A trading plan is an outline that sets the trajectory of your trades in the market. You are less likely to fail if your trading plan is well thought out. From allocating the appropriate risk/reward ratio to implementing a robust risk management strategy, such as setting up a stop loss, a trading plan to tie up loose ends, minimising losses and improving the chances of a profitable trade.
However, in a market where there are so many variants influencing the result, creating a plan that gives positive outcomes is a task in itself. And let’s not forget: there is not plenty of time for traders to make alterations when they are in the game. Therefore, you should set up your plan before opening your trade. Trading calculators are popular tools that aid traders in laying out the foundation of their plans. How?
Trading calculators take in simple metrics, such as risk-reward, stop losses, etc., to provide traders with useful information that would otherwise take hours to find out when done manually. This information involves pip value, position size, and other criteria that a trader has to take into account when creating a trading plan. In this article, we will discuss the top 10 trading calculators along with their importance for traders, especially new ones.
What Are Forex Calculators?
Forex trading calculators are tools that help traders find essential trading values to help them make their trading plans and decisions better. These calculators work the same way as other calculators. Insert the parameters as required. In return, they will give you the essential parameters that you need to execute your trades.
Importance Of Forex Calculators
Forex trading calculators save time and enhance traders’ results. In addition to that, they make trading cost-effective for traders. Here are ways in which using a Forex trading calculator can help you.
- Making well-informed trading decisions: Trading calculators help traders make informed choices by providing them with the results of essential calculations and up-to-date data. You can carefully analyse potential profits, losses, and risk levels before entering a trade, enabling you to make more informed and confident decisions.
- Promoting cost-effective trading: Using trading calculators can optimise trading strategies and identify cost-effective opportunities. These calculators assist in determining the most efficient position sizes and risk levels, allowing traders to maximise potential profits while minimising expenses.
- Effective risk management: Forex trading calculators are valuable tools for managing risk by calculating potential trade losses or profits in advance. This empowers traders to make well-considered decisions and avoid excessive risk-taking.
- Saving time and effort: Trading calculators automate complex calculations. As a result, traders can save time and put extra effort into strategizing their trades. Moreover, rather than manually performing various calculations, traders can rely on calculators to get instant and accurate results.
- Optimising position sizing: Forex calculators assist traders in determining appropriate position sizes based on their account size and risk tolerance. This way, traders can avoid overexposing their trades. Hence, they can avoid risking an excess amount of money on a single trade.
- Convenient currency conversion: Forex trading calculators also facilitate currency conversions, which prove beneficial for traders who work with multiple currencies or need to convert profits or losses between different currencies.
- Strategic trade planning: Trading calculators enable traders to plan their trades effectively. There are different calculators that traders can use to find important trading values and plan their trades better. Traders can even refine their strategies with them.
- Enhancing transparency: Trading calculators contribute to transparency in trading by providing clear calculations and results. Traders better understand the potential risks and rewards associated with their trades, fostering transparency throughout the trading process.
10 Useful Calculators That Newbie Traders Should Use
Purpose: Traders can calculate the value of a pip using this trading calculator. In other words, you can find out the smallest change in the price of a currency pair with the help of this calculator.
Benefit: It helps traders assess potential profit or loss by determining the pip value. It is also useful for risk management and position sizing.
Purpose: Calculates the required margin for opening and maintaining a position.
Benefit: A margin calculator will determine the required funds to deposit for trade initiation. With this, traders can manage leverage and risk.
Position Size Calculator:
Purpose: Calculates the ideal position size based on account size, risk tolerance, and other factors.
Benefit: Assists traders in determining the optimal trade size, considering risk appetite and account balance. You can make your risk management stronger and optimise your trades.
Purpose: Forex traders use this tool to precisely evaluate their potential profit or loss on a trade.
Benefit: You can evaluate the trade’s profitability by inputting the trade size, entry price, and exit price. Therefore, a trader can easily evaluate a trade’s success.
Stop Loss Calculator:
Purpose: Calculates the appropriate stop-loss level for a trade.
Benefit: It helps traders determine the price at which they should exit a trade to limit potential losses. This calculator is a must-have for setting risk management parameters.
Lot Size Calculator:
Purpose: Traders use it to find lot sizes based on risk percentage and account balance.
Benefit: A lot size calculator assists traders in determining the suitable lot size based on their desired risk level and account size. In seconds, traders can allocate the required size for their positions while effectively managing their risks.
Purpose: A great tool for calculating overnight swap charges for holding a position.
Benefit: It enables traders to estimate the swap charges incurred for overnight positions. It is the most useful tool for considering carry costs.
Purpose: A spread calculator will find the spread cost of a trade for you.
Benefit: It allows traders to determine the cost associated with the bid-ask spread. This helps in evaluating overall trade expenses.
Pivot Point Calculator:
Purpose: With this calculator, you can determine your pivot points, which can identify your support and resistance levels.
Benefit: Aids traders in identifying key levels for trade entries, exits, and stop-loss orders. Traders rely on this tool for technical analysis and trade planning.
Purpose: As the name says, this calculator calculates Fibonacci retracement levels to identify potential support and resistance levels.
Benefit: Traders use the Fibonacci calculator to identify price levels for trade entries, exits, and stop-loss orders using Fibonacci ratios. It can aid traders in technical analysis and trade planning.
A trading calculator is a time-saving tool that helps traders find out the answers to different trading-related queries. Though all these calculations can be performed manually, trading calculators do this with higher accuracy and speed. In this article, we have discussed the top 10 trading calculators that can make the job of a trader easy. Using these tools is as simple as using any other online calculator. Fill in the required data and get your results.
The best way to get started with trading calculators is to implement them into your trading plan slowly. We recommend you test them out first when demo trading. This will help you not only get acquainted with the tool better but it will also help you build a better trading strategy.