Tools Used by Forex Traders (Best Forex Technical Analysis Tools)
Forex traders use a variety of tools in their day-to-day operations to help them advance. Typical price charts simply do not provide enough information for a forex trader to take calculated risks. The main source of information for forex traders comes from technical analysis tools. These tools serve the purpose of gaining additional insight into the market. Technical analysis tools include statistics and chart overlays. There are a few different types of analysis tools. The following few tools are used on a consistent basis for successful trades all over the world by forex traders.
Forex analysis tools
MT4 session highlighter
An MT4 session highlighter indicator shows the different trading sessions on MT4 charts such as the London, New York, and Asian FX Sessions. You can download the MT4 session highlighter indicator below.
Download MT4 session highlighter
First and foremost, trading is open 24 hours a day during the week. At any given time within a 24 hour period, a major market is open in a city somewhere. This is why it is very important for forex traders to trade at optimal times. Europe opens first, followed by NYC and then Sydney. Following Sydney is Tokyo. Before Tokyo closes, London has already opened. This consistent pattern of trading is one of the best ways the forex market stays alive and consistent throughout the workweek. The global market can vary in size, some are large and some are small. The main point to remember is that each market has a different number of transactions and employees.
Therefore, each session is different due to its unique characteristics. Session highlighters effectively show the price action during a specific session. These can be tracked by the minute or the hour. The session highlighter is able to draw a vertical line in the event a major session closes or opens. This occurs on the price chart. Each specific trader can use colors in order to show various trading sessions and highlight them. It is also important to note that MT4 is one of the most prominent session highlighters.
Forex Volatility indicators
Forex volatility tools are used in order to show how much a specific currency pair moves. Many traders will look at an average of 30 days. By viewing a 30 day average, traders can see specifics that give them insight into the best moves to make. This tool is able to show exactly how much a pair typically moves within a given hour of the day. By viewing general averages and previous statistics, traders can take calculated risks based on the information they observed. If the volatility has changed over time, traders have easy access to this information.
By using forex volatility, a trader can gauge if the investment would reach its profit target. Volatility tools do not disclose which direction a trade will go, but it will show how much the price moves. There are many tools such as the risk calculator that can be used by plugging in a time period, and the tool will provide the likelihood of the price staying within that specific range.
Forex Positions/ COT Data
Position summaries are proven to be helpful tools for revealing long and short. By watching how the ratio subsequently changes as the price changes will provide a level of insight for future trades The main goal of all these strategies is to predict how the market will behave based upon past trends. Traders will exit these positions either at loss or profit. If a large majority of traders are long, this indicates that the majority have already bought. This figure can be somewhere around 90%. There are few traders left in this scenario to continue pushing the price. Without anyone left to purchase, the prices move in the opposite direction.
COT report stands for Commitment of Traders report . This report shows data all the way back to 2008. The data shows the specific position of traders during a very significant market turn. This tool helps to anticipate changes and fluctuations.
Download COT data MT4 indicators
Correlation and Indicators
Download Correlation indicators for currency
Correlation and indicator tools are used in relation to direction, but can not anticipate price moves. Correlation is subject to change over time and measured within different times. Indicators are used with graphs and charts. Indicators can draw lines over price waves which helps traders focus on larger price moves and overall profit trading.