Forex Trading Checklist: 4 Essential Tools To Help You Conquer The Market
Want to improve your forex trading performance? Here are four essential tools to help you conquer the market.
Did you know the global forex market in 2020 was worth around $1.934 quadrillion? Just to put that into perspective, this makes it out to be around 2.5X larger than the global GDP. However, despite its incredible size, trading forex for a living is all about the fine margins. If you want to beat the market and take home your slice of the pie, your mission is to be as accurate as possible over the long term.
As they say, the devil is in the details, and the more precise you are with your analysis, the more accurate your trades will become. Nonetheless, any competent trader will tell you that consistently identifying profitable setups is much easier said than done, which is why a trader must learn how to use the vast array of resources at their disposal in order to give themselves the best chance of conquering the market. On that note, let’s take a look at four of the must-have tools every trader should have in their arsenal.
1 – Charting software
Charts are one of the most important things to have when it comes to forex trading. You can use them to keep track of market activity, spot patterns, research the price action of individual currencies, and even conduct real-time market analysis. Fortunately, the most popular charting software providers usually give you access to a large range of technical indicators, which can further help you improve your overall accuracy.
These days, real-time charting is available on most of the advanced forex trading platforms. With that said, if you’re looking for something more sophisticated than what your broker provides, then there are plenty of standalone options out there for you to explore.
2 – A trading journal
Analyzing, tracking, reporting, and assessing your past and future trades are all important aspects of successful forex trading. Without precise records of all the positions you have taken, you will have a very difficult time figuring out why you end up losing (or winning). The thing is, while it’s convenient to learn from other traders through mediums such as online courses and seminars, the best way to improve is through reviewing your own trading activity.
Keeping a trading journal is a great way to observe your trading habits. It allows you to gain valuable insights into your tendencies and shines the light on any potential weaknesses and mistakes that you’re making. Here are a few tips on how to keep a trading journal:
- Write down every trade before you enter into a position (include your reasoning why, and what logic the trade is based on)
- Log your emotions both before and after
- Take time to go back and reflect on your previous trades. For example, review the trades from the previous day before you begin your new session.
3 – Forex signals
One of the most difficult aspects of being a trader is having to continually develop your own trading ideas time and time again. Conducting fundamental and technical analysis can get tedious for even the most disciplined traders, and when your concentration slips, it can lead to costly mistakes by entering sub-optimal positions.
A great way to get away from the monotony of finding your own positions is to follow trading signals (a form of copy trading). With that being said, it’s crucial to note that the best forex signals are only worth following if you know they’re coming from a reliable and trustworthy source, so make sure you do your homework before you blindly follow someone else’s advice.
This isn’t to suggest you should completely disregard technical analysis and stop hunting for your own trading opportunities. Forex signals should be used as a guide to incorporate into your regular trading practice to help you identify potentially profitable positions and improve your accuracy over time.
4 – Forex time zone converters
The best times to trade the market largely depend on where you are situated and the currency pairs you want to trade. As you know, the 24-hour forex market is divided into three primary trading sessions: the London session, the US session, and the Asian session.
This can be perplexing and disorienting for traders, particularly those who want to trade various currency pairings simultaneously. To make things easier, you can use a forex time zone converter to keep track of when sessions are open or closed and when trading sessions overlap. These events tend to be the times when there is the most volume and volatility; therefore, it’s critical to be aware of these occurrences so you can plan accordingly.
There are numerous tools available to assist you in becoming a more effective forex trader, and the majority of them are inexpensive and simple to use. In general, experience and knowledge are the most important aspects of forex trading. As such, the onus is on you to acquire information and determine the best course of action at each given time, and the four tools listed in this article can help you do just that.