An important factor when comparing Forex brokers is their platforms. For any trader to have a relative easy trading experience, it all comes down to strategy and the way he or she utilizes the platform's functionality and tools. Most
traders formulate their strategies based on two main methods, the fundamental analysis and technical analysis. Both methods have a different set of tools that a trader can use with technical analysis having the widest range.
Some useful tools to look for in a Forex platform are:
1) Fibonacci Retracements: Based on the sequence created by Leonardo of Pisa back in the 13th century, traders use Fibonacci retracements to determine support and resistance levels in technical analysis. The main concept in the market is that, currency prices move at a predictable pattern that can be retraced and predicted using mathematical formulas such as Fibonacci numbers. Most Forex brokers today have Fibonacci retracements tools pre-configured on their platforms.
2) Bollinger Bands: Used in technical analysis, Bollinger bands use a variety of data such as market volatility to give accurate indications of market trends. Extremely popular tool amongst most traders, Bollinger bands can be found in almost all platforms. They have been invented by a financial analyst named John Bollinger back in the 80s.
3) Moving average: By analyzing a variety of data and filtering, moving average is used to show trends within a short term or long term periods. Moving average is common with most brokers today and also popular within other financial sectors such as the stock market.
4) Real time news: If your strategy is based on fundamental analysis then staying constantly updated with the latest financial news should be a priority. News services such as Bloomberg, CNBC and even live commentaries are often integrated within Forex platforms but in many cases will require a monthly fee. If you have a limited budget then a variety of free services can be found online.
5) Leverage: Having a flexible leverage integrated within your platform can be a key factor in your strategy. When you identify opportunities having a flexible leverage will allow you to invest at a higher risk with higher returns. It will also allow you to minimize risk by reducing leverage whenever the market is too volatile. Keep in mind that correct money management is also essential when it comes in keeping a positive balance in the end of the month.
Richard BroomStick is a financial writer. FXMoz provides high quality content for Forex trading and finance. Check out our eToro review
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