Given the liquidity of the forex market and the fact that an estimated $6.6 trillion is traded in global currencies every single day, it makes sense that investors should make the most of every available tool when trying to operate profitably.
One such tool is a forex calculator, which enables traders to manage real-times within the marketplace and make more informed decisions about how to structure and time their orders.
But what are the various types of forex calculator available, and why should you make use of them as a trader? Here are some key considerations you should consider when learning how to trade forex.
The Different Types of Forex Calculator
One of the most basic types of calculator you’ll use as a trade is a currency converter, which enables you to appraise basic value when dealing in specific pairings.
Beyond this, you’ll also need to use a margin calculator, which is capable of determining the precise margin required to hold or open desired positions.
More specifically, opening any position requires you to establish a margin or funds that must remain in your account, so a calculator makes it possible to adjust leverage and reduce lot size as and when required.
Another popular iteration of this tool is the pip calculator, which becomes accustomed to the pip value of your preferred base currency over time. You can subsequently use this tool to assess the risk level that’s specific to each trade, with the pip value defined as the rate change in each pairing.
Last, but not least, we’d also recommend using a stop loss forex calculator. This plays a pivotal role in risk management, as you look to minimise losses and make best use of the information provided by forex calculators.
With this type of calculator, traders can tell brokers to limit their losses and leverage profits in relation to individual orders, estimating the precise point at which open positions will automatically close.
This definitely creates an additional layer of security, while enabling us to take more calculated risks in the pursuit of increased profits.
What are the Benefits of Using Forex Calculators?
As we can see, each type of forex calculator has its own unique uses and benefits, but as a general rule, these entities help you to make more informed and considered decisions in a real-time market setting. Any of the best forex trading books worth their salt will confirm this.
These calculators also help traders to save significant swathes of time when performing complex calculations and conversions, which is particularly crucial for day traders or those who want to execute a high volume of orders within a relatively short space of time.
As we’ve already touched on, stop loss calculators should also sit at the centre of your risk management strategy, particularly in terms of identifying the viability of potential trades and eliminating losses over time.
This is arguably the best example of how a forex calculator can drive more informed and effective decision making, particularly in such a busy and increasingly fast-paced marketplace.