Top 5 Tools Needed To Start Fx Trading
Updated: Apr 18, 2019
A great man once said:
The best investment is in the tools of one's own trade
- Benjamin Franklin
This applies to Fx Trading as much as any other discipline. Navigating the shark infested waters of the Forex Market can be a difficult and daunting task. Unfortunately, as in any online based profession, there are those who would try and sell you an "automated robot" that promises to do everything for you. It states that you don't have to do any manual work at all, and it will turn anyone that uses it into instant millionaires!
The question we would ask is: "if your system is so good, why haven't you already used it to retire to a desert island!?" - DO NOT buy any "automated robots" that promise this!
The right tools, however, can massively aid your success! We hope that this article will guide you to the tools that will support you the most in successfully Trading Fx, whilst not promising to be the "one golden solution" that costs you all of your initial capital!
We're not suggesting that you should never pay for a tool and, indeed, some of the best tools will cost you something. What we do want to try and help you with though, is which ones you definitely will need and how to tell good from bad. In order to do this, we have recommended a product(s) that will best support the tools you need!
So, let's get started...
1. Trading Platform
The first thing you are going to need to do is open a trading account with a broker. Once you have done that, in most instances, you will have access to their trading platform.
In some cases you may have to link to a third party, such as MetaTrader 4. This platform is the most popular, due to the sheer number of features available. You also have the availability to write your own code, to fully customise your trading experience and be able to build trading algorithms, which can automate your Fx Trading.
Personally we use IG.com. This platform is simple and easy to navigate, especially when you're just starting out, comes with it's own trading platform and a huge variety of markets to trade. There is also the option to link with MetaTrader 4, should you wish, as well.
We feel that the important factors to consider when looking for a broker are:
Commission costs - What does the brokerage charge in fees and spread? If these are high, they can eat into your trading profits.
Ease of use - How easy it is to open an account, deposit and withdraw funds and generally use the platform?
Choice of instruments - Does the brokerage give you access to a wide variety of instruments to trade?
Reputation - Does the company have a good online reputation?
Support - Does the broker have good customer service reviews, as well as several methods of contacting the support team?
The best books that we have found the give you more information around choosing a broker are:
Forex Trading: The Basics Explained In Simple Terms - A section dedicated to choosing a Forex Broker as well as a great all round introduction to trading the Forex Market
Buy my copy now!
Read our review first! https://tinyurl.com/y2njoy39
Currency Trading For Dummies - A fantastic book for breaking down the complexity of Fx Trading - also contains a section covering online trading
Buy my copy now!
Read our review first! https://tinyurl.com/y2u8z7hv
2. Price And Signal Alert software
Price and/or signal alerts are usually sent to you via a provider. When the price reaches a certain level, you are sent a notification to your email or phone and, often, it will include a recommended stop loss level and target profit level.
There are a variety of products out there and they range from being totally free to more expensive models. We found that the free ones tended to still require the user to enter the price at which they would like to be notified - this needs the user to have the knowledge of why they want to be notified of that price point in the first place, and so requires a much deeper fundamental understanding of Fx Trading.
There are also some excellent software products that will scan the currencies you want to assess to show which ones are currently in trade-able trends. Some also have algorithms built in, which will automatically recognise price patterns on charts and then alert you when price has broken out of those patterns, often one of the most profitable times to trade. These indicator products allow a novice trader to trade in the markets more successfully, earlier on.
Of course, we still recommend acquiring as much knowledge as possible and continuing to develop your own strategies. However, some of the software products also allow you to add your own strategies so that the product aids the success of a particular strategy!
Two software products that we think could make the most difference to your success levels are:
Forex Trendy: Forex Trend Scanner - An excellent software product that will scan Forex Pairs to show which ones are in the most trade-able trends and send you price and signal alerts to boost your trading success!
Get Forex Trendy now! http://piptracker.fxtrendy.hop.clickbank.net
Read our review first! http://tinyurl.com/y56djkf3
Forex Millennium - Extremely beginner friendly software that generates reliable signals - also comes with three different risk modes so you can decide on your risk comfort level!
Get Forex Millennium now! https://86e59cth5flzu567c9ujst0z8t.hop.clickbank.net/
Read our review first! http://tinyurl.com/y4xoaczd
3. A Forex Mentor
The best teachers in life are those who tell you where to look - but don't tell you what to see
-Alexandra K Trenfor
The benefits of a great mentor, in any walk of life, cannot be overstated. Just a selection of benefits a good mentor will provide are: helping you set measurable goals, never letting you become complacent, sharing personal experiences that inspire and motivate you, providing information and knowledge and seeing where you need to improve where you are "self blinded".
In Fx Trading, it is easy enough to learn to trade alone but becoming a successful Forex Trader alone is almost impossible. The problem experienced by new Fx Traders is that they come up against a barrage of information and, due to the complexity of the Forex Markets and Trading, it is very difficult to tell what they should be using to get started. That's why having a Forex Mentor can prevent you failing before you have even started!
Where Can I get a Forex Mentor?
There are a lot of dedicated Forex Forums that you can access, where traders post their trades, can chat to one another and ask questions. The limitations here are that you never know whether the traders posting their trades are being honest and, due to the free nature of the forums, there are a lot of people asking questions and often far more novice traders than professional ones.
Another option is books. A lot of the Forex beginner book authors also provide online services where readers can ask questions about the material and follow the authors trades. This is a great option but, of course, there is an upfront cost for the book and then sometimes an extra cost to be able to access the author's online resources. However, we would say that you get what you pay for, especially in the Forex World, and the cost of these resources will be returned to you several fold in Trading Profits! Two that offer this are: Forex Trading: The Basics Explained In Simple Terms and Forex For Beginners.
Finally, there are dedicated "clubs" that traders can pay to access and then have full exposure to such things as: live trading room sessions, a library of educational videos, downloadable ebooks and trading tools, live chat and support, detailed daily trading reports and live chat rooms to interact with mentors and fellow traders!
We think this is the best option and the cost can be very reasonable. Undoubtedly, it will more than make up for the losses sustained that can occur from going it alone. Also, it can often be less than buying 5 books!
Two that we highly recommend are:
Traders Academy - Gives members access to a huge amount of benefits that are guaranteed to improve any Trader's Success! Members will have access to: live webinars, a community of traders, and much more!
Get access now! https://a845dbqbvbb9q8zmq4hnta5t8j.hop.clickbank.net/
Read our review first! https://tinyurl.com/y275bb76
Trade Like a Pro - Gives members access to trading software used live on the platform, daily video analysis, access to a private community of professional traders and help, support and advice whenever needed!
Get access now! http://piptracker.lmtmentor.hop.clickbank.net
Read our review first! https://tinyurl.com/yxgrtfec
4. A Trading Journal
A Trading Journal should be like the "staple" to your trading diet! It should form a crucial part of your trading routine and, indeed, aid you in maintaining that routine!
One thing that must happen in order for humans to improve at any pursuit is to make mistakes! Fx Trading is no different. What is important, however, is that you learn from those mistakes - the best method for doing that is to have logged all your trades in your Trading Journal, including the reasons behind making the trades and exiting the trades, so you can then analyse them afterwards.
A Trading Journal will also serve to remind you that trading success is measured over time with a series of trades! All too often, new traders can get lost in an individual trade and forget that trading is about making little losses and big wins. The journal will help you to keep your focus on this!
There are more reasons why keeping a Trading Journal is critical to your trading success, but take our word for it, and make sure you keep one right from the start!
The good old pen and paper is generally considered to be the most effective way to keep a journal and there are studies that show that you remember a lot more when writing as opposed to typing. Just make sure you keep it in a proper file or folder and don't leave it just lying around for the cat to eat!
If you are, however, adamant about using a more modern method, then putting together an Excel spreadsheet is definitely the next best thing. If you don't think you have time to do this, or your Excel skills aren't up to scratch, then you can find free versions to download just by Googling "free Trading Journal".
So what should your journal include?
The entry date - the date that the trade was made
Fx pair - the Fx pair being traded
Buy/Sell - whether the trade was a buy or sell
Entry price - the price that you bought at
Your stop loss - where you have placed your automatic sell
Your planned target or exit - where you plan to take your profit
Possible risk - how much you could lose if your stop loss is activated
Your position size - the number of lots being traded
Exit price - at what price you actually exited the trade
Pips +/- - how many pips were gained or lost on the trade
Total P/L - how much money you made or lost on the trade
Risk and reward - the risk reward ratio that you are using on the trade
Exit date - what was the date that you exited the trade
Reason - what was the reason you originally entered the trade
5. Economic Calendar
Another tool that is essential to your trading success is an economic calendar. These tools will contain a list of upcoming economic announcements and data releases over a specified time period. These releases will often have an impact on the currencies that they directly relate to and also currencies that are indirectly related for one reason or another.
Some releases have a higher impact than others and your calendar should detail which releases have High, Medium and Low impact. As Fx Trading is carried out with currency pairs, it is critical that you understand which upcoming releases will impact on both currencies in the cross.
Clearly, in order to most effectively use the economic calendar to aid your Fx Trading, you will need an understanding of the Forex fundamentals.
To give you the most in-depth coverage of this we recommend:
Currency Trading For Dummies - not only does it break down the subject into short and easily understandable sections, it is also the book that goes most in-depth into the fundamental reasons behind why currencies move
Buy my copy now!
Read our review first! https://tinyurl.com/y2u8z7hv
Bonus: Financial News
What happens in the wider economic and political world can have a huge impact on currencies. Therefore, in sync with your economic calendar you should make sure that you have access to up-to-date news!
Having a good understanding of the events and releases that are going to happen, and role they might play in impacting the currencies you are trading, or thinking of trading, can have a hugely positive impact on your Fx Trading success!
There are some great free websites out there that are perfect if you are just starting out. Also, if you are getting more serious with your trading, you can pay a small monthly fee to access real-time news updates to make sure you are constantly up-to-date with new information!
Well, thank you for taking the time to read this post, we hope the information will be useful to you. Leave us a comment below to let us know what you think or ask any further questions.
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Until next time...