Choosing a FOREX trading system and tools to assist you

Almost every online FOREX broker has a FOREX trading system for their clients to make transactions and get information about market prices. Due to the relative maturity of online trading there is a consensus among FOREX brokers about what clients need in terms of software tools. All FOREX software needs to provide up-to-the-second market information. The fast moving pace of the FOREX demands real-time data delivery for making decisions about when to enter and exit the market. FOREX dealers claim their software performs well with a minimum of delay, but in fact there can be a number of factors that could delay data transmission.

Internet connection speed and distance from the broker's servers are the two main factors that can slow down data transmission. FOREX traders should have a reasonably modern computer and a high speed Internet connection to take full advantage of the FOREX currency trading system offered by their broker. It may also pay to choose a broker in the same area as you live. Traders in Bangkok who deal with brokers in Ohio may experience delays – especially during volatile market conditions.

Trading system: Web Based or Client Based?

There are two main classes of FOREX software – web based and client based. Web based software is on the broker's website – you don't have to install any software on your computer. Client based software requires you to download and install the software package used by your broker. Which is better? More and more brokers are offering web based client software for reasons of convenience, safety and reliability. Web based software allows you to log on to your account from any computer – you can make trades from any location that has an Internet connection.

Client based software, on the other hand, restricts you to making trades from just one computer. Besides the convenience, web based software offers greater security. Data is secured with high-strength encryption making it impossible for outside parties to access during transmission. Client based software is also secured during transmission but there are more possibilities for data loss from the trader's computer. Viruses and hackers may be able to access valuable financial data stored in a home or office computer.

Features to look for in a FOREX trading system

FOREX trading software needs to access real-time quotes and offer a means to enter and exit the market. Even the most basic packages offer these functions. Current quotes can be seen for most currency pairs and the software allows you to buy or sell at market prices or enter and exit the market using stops or limits. Ideally, trading software should have integrated charting functions with a variety of viewing functions.

Basic software packages should be offered free of charge, but many brokers also have more advanced packages available for a monthly fee. Some of the features you could expect to see in advanced software include the ability to trade directly from the chart and full analytical functions.

Technology

The backbone of FOREX trading systems is a series of data servers that allow you to connect to your broker's web site and make transactions. Servers operated by the FOREX broker need to be reliable and secure for maintaining data integrity and assuring accurate transaction processing. Servers are subject to power outages and natural disasters, so to ensure maximum uptime, the broker should operate at least two sets of servers in separate locations. Brokers should also offer regular data backups to guarantee the integrity of their customer's financial data in case of server failure.

FOREX trading tools

There are many FOREX trading tools available to the FOREX trader for analyzing the market as well as for buying and selling currencies. Software tools are a necessary part of FOREX because of its volume and volatility. Software can be used to automate some of the trading procedures and safeguard against losses. In order to make rational, successful trades, the FOREX trader needs information – lots of information.

Current exchange rates are the tip of the iceberg – the trader needs historical data as well as current information about political and economic conditions that could affect currency prices. All this information is provided by many FOREX brokers on their web sites. So it's important before deciding about a broker to try out a demo account at a few online brokers to see which tools are included as part of their trading system. More FOREX tools are available to help you minimize your risk and maximize your profits. The Risk Probability Calculator (RPC) can be used to identify trades that have more potential gain than potential loss.

The RPC can also help you target exit points to end the trade. Pivot Points can be used to predict movements of currency prices. They are calculated as an average of the currencies high, low and closing prices. Pivot Point Calculators tell you whether prices fall in the normal trading range or extreme trading ranges. One of the best online courses about pivot point trading is offered by professional trader Peter Bain. Peter is an authority in currency trading education and demonstrates simple yet powerful currency trading strategies used by banks, financial institutions and professional Forex traders.

Pip value calculators are used to tell you the value of each pip (smallest currency unit) according to various sized lots. Pip calculators can tell you the actual profit or loss that will result from movements in the FOREX.