Just like tools in any other field, when trading you also want to have the proper tools. Having the right forex trading tools in your toolbox is of particular importance when you set out to scalp or day trade the forex.
While accuracy is important, regardless if trading short term or long term, it is of particular importance for scalping strategies when trading the forex.
Typically, scalpers stay in the market only for short periods of time relying on exact entries and exits to make their profits. To be successful you must be able to trust that you have the ability to enter and exit the market when you need to. So what trading tools are required for short term trading?
Computer and Internet Connection
Even though this sounds obvious it’s important enough to mention.You must have a computer to access the internet. You also must have an internet connection that is reliable and operates at a high speed. Dial up connections simply cannot handle the fast paced forex trading environment. The last thing you want when in a scalp or short term trade is for your connection to drop.
For most everybody today those concerns are no longer an issue. Just about everybody has the right computer setup to trade. If you do not, you must get the right equipment; this is one requirement that is not negotiable, particularly when trading short term forex.
Broker and platform
Your next consideration is choosing a broker and a platform you can trade through. Select a broker that has been in business for some time, a solid track record, quality customer support, fast and reliable trade execution and low spreads.
Take your time and do your homework here. Check out the brokers you consider trading through by going to the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). Also check the forums for the experiences of other traders with these brokers.
Your final choice of broker most likely will determine the platform you’ll trade on, unless you decide to go with your own charting package.
Regardless of your final decision, here is a short list of key considerations to keep in mind when evaluation a trading platform.
- How many and which currency pairs can you trade through the platform?
- What order types are offered?
- What account types are available: standard and mini accounts only or do they also offer micro accounts?
- What research can you do and what news is available via the platform?
- What type of technical and trading support is available?
- What charts come with the platform?
- Does the platform integrate with third party charting packages?
- What technical indicators are available through the platform and are the indicators you need offered?
- And finally what is the amount you need to open the account and to keep it open?
The most important Forex trading tool: your trading strategy
One of your most important tools in your tool box is your trading strategy. Will you scalp or will you day trade? Will you trade with the trend or will you trade counter trend? Will you trade the London open or will it be the London Close?
You want to be clear on what your trade setups are and when the conditions for your trade entry have been met. You want to know what the conditions for optimal trade entry and exit must look like before you ever enter any trade.
Pay particularly close attention to this part of your trading tools. If you don’t have a trading strategy or choose not to follow it, all your other forex trading tools simply won’t matter.