Forex Trading: What Are Forex Trading Software?

As you start learning more about the Forex trading world and the many opportunities it can offer to foreign exchange traders of all sizes you will realize about the existence of many tools available to the Forex trader for analyzing the market as well as for buying and selling currency pairs. These software tools are a necessity for the Forex trader because of the volume and volatility that characterizes the Forex market.

In order to make successful trades, the Forex trader needs lots of information and current exchange rates, the most evident information you can find, are just the tip of the iceberg. A professional forex trader needs historical data as well as current information about political and economic conditions that could affect the behavior of currency prices.

Successful Forex trading is all about being able to predict whether a currency will fall or rise against another currency allowing the Forex trader to profit from those currency movements.

Most Forex trading can be characterized as speculative, this means the trader makes buying decisions based on predictions on how the market will respond to current political or economic events, and in order to be profitable with speculation the trader requires up-to-the-minute information and an analysis of current and historical conditions.

A number of tools are available to help you as a Forex trader, so you can minimize your risk and maximize your profits. For example:

Pivot Points, can be used to predict the up or down movements of currency prices. They are calculated as an average of the currencies high, low and closing prices. Pivot Points can tell you whether prices are inside the normal trading range or in the extreme trading ranges.

Risk Probability Calculator (RPC) can be used to identify forex trades that have more potential gain than potential loss. The RPC can also help you target exit points to end the trade.

Pip Value Calculators can tell you the actual profit or loss that will result from movements in the Forex markets.

Provided you have downloaded your brokers trading station software, and once you have decided which currency pair to trade, you can log in to the trading station and then enter the desired currency pair as the current exchange rate appears on the screen. The amount of the trade is entered, this means, how much currency you are willing to buy. Some brokers may even give you the option of specifying the amount you wish to risk, automatically setting a 'stop loss rate' into your order.

After the details of the forex trade are entered, you will be taken to a confirmation screen where you can accept the current price on screen. You may be given the option of 'freezing' the quoted price, meaning the price of your transaction is exactly what you see on screen without any slippage. Accept the rate and you have placed your trade.

With the use of software forex tools you can enter a 'stop loss rate' to automatically sell the currency if it falls below a certain rate, avoiding possible losses and giving you peace of mind. But this is not all the automation you can get, you can also enter a 'take profit rate' to automatically sell the currency when it reaches a certain level. This way you won't need to monitor your account all day in order to take profits once an acceptable number of pips have been earned.