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Forex Tools

The huge foreign exchange market has only recently become accessible to retail traders via the Internet. As the market has opened itself to dealing with the general public, a number of software developers have stepped into the market to offer a variety of helpful forex tools at increasingly accessible prices that traders can use to assist them in analyzing or executing currency transactions.

In the past, the proprietary development and use of such tools was prohibitively expensive and was usually only undertaken by large financial institutions who could afford the development costs. Fortunately, many quite sophisticated such programs are readily available today at affordable prices. Some of these are even offered free of charge to the public by their developers or more selectively to the clients of certain online foreign exchange brokers.

Most of the popular types of forex trading tools are discussed in the sections below, including a brief description of each kind of software tool and how it might be useful to a forex trader.

Forex Trading Platforms

Just about any currency trader who wishes to operate in the foreign exchange market via the Internet will require the use of a forex trading platform. Such key forex tool typically allows a trader to enter trades and orders, as well as liquidate and manage existing positions. Some of the more sophisticated platforms also offer charting features and support algorithmic trading by incorporating a programming language.

These platforms are typically offered free of charge to clients by the online brokers that develop them, although some relatively sophisticated platforms are offered by third party developers. The latter group includes the popular MetaTrader 4 or 5 supported by a number of foreign exchange brokers that allows traders to switch brokers or hold online accounts at different brokers while still using the same platform.

Forex Charting and Technical Analysis Programs

Many retail currency traders use technical analysis as a key part of how they go about making decisions. As a result, the next most important forex tool would be software that allows traders to chart the price action for the currency pairs they are interested in and to calculate and plot the technical indicators that they wish to use in their decision making process.

Furthermore, recent innovations in pattern recognition technology have resulted in a growing number of forex trading tools that can analyze price charts for the classic chart patterns widely recognized and used by professional technical analysts and used to forecast future price action. Such software can usually identify forming chart patterns, highlight breakout points, compute measuring objectives and assess the probability of the price action successfully attaining its target once a chart pattern breaks.

Forex Trading Robots

Once considered the holy grail of forex tools by many professional traders, the age of fully automated foreign exchange trading has finally arrived as forex trading robots have recently become available to retail traders.

Most of these robot software programs have been developed as Expert Advisors that operate within the environment offered by the MetaTrader 4 or 5 platform. These robots usually have the ability to operate on a fully automatic basis when it comes to deciding upon and entering trades and liquidation orders directly into the foreign exchange market.

These robots can vary considerably in their sophistication when making decisions, as well as their degree of profitability when allowed to start trading in a live online account. Nevertheless, at least some of these robots do appear to have been developed by consulting with professional currency traders and hence observing them in action might assist novices in making better market decisions than they would ordinarily make.

Forex Signal Generators

For those who prefer to make their own decisions rather than allow a robot to deal automatically on their behalf, a potentially useful tool might consist of the forex signal generators.

Signal Generators typically consist either of software systems that analyze the foreign exchange market and alert the trader when they identify trading opportunities or signal generation services that inform them of their signals in a timely way as they arise.

The alert service, usually provided by a forex signal generator, lets a trader know when possibly profitable opportunities are setting up in the market, but still gives him full discretion as to whether or not to take the trade. They offer the benefit of allowing a trader to do other things and only place their focus on the foreign exchange market when an opportunity has been identified and a signal generated.

Of course, while the aforementioned types of forex tools can be very helpful or even invaluable to some traders who incorporate them into their currency plan, they still require testing, experience and the application of sound money management principles in order to have the best chances of using them successfully in a live environment.

 

 

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