Forex Trading Calculators – Why Do You Need to Know Them!
Forex trading is one of the most risky financial ventures. Therefore, it is important for traders to understand the factors that are involved in forex trading like potential risks, position sizing, leverage, and so on.
Did you know that trading calculators can help you understand the above factors that are involved in your trade? Here, we will understand how traders can use calculators for trading more efficiently.
Let’s get started!
What Are Trading Calculators?
Trading calculator in forex trading is referred to as a multi-purpose calculator that is used to calculate potential profits and loss, spreads, required leverage and margin, and trading cost per trade. These calculations are essential for both beginners and professional traders to carry out their trades with greater efficiency.
It is crucial to know how much capital is required to carry out a particular trade, what are the spreads in pips on that trade, how much leverage can be used to increase the exposure of the trade, commission to be charged on the trade and what are the potential risks and profits associated with the trade.
Are Trading Calculators Easy to Use?
Trading calculators are the most simple way to calculate your trading figures in the trade. These calculators make it easy to conduct mathematical calculations that may require a lot of time if done manually. Traders just need to put the values and the calculations are automatically carried out. Trading calculators are helpful for all levels of traders as it helps save a lot of time and avoid any hassle while trading. The most crucial part is choosing the right calculator that complies with the trader’s trading strategy.
Commonly Used Forex Trading Calculators:
Forex trading calculators are flexible and adaptable calculators that are beneficial for all kinds of traders (beginners, intermediate and advanced traders). These calculators guide traders to create an appropriate and well strategized trading strategy and make best trading decisions.
Some of the Forex trading calculators are:
- Pip Calculator: Pip calculator is one of the most important forex trading calculators that is used to calculate the value of pip on the base currency allowing traders to understand the risk for each trade. The single pip is compared to 0.0001 of the price. Pip calculator can help in calculating the pip value based on the selected currency pair and size of the trade in lots (Nano, Micro, Mini, or standard) giving a better understanding and making more profits.
- Fibonacci Calculator: The forex market is encountered by breakdowns and rebounds and fibonacci calculators are used to create price chart points that tells the ratio of how much the previous shift will be retracted by the earlier movement. These forex trading calculators analyse these retracements and postponements.
- Margin Calculator: Margin is the minimum amount that is required to open and hold a position. Opening a position requires a certain amount of capital in a particular trading account. Using margin calculators, traders can change their leverage and lot size, giving a precise idea about the position size that can be opened with a particular amount and the leverage that can be used.
- Position Size Calculator: Forex is a risky asset to be traded. Traders need to have a good amount of knowledge about the potential risks and the ways to deal with them. Position size can have a heavy impact on your profits. This calculator helps in calculating appropriate position size for a trade based on the trader’s risk level, stop- loss in pips, account dimension and checks the position margin while focusing on position size of the trade. This helps in keeping the risks in control per position.
- Stop-loss Calculator: Stop-loss calculator is also known as take- profit calculator that allows traders to stop the losses and take the profits. These calculators create potential profit or losses in a trade. To calculate the stop-loss levels, traders need position size, the base value and trading tools.
- Profit/ Loss Calculator: This calculator helps traders to calculate their potential gains and losses in a particular trade. The calculator is used to compute the trader’s potential profits or losses once the take-profit and stop-loss points have been attained.
- Spread Calculator: Spread in forex is defined as the difference in the ask and the bid price of the exchange pair where the ask price is the price at which the trader buys the currency pair and the bid price is the price at which the trader sells his currency pair. In forex, spreads keep on changing throughout the day and traders must consider broadening the spreads as a margin call. This signifies that if the position is held open, traders receive a margin call or get stopped out at that position. The spread is calculated in pips, which is the smallest unit for measuring the movement of price value in the currency pair.
- Multi-target calculator: Forex multi-target calculators include ratio of risk and rewards along with the part of position. The calculator helps in achieving the best rrr ratio for the trade. Traders can divide their huge part of trade into concluding trade if the trader anticipates the market to get a probable long-term tendency. Conversely, this calculator can help in highlighting the initial targets for the trade.
- Risk Check Calculator: Risk check calculator helps in keeping a check on account balance ratio that a trader can risk. This calculator helps in dividing the appropriate lot size to particular trades. The calculator considers the account balance, exchange pair, and price at the stop- loss.
- Forex profit calculator: Traders must anticipate both the positive and negative effects of a trade and to do so, traders use many forex trading calculators. Forex profit calculator is used to calculate the profits that are associated with the trade. This calculator can be used for a wide range of currency pairs, from major currency pairs to exotic currency pairs.
Take in Account:
There are hundreds of other forex trading calculators available on the internet. Traders need to have a good understanding of these calculators in order to pick the right forex trading calculator for a particular trade. There are many sources available that traders can make use of to increase their scope of trade. Practise using these calculators patiently in order to be successful in the long term.