkish Lira and Turkish Ruble. They are often active in major pairs; thus, the first step when switching to exotics is determining the capital required to establish a position. This statistic is critical for maintaining a balanced risk management strategy.
3. Risk of Ruin Calculator
The markets are being affected by inflation, weakening growth, and geopolitical tensions controlled by the central bank’s actions. Under such circumstances, traders should consider the emphasis on risk management.
The risks can be controlled by placing a stop loss. On top of this, you need a risk of ruin calculator as a trader. The tool is free on many websites, which is a great advantage. It helps the traders evaluate the possibility of losing all their money depending on variables such as:
- Risk ratio
- Risk per transaction
- Reward ratio
Traders should also consider learning the mathematical formula used to show the performance of your trading and the amount of risk of losing your funds. You can do this by researching on the internet or even from the pros in the trading industry.
4. Trend Line Tools
A trend line is an important tool that helps traders analyze the movements of the market. It tells you where the trend is headed and how far it will continue. The trend line can also be used to show where a market price is likely to end up.
This tool helps traders in obtaining a high-quality trade setup. As a trader, you should understand how the tool is used to make a lot of money. If you use the tool correctly, you will not face any risks.
5. Horizontal Line Tools
These tools help in determining the level of resistance and support. You need to figure out the major trading zones to stay in the ETF sector for the longest time, and you can do this by using the horizontal line tools.
These tools are available on various websites for free. They also make your work easier, like when you want to do the math you can use the above calculators. As a trader, you should learn what works for you and what doesn’t work for you.
If you are a newbie, consider seeking professional information about the tools from the pros in the industry. Avoid trading without enough knowledge to avoid the risks.
The pros will help you know which websites are best for finding tools. You can find the tools on the websites of the high-end brokers or the low-end brokers. The pros will help you identify the high-end broker’s websites that are good compared to the low-end broker’s websites. For your dream as a trader to come true, you must be committed to learning about the tools.