4 important forex trading tools

4 Important Forex Trading Tools http://www.netpicks.com/forex-trading-tools/

Unlike the traders of yesteryear, today's market participants have a

huge selection of Forex trading tools at their disposal. As a matter of fact, the

selection can be overwhelming at times so it's important to dial it down to simple categories and decide what

fits your needs.

The only way you'll know what trading tools you need is to know what kind of

Forex trader you are. Swing traders may require different tools than traders who scalp or day trade the currency market. Let's drill into four categories of trading

tools that you may want to investigate as part of your Forex trading business.

The most obvious place to start is with the charting software you'll need to chart the various currency pairs you

may be trading.

Your choices range from the charting packages offered by your broker, to the famous (and free) Metatrader

package, and all the way to paid charts such as Sierra, Ninja Trader, and

Tradestation.

Metatrader is very popular with the retail Forex trading crowd and

EXTREMELY popular with those that sell Expert Advisors that trade for you.

Think of "cheap algorithm trading" and

you will know what I mean. (something I suggest you stay away from).

Everyone will have different needs and different budgets. You must test drive

each platform you are interested in and see how it responds. One big thing for me is watching computer load and I can say that so far, I've

found Sierra charting takes very low resources on my computer to run.

While the charts are important, you also want to keep in mind who is supplying

your data. For retail Forex, your broker is generally the market maker and will supply you with the quotes and data and that may cause you concern. I've seen spikes in the

broker data that did not appear when using an outside data source.

Each charting package for Forex trading will come with many technical indicators and some will come with built in scanners as

well as the ability to trade from the chart. Again, everyone will have different needs so make sure you read the list of what's

available for the charts you are interested in.

Here are some of the highlights of Sierra charting: - Sierra Chart is extremely fast with a definite focus on high performance in all areas of the program. - Create your own custom studies. - Sierra Chart is simple to get started with and simple to use.

Forex is currency trading and currencies are impacted greatly by the actions of the countries related to the currencies you are trading. Due to the impact news can have on currencies, the second trading tool is economic

news reporting.

A calendar listing the days news events is something every Forex traders should be

looking at for every trading session. This is very important for traders who day trade

or scalp the currencies. Swing traders, depending on their style, aren't really

concerned with the volatility that can come with an individual news release.

One of the most important releases you should be aware of is called: FOMC: The

Federal Open Market Committee:

The FOMC meets eight times per year to set key interest rates, such as the discount rate, and to decide

whether to increase or decrease the money supply, which the Fed does by buying and selling government

securities. - Investopedia

Another release you should be aware of is: NFP: Non-Farm payroll:

In general, increases in employment means both that businesses are hiring which means they are growing

and that those newly employed people have money to spend on goods and services, further fueling growth.

The opposite of this is true for decreases in employment. - Investopedia

You can see on this segment below how the releases are listed on the Bloomberg calendar.

I've boxed in the important releases and you can see they have a red star beside them. This

indicates that these releases have the potential to move the market. Be very aware of these

releases and a general rule at Netpicks is not to be taking a trade five minutes before the news.

Technical analysis is described as: a security analysis methodology for forecasting the direction of prices

through the study of past market data, primarily price and volume - Wikipedia

Traders utilize technical indicator tools to assess the opportunities that fall under their trade plan for taking a

trade in Forex. There are drawbacks that come with using trading

indicators but most of them come with how traders use them.

Indicators are not the "holy grail" nor do they have an "uncanny ability" to predict the next market move. They are a tool that can have a place in a well thought out and tested trading

plan.

Traders will find they have favorite indicators they like to use which is important because you are able to

expertly apply them due to the amount of time you use them. You must become an expert at whatever trading tool you use and any market

including Forex, is not exempt.

Let's look at one very popular indicator known as Trend Lines. One of the

oldest indicators around and are used to not only to determine trend, but

also strength of trend and can even be used for entry into a trade.

Number one is the bottom trend line, number two is a copy of number one

applied to the top and forming a channel. You can see how price is

bouncing off both sides of the channel.

Drawing trend lines is straightforward. You simply connect two or more higher swing lows in an uptrend and lower swing highs in a downtrend as you can see in the chart

above.

I find trend lines to be powerful and can set up some very good channel trades where you short the top and buy at the bottom. Of course you need a trade plan for this but start

experimenting with trend lines if you are new to them.

One thing that gets missed when talking about trading tools is the

"paperwork" behind the scenes. You must have a way to journal in your

trading business.

You must know if you are slowly bleeding your account dry or if you are trading in a manner that will see you slowly compounding your account.

Log important Trade Statistics Track set up types

Netpicks understands the importance of

trade logs and is providing you with a free Capital Growth Application.

http://www.highvelocitymarketmaster.com/capitalgrowth/

Recommended risk per trade based on your trade account size & market/time interval you trade.

Scientific quarterly breakdown of your account growth

so you can track your progress.

The all-important Net Income totals which give you the real truth on where you stand with your trading.

Using and understanding these categories of trading tools is the easy part. The hard part comes not only

when you try to design a trading system or plan but also trying to stick to what you've tested shows an edge.

One of the best ways to stay on track is being part of a bigger group of traders who care about your success. Trading

is tough.period. Any edge you can gain, including surrounding yourself

with those fighting the same issues, is well worth having in your corner.

Forex trading tools are not just what you use to help you enter and exit

trades. Educational companies such as Premier Trader University can not only

set you up with a profitable trading system but also ensure that you have the "psychology of trading"in check to

increase your odds of success.