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Calculators In The Forex Trade

Advances in Internet technology has only meant that forex trading tools are already available to the average trader.

Forex softwares are an indispensable part of the forex industry for the sheer volume that is traded daily and the characteristic volatility of the forex market.

As it is, there are many tools (charting tools) to help forex traders analyze if a currency is strengthening or weakening. These Internet-based tools help forex traders draw up a technical analysis which, with fundamental analysis, form the basis of trading strategies.

There are also tools that automate the buying and selling of currencies. These tools automate some of the trading procedures and protects forex traders against losses. There are two types of forex trading: reactive trading and speculative trading

In reactive forex trading, the trader merely responds to a country's political or economic climate. In speculative trading, the trader buys a currency based on speculations on how the forex market would react to recent events.

In both cases, the successful trader relies on information - lots of it - on conditions that could affect the price of currencies. Forex brokers would typically have this exhaustive information on their websites.

Brokers would also have specific tools on their websites that would help forex traders maximize their profits, among them:

Risk Probability Calculator (RPC)

The RPC tool is used to identify forex trades that are potentially profitable and those that have the potential for loss. This tool can also help forex traders target exit points to end a trade.

Pivot Point Calculator (PPC)

The PPC is used to predict currency price movements. A pivot point is calculated as an average of a currency's high, low and closing prices. The PPC tool also tells a forex trader if a currency price falls in the normal trading range or in the extreme.

Pip Value Calculator (PVC)

Pip is the smallest currency value in a given lot. The PVC so far should be the most interesting tool for forex trader because it shows the actual profit or loss arising from forex movements.

Once you have selected which currency pair to trade, just log on to your online account. Enter the chosen currency pair - the forex rate should appear on the screen. Enter the quantity of the currency you want to buy.

Take note: before you register with any online forex broker, make sure the website has a 'stop loss rate' tool and a 'take profit rate' tool (make sure you use these tools too). "Stop loss rate" automatically sells the currency for you it falls below a specified exchange rate.

"Take profit rate" automatically sells the currency when it has reached a specified profit level.