To trade the Foreign Exchange -- or Forex -- currency markets you need the right tools. Trading on margin makes Forex trading very risky. A bad trade can wipe out your entire capital. To be an effective Forex trader, you need reliable currency charting software, an online Forex trading account and a subscription to a Forex trading "Advisory Service" that provides a daily market overview.
Trading Software
Forex trading software is a growing component to the Forex industry. Open an account that allows you to monitor, execute, manage and chart your trades. The basic Forex tool is a trading platform that allows management and manual execution of trades. Most Forex brokers allow you to download their trading platforms once you make an initial deposit to fund your Forex brokerage account.
Forex Charting Software
Forex charting software performs technical analysis which relies on historical price performance to predict future Forex pricing moves. The most basic charting software allows you to draw trend lines, calculate moving averages and track and plot exchange rate progress over time. Sophisticated charting software provides a greater amount of technical indicators.
Algorithmic Software
Algorithmic or automated software uses pre-programmed algorithms based on a trading plan without manual trading. A trader can also program his own algorithm. For example, a trader can institute a trading plan for specific currency pairs such as the EUR/USD (euro to U.S. dollar). Forex trading robots fall under the automated software category. Many of these Forex trading robots are frauds that do not live up to their purported historical performance.
Forex Signal Generating Software
Forex signal generators provide information to traders of where to enter and exit a Forex trade position. The software provides a trader with alerts for buying and selling opportunities. Signal generating software also gives an indication on stop-loss and profit and loss levels. A stop-loss is the maximum amount of risk exposure or loss that a trader is willing to take on Forex position.
Source - eHow
