Interested in forex trading?

Then you will need a few necessary tools to enable you contact other traders, get market information, and garner information to assist you make profitable trade decisions.

Choosing these tools can be a complicated process especially for a beginner.

Here is a simplified guide on how to make appropriate choices for forex trading tools.

1. Broker

The first tool you need is a brokerage firm that will connect you to the rest of the market. When choosing a broker, the first thing you need to keep in mind is that the very lucrative forex market has its fair share of scam artists.

Conduct due diligence and give primary consideration to firms that are registered under reputable authorities.

There are some reputable firms which are not registered by these authorities so that they can pass the savings they make by offering traders highly competitive prices and spreads.

Thus, registration or lack thereof should not be the sole determining factor. If you personally know of a trustworthy trader in your family or social circles you can ask them for recommendations.

Click here to read an informative guide on how to choose the best broker.

2. Platform

While the broker is your connection to the forex market, the platform is window where all your transactions will take place. Most forex brokerages offer multiple trading platforms and some can be connected across multiple devices.

To make your choice of trading platform, you need to ask yourself a few important questions. For instance, will you be using a shared computer?

If yes, then you are better off trading using a web-based platform that can be accessed from any computer without having to download or install programs.

If no, then you better go with a platform that can be downloaded, installed, and personalized for a better trading experience. Another consideration is whether you will be trading on the go.

There are various mobile platforms designed to work well with SmartPhones, iPhones, iPads, and tablets. However, some of these mobile platforms do not have the full features and capabilities you may find on the desktop platform.

3. Charts

Of course you will need price charts for your traded currency pairs. There are all kinds of price charts and your choice should be determined by which one you can understand best and the kind of timeframes you will be trading.

You may also want charts that feature a specific type of market analysis or charts that feature a combination of multiple analysis methods.

Additionally, most traders nowadays prefer charts that are combined with trading features, such that by clicking on the charts you can directly place your orders without necessarily going to the platform’s mainframe.

Moreover, other desired features include chart drawing tools that enable traders draw support and resistance lines across the price charts.

4. Signals and Indicators

Once you have your forex trading plan, you can check whether the platform you choose has the relevant indicators, oscillators, and trade signals. If not, check whether you can create your own and code them into your platform.

Various merchants also offer signal subscriptions that you can import into your charts and platform. To choose from all the available signal providers take your time to study each of them.

Many on the market are unreliable while some give outdated information in this time sensitive investment field.

Check for online ratings and reviews for some of the best signal providers and only go with those that offer a trial period. Otherwise you might be stuck with a subscription that adds no value to your trades.

5. News Feeds

Most trading platforms send out economic and financial news feeds to their traders. These are usually from reliable sources such as Dow Jones. However, not all economic news is relevant for your particular currency pair.

Decide what kind of news feeds will contribute positively to your making wise trade decisions involving your currency pair before you subscribe. If available, use the filter features to only receive what is relevant for you.

6. Bots

Automated trading is all the rave when it comes to online trading. The search for a fool-proof trading robot that will return profits with every trade has been ongoing ever since the first online broker started trading. Unfortunately, that search will seemingly continue for a long time.

You will receive many enticing offers to use many different kinds of automated systems. If interested, be very careful on how you pick.

Scammers have taken advantage of the interest in robots to create malicious software that captures financial information from unsuspecting traders.

Ensure that you are dealing with a genuine provider before you engage their products. If a money back warranty is offered and a trial period, then that is best.

If you are satisfied on security issues and performance, check that the bot is compatible with your platform. Most of them are specifically designed to work with particular platforms and will not work well with others.

Conclusion

While the mentioned list contains the most commonly used tools in online forex trading, it is not a comprehensive list. There are many other tools with claims of making your trading an extremely profitable no-brainer.

Some perform relatively well than others while some are outright scams. Beware of merchants who hide their identity as they are most likely to sell you malware that will infect your platform and steal your credit card information.