Trading Instruments

November 16

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Top Trading Instruments for Your Profitable Business

Forex trading is not an easy task for both beginners and experienced traders. Regardless of the trader’s experience and knowledge, he will always try to simplify the decision-making process using various trading instruments. These trading instruments help determine the most profitable entry and exit points of the market.

The methods for accessing various trading instruments differ, and there are many trading instruments types. This can be either a net sale of trading instruments or a paid subscription with monthly/annual service coverage. At the same time, you can also find trading instruments that are free of charge to clients of brokerage companies.

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Some useful utilities for trading and market analysis can be found in the popular MetaTrader 4 trading terminal. Platforms like MT 4 offer a comprehensive package of technical indicators as well as various trading automation options. Do not know what trading instruments types are top effective and will make your trading business more effective? Then keep reading — we will share with you the must-have trading pack.

#1 — Free Trading Instruments

There are fundamental analysis trading instruments that can be found for free. Among them, you will always find a calendar of economic news. Depending on the currency pair traded, we need to have information about important events that can affect any particular country. There may be differences in interest rates, and, accordingly, expectations in the Forex market can be important at the level of the exchange rate. 

Some other free trading instruments types can be found on almost all broker sites. Some free trading instruments are applications that can be used online; others can be downloaded as an Excel spreadsheet or even as add-ins to Excel-based programs.

#2 — Full-Fledged Economic Calendar

One of the most useful and popular trading instruments is the economic news calendar. Such trading instruments allow traders to learn about future events in the finance niche, including key economic data and major geopolitical events. For example, with the help of economic calendar trading instruments, we can find out when important statements of representatives of central banks will be published, etc.

Olymp Trade economic calendar

As one of the most effective trading instruments types, the economic calendar is primarily of interest to those who trade based on fundamental analysis. Large brokers almost always have economic calendars on news sites. The popular majority of such trading instruments are composed of a release type, such as unemployment rate, historical data, and forecast data. Many pieces of news are classified according to the degree of market impact: 

  • Significant impact;
  • Moderate impact;
  • No market impact at all.

If the economic news has a low impact, then the currency pair has either very little reaction to this event or no reaction at all. Accordingly, the medium and the highest impact events cause the greatest fluctuations in the price of a currency pair. Keep an eye on all the happenings with trading instruments.

#3 — Financial News Feeds

The financial news feed is a supplement to the economic calendar and is believed to be one of the effective trading instruments types. Economic news is disseminated by major financial publications. For example, The Wall Street Journal, Reuters, Bloomberg, MarketWatch, and other major financial sources. Interest rates play an important role in assessing the movement of currencies because news of changes in interest rates from each individual country directly affects the value of the national currency of that country. Reports of high-ranking officials of various states, official press conferences, and political statements quickly spread into news feeds. 

Other important economic news that can affect the value of the national currency is adverse geopolitical events, the production of strategically important natural resources such as oil and gold, and the level of employment. These are just a few examples. If you dive into this business, you will understand that there are a lot more things to keep track of with the help of trading instruments.

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#4 — Trader Calculator

Working with currencies from a trading point of view can be quite confusing if someone is not familiar with the pip scoring system or doesn’t employ trading instruments. A pip is the lowest trading unit for a currency pair, and typically are different amounts depending on the base currency and the quoted currency.

A trader calculator refers to trading instruments types that allow you to determine the value of one point based on the size of your position in the desired currency. A standard calculator for the desired currency pair can show the value of one pip based on a standard lot of 100,000 units, a minimum lot of 10,000 units, and a micro lot of 1000 units.

For example, a major currency pair such as EUR/USD is traditionally expressed in terms of US dollars per Euro. If this currency pair is trading at the level of 1.0000, then the cost of one point is 0.0001 US dollars per Euro, a standard lot of 100,000 Euro would cost 10 US dollars. You do not have to make all these calculations yourself — use dedicated trading instrument types for this purpose.

#5 — Forex Time Zone Converter

Activity in the Forex market may vary depending on where the working day is geographical. The world’s largest Forex centres that set the tone globally are New York, Tokyo, London, and Sydney. And all these financial centres operate in different time zones, and you need to keep track of them by dint of trading instruments. The business hours of these financial centres partially overlap. For example, in Sydney New York time, the market opens at 5 a.m. on Sunday and closes at 7 p.m. on Friday.

Information about what time it is in various financial centers around the world is important data. This is especially true when the trading time coincides with several financial centers. At this time, you can observe the greatest financial movements and the greatest liquidity with the help of trading instruments. Trading activity, liquidity, and volatility are the three most important ingredients required for a financial instrument that can be effectively traded.

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#6 — Forex Volatility Calculator

As we have already mentioned, one of the most important elements that are required for successful trading is market volatility. Currency pairs that have a limited range of volatility tend to be less attractive to trade. Calculating volatility for a currency pair is, of course, not an issue if you make use of trading instruments. So when we have a lot of currency pairs, it is better to calculate volatility using software methods. In simpler terms, you should always use special services and trading instrument types for this purpose.

A typical Forex volatility calculator will take historical data and calculate the approximate current volatility for each currency pair in real-time. Good trading instruments must be able to calculate data for 1 week, 1 month, 3 months, and even 1 year. This will help traders determine the real market volatility for the selected currency pair. What is more, trading instruments will also help you find those currency pairs that have not historically been volatile but which currently tend to be highly volatile, and therefore lead to higher trading opportunities.

Our Verdict!

Forex trading is an exciting and intense activity that often attracts newbies. However, there are many important factors to consider here. No trading instruments should be chosen for trading if the trader does not have sufficient knowledge about it and is not familiar with its features. Using professional trading instruments types if a trader does not even have basic knowledge about it is a fundamentally wrong step. Traders should carefully examine the potential for profitability before starting day trading with any trading instruments types or tools.


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