5 Tools for Forex Traders

Technology is improving all the time but the typical Forex trader does not have the time or energy to stay abreast of all the changes. That is a shame because there are plenty of tools out there for Forex traders to utilize in their never ending quest for pips and profits. For more references, have a look at Forex Time’s trading tools section.

1. MetaTrader

The MetaTrader 4 platform is the go-to trading station for thousands of Forex traders and the system contains many tools inside. Backtesting capabilities and expert advisors just scratch the surface of what MetaTrader is capable of. The system provides auto-trading, and the newest release MetaTrader 5 carries futures and equities too.

2. Commitment of Traders Report

The Commitment of Traders (COT) report is a handy tool for Forex traders to analyze weekly trends in the Forex futures markets. The data is split between commercial traders, non-commercial traders and non-reportable traders. The commercial traders are big institutions that tend to be bullish at market bottoms and bearish at market tops while the non-commercial traders are big speculators like hedge funds. Whereas non-reportable traders are the small guys.

The key is to look for differences between the commercial and non-commercial traders as this often signals turnarounds. The COT tool at Oanda.com shows the report in real time therefore negating the need to download the data from the CFTC (Commodities Futures Trading Commission).

3. Order-Book

Another tool which can be found at Oanda.com is the order-book, which represents all of Oanda’s open Forex positions as well as orders above and below the market. It is an excellent visual representation of where traders entries are, and therefore where the price is likely to go.

4. Heat-Map

The Forex heat map provided at Finviz.com is another useful visualization tool. Instead of looking at a number of buy and sell arguments, it is much easier to see what is going on between currency pairs and the general trend by looking at a heat map like this one.

5. Top 100 Trader Statistics

This is another great tool provided by Oanda which most traders probably do not utilize. It is worth mentioning that Oanda is a pretty big broker, and this tool shows the top 100 best and worst traders over a given time period.

More importantly, the tool details what currency pairs the best traders made their money on and which currency pairs the losing traders were playing. It also indicates which direction and for how long the top traders held their trades for.

For example, the statistics show that in the last 24 hours, 94% of GBP/USD traders were short, and 99% of them were profitable with an average trade of 1.9 hours and an average pip gain of 10.4 pips. A remarkable statistic given the difficulty of Forex trading.