Trading in the forex market can be complicated due to frequently changing market trends.
The technicalities of forex trading need to be learned by observing the live markets in real time.
But the trading process can still be overwhelming even when you are well-versed in market dynamics and functioning.
The complexity comes from the vast amount of calculations needed to execute trades perfectly.
But there is a powerful tool that processes data accurately and simplifies trading.
The tool we are talking about here is called a trading calculator.
As a trader, you should be able to use this tool well as calculations, an integral part of the trading process.
With this article, you will get to know the A to Z details of this useful tool called a trading calculator, including what they are and how they are useful to traders.
What Are Trading Calculators?
Understanding trading calculators is quite easy.
Just as the name suggests, trading calculators are a set of tools that help traders by performing various trade-related calculations.
They are designed to perform different functions related to trading with at most precision and provide instant results.
Doing these calculations manually may result in errors leading to costly trading mistakes.
These complex calculations can also be confusing and time-consuming for a trader, which adds to the necessity of having a set of trading calculators as a part of the trader’s toolkit.
So, many brokers and trading platforms have added automated trading calculators to their online platform interface, giving their clients easy access to these tools for free.
Types of Trading Calculators
Online trading platforms offer different types of trading calculators, each performing different functions, but all focused on simplifying trading for traders.
Here are some of the top trading calculators traders use these days:
1. Currency Converter
Conversion of one currency to another is the very essence of forex trading.
As a trader, you will have to calculate the value of one currency in another.
You can easily calculate the same using a currency converter, the most basic type of forex trading calculator.
They will automatically do these calculations within no time by using real-time exchange rates of currencies.
You just need to specify the currency from which you want to convert and the currency to which you want to convert.
Then you enter the amount, and the calculator will give you the result as converted currency.
2. Pip Calculator
Another basic yet essential part of forex trading is pip value calculation.
Pip denotes the minor fluctuations that happen in the price of currency pairs.
They also tell you how many currency units will be needed to enter a trade.
For instance, if you are trading with a EUR/USD currency pair but have funded your trading account with AUD.
Then you need to know how much AUD you will earn when the pair price gains a certain number of pips.
So, pip value calculations are necessary for planning your trades.
You can specify the account base currency, chosen currency pair and the trade size in lots.
Then the pip value calculator will tell you the pip value in your account currency.
3. Profit & loss Calculator
A forex profit calculator or profit & loss calculator is actually a tool to calculate your trading results in different scenarios.
It tells you the potential profits and losses for a particular trade so that you can prepare well for the possible outcomes.
You need to specify the account base currency, the currency pair chosen as a trading instrument, the type of position opened (long/short), trade size in lots, and prices at which you will be opening and closing the trade.
Then the calculator tells you the trading results you may get based on the current exchange rate.
4. Position Size Calculator
Calculating position size for a trade is a crucial decision in determining the trading results.
The size of the position we open decides our profitability and will also disclose our risk of loss.
A tool you can use for determining the optimal position size with logical calculations is a position size calculator.
You need to enter information such as account base currency, currency pair traded, type of position opened, entry price, stop loss level, account balance and percentage of trading capital you are willing to risk for a single trade.
Then the calculator will tell you the perfect position size based on your risk tolerance. The result will be given in standard lot size in most cases.
5. Spread Calculator
Spreads are a part of the trading cost in forex, and you can calculate the spreads your broker charges using an online spread calculator.
6. Commission Calculator
Your broker will also be charging a commission per trade which is also significant in calculating trading costs.
A commission calculator tells you the commission you will pay for a trade based on the trade size.
7. Margin Calculator
You may use some leverage for your trade positions to accelerate your profits.
The broker will give you a fixed amount of leverage when you meet the specified margin requirement as an account balance.
But you need a certain margin level to open a leverage trade position.
This margin level can be easily calculated using a margin calculator.
8. Swap Calculator
When you open an overnight trade position, all regular trading accounts will be subject to swap rates or interest charges.
This is the interest rate difference between the currencies in a chosen currency pair, which you will have to pay in case of a buy position (long) or earn it from the broker in case of a sell position (short).
The swap calculator can be used to calculate the long swap and short swap for a trade based on the trade’s duration and the trade’s size.
9. Multi-target Calculator
As the name implies, the multi-target calculator helps you determine multiple target prices for a trade based on your risk/reward ratio.
Setting and maintaining a risk-to-return ratio is essential to risk management in forex trading.
A multi-target calculator can be used to close your trades in parts to stay true to the set risk/reward ratio.
10. Pivot Points Calculator
This calculator is a useful tool for technical analysis using support & resistance levels.
Traders can use a pivot points calculator to determine the support and resistance level and identify the direction of the ongoing trend.
11. Fibonacci Calculator
The Fibonacci calculator is another tool for technical analysis using the Fibonacci retracement levels.
Fibonacci levels are a bit complex for an average beginner, and using a Fibonacci calculator would be ideal for simplifying the analysis using this advanced indicator.
So, these were some of the most popular trading calculators offered by forex brokers and online trading platforms for free.
You just need to find the best platform where you can use these tools easily for a seamless trading experience.
Also, don’t forget to learn about forex pivot points.
Benefits of Trading Calculator
- Saves your time by providing instant results for each and every calculation.
- Automates the calculation process and guarantees a high level of accuracy.
- Can easily calculate the outcome for different scenarios to plan ahead.
- Makes trading easier as you just need to enter accurate data into the calculator and enter trades based on the results you get.
- Trading calculators are not just mere calculators but also function as tools for risk management.
- Anyone with some basic knowledge can easily use online trading calculators as they are user-friendly and beginner friendly.
- Trading calculators enable a newbie to trade like a professional by making calculated moves in the fast-moving and dynamic forex market.
How to use Trading Calculators?
Using different types of trading calculators is very easy, as we have stated above.
You just need to find a platform that has these tools as well as suits your requirements as a trader.
Then you just need to specify the details and enter the values into the specific calculator.
You will get instant results as soon as you click ‘calculate’ on the trading calculator.
Just make sure you have a stable internet connection, as most of them are online calculators.
In conclusion, I want to say that the trading calculators are one of the most important forex trading tools that you need to use as a beginner.
Even professional traders use different types of trading calculators to speed up the calculation process which eventually enables them to execute complex trading strategies with ease.
In fact, having a set of trading calculators in your toolkit would be ideal for upgrading your skills as a trader in the forex market.
They allow you to focus on other aspects of trading as the time-consuming process of calculation will be done by the automated online trading calculators itself.