A forex trading calculator is a tool that provides you with the right information at the right time. It’s a great way to make sure you’re whether a risk is worth taking or not. There are many types of forex calculators. But if you are not familiar with basic forex terminologies, you will not be able to use any trading calculators effectively. Here, we are going to talk about basic forex terms that traders need to be familiar with when using trading calculators. But before that, let’s understand how they are useful to traders.
How Are Trading Calculators Useful to Forex Traders
Forex traders can benefit from using a forex trading calculator because it helps them to be aware of their risks and trades, which can help them avoid making mistakes and keep their trades on track. They can also use these calculators to determine how much money they have made or lost in a certain amount of time and how much more they need to make before they hit their target profit goal.
There are calculators that are also useful for determining how much money a person has made over time as well as how much money they’ll need in order to reach their goals. If someone wants to go from making $100 per day in profits to $500 per day in profits, then using a forex trading calculator will help them determine exactly how much percent will be needed in order to achieve that goal.
Forex Terms You Need to Be Familiar With When Using Forex Trading Calculators –
1) Pip
Pip is the smallest unit of change in the exchange rate of a currency pair. It is helpful in calculating the profits of the trader.
2) Commission
A commission is the fee that a broker charges for executing trades. It is usually expressed as a percentage of the total value of the trade.
3) Pivot point
A pivot point is a strategy used to determine whether to buy or sell an asset. When trading, it’s important to know where your asset will be trading when it reaches its goal.
4) Margin
The amount of money you have to put down in order to open an account with a broker. If you don’t have enough money on hand, the broker will require you to deposit more funds before they allow you to start trading.
5) Fibonacci retracements
Fibonacci retracements are calculated by taking the two previous prices and adding them together (or subtracting them from each other), then dividing by two. This allows traders to identify areas where there has been support or resistance found in price movements over time (usually months).
6) Swap
In the trading world, a swap is an agreement between two parties that one party will take over the other’s position if the first party fails to fulfill their obligations. The other party pays you for taking over their position and vice versa.
7) Position size
Position size is how much money you are risking on each trade. This is usually displayed as a percentage of your account total or sometimes in dollars per trade.
8) Profit/loss
Profit/loss represents how much money you make or lose on each trade. If you make $1,000 and lose $1,000 on a trade, then your profit/loss would be $0. You can calculate your overall profit/loss by adding up all your profits and subtracting all your losses (or vice versa).
9) Support and resistance
Support and resistance: Support and resistance areas refer to price levels where buyers (supports) and sellers (resists) can go before they meet in the middle and cause a reversal from up to down or down to up, respectively, in an attempt to get more favorable price movements.
10) Spread
The spread is the difference between where an asset’s bid and ask prices are located. It gives you an idea of how much leverage you have in your trading strategy.
11) Stop loss
The price at which you decide to exit a position. This can be used to limit losses in case the market moves against your position and it becomes too risky to hold onto it.
Basic Forex Trading Calculators
Now that you are aware of forex terms, you can use a trading calculator effectively. Here are some of the basic forex trading calculators that you could use:
- Profit/Loss – The profit or loss you make on a trade. This is the difference between the price you bought at and the price you sold at.
- Margin – The amount of money you need to keep in your account in order to buy and sell without having to borrow or put up collateral.
- Risk – How much money you are risking in the trade, or how much money the trade is worth, relative to your capital base (i.e., how much of your assets are at stake).
Forex trading calculators are useful in finding out whether it would be profitable to make a trade or not. But in order to use them, it’s important for traders to be familiar with forex terms because, without them, you’ll have a hard time understanding the market or even making sense of what’s going on. So, If you’re just starting out as a trader or if you’re an experienced trader who wants to brush up on your knowledge, it’s always good to know the lingo.
