Top 5 financial tools that traders should have at their fingertips
If you are a beginner trader, you may be wondering what are the key financial tools that professionals may be using, and I don’t know about them. There are essential tools every trader should know and use, despite their experience. In fact, many experienced professionals use fewer tools when trading financial markets than their newbie counterparts. In this guide, we will list and discuss 5 of the top financial tools that are used by all professional traders.
Intro to trading tools
Researching the market often employs stock screeners or other custom methods used by traders to select a small group of trading instruments. Trading instruments are tradable assets in each trading asset class. Forex market’s trading instruments are currency pairs.
After a few interesting instruments have been selected, traders will watch these assets carefully to determine entry and exit points and if certain conditions are met by any of these assets they will execute the trade. There are various ways of selecting the best trading instrument that can make a profit.
While stock screeners help stock traders to select stocks by certain filters, other tools like trading research terminal or a market heatmap will encompass all kinds of assets to find the best instruments that are bullish or bearish. These tools are technical and determine which instruments are most bearish or bullish and help traders make their job easier.
Top 5 financial tools
Let’s start with our top 5 picks and then discuss each one of them.
Trading Platforms
Trading platforms are software that allows traders to open and close trades on financial markets. Buying and selling assets is possible through user-friendly and reliable platforms. It is crucial that platforms have many types of orders like limit orders, market orders, stop loss orders, etc. Some of the most advanced and popular trading platforms are MetaTrader 4, MetaTrader 5, cTrader, and TradingView.
Charting software
Charting software provides price charts that can be used for making sense out of financial markets. Often, charting software is part of trading platforms and offers advanced technical analysis capabilities. Using indicators which are mathematical formulas allow filtering the market noise and focusing only on essential developments on the price chart. All above mentioned software comes with inbuilt charting software and shows visually trading charts. TradingView started as a charting web platform and transformed into the full-fledged trading platform we know today.
News and Information Services
Knowing the latest developments in financial markets and global financial events can lead to better decisions in trading. Market news and the economic calendar are two of the most prominent ways of staying informed about important fundamental developments. Some popular and widely used information news websites include Yahoo Finance and Bloomberg. Economic calendars are available on many websites and offer the tracking of the upcoming fundamental indicators. Some trading platforms like TradingView offer news plugins to control upcoming macroeconomic indicators.
Risk Management Tools
Stop loss, limit orders, and trailing stops are among the most useful risk management tools every trader should be using. Without the stop loss, failure is guaranteed when trading markets. These tools are usually part of the trading strategy and depend on the trader’s risk appetite and the trading strategy’s risk tolerance. These tools are inbuilt into all trading platforms and may be part of charting software.
Performance Analysis Tools
Portfolio trackers and trading journals are among the most used performance analysis solutions out there. For investors, portfolio trackers can provide vital information about portfolio performance and its diversification levels. A trading journal on the other hand is a tool that traders use to write down and journal all the trades and analyze their performance. With the trading journal, it is possible to find where the weaknesses of the trading strategy lie and what could be improved to eliminate most of the losses without eliminating the profitable trades as well.
Summary
When trading, there are essential tools that can amplify trading performance and provide a helping hand to new traders. Popular advanced trading platforms such as TradingView, MetaTrader, and cTrader come with inbuilt multiple tools like charting software, trading platform, and risk management tools. Some of them even incorporate fundamental news, like in TradingView’s case. Performance analysis tools offer traders and investors the ability to analyze past trades or investments and define where the weaknesses lie. It is absolutely critical to use these essential financial tools to achieve success in turbulent financial markets.
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