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Forex Trading Calculators for Better Trading

The Forex trading marketplace is a global platform where traders, banks and institutions trade and speculate on currencies. The forex market is also referred to as the OTC (Over The Counter) market as it does not have a centralized marketplace for the exchange of national currencies. All acts of forex trading are carried out electronically through computer networks.

With so many traders involved in the act of forex trading around the globe, the need for profit and loss estimation has risen to a great extent. Traders are keenly speculating and calculating potential profit and loss on their trade activity by using a variety of forex trading calculators like forex pip calculator. The need for such forex trading calculators have surged over the years due to the accuracy and clarity they provide.

What are Forex Trading Calculators?

As the name suggests, a forex trading calculator is a tool designed to help traders calculate potential profits and losses of various transactions. Forex trading calculators are designed in a way that enables a trader to calculate profit and loss for a diverse range of currency pairings including minors, majors, exotics and crosses. Forex trading calculators are equipped with advanced mathematical algorithms that enable the calculation of complex financial equations with accuracy and provide results within seconds.

Significance of a Forex Pip Calculator

Pip is short for ‘point in percentage’. In forex trading, pip refers to the smallest change in price for a particular currency pair or a movement in the rate of exchange between two currencies. For calculating forex pip a trader needs to select the preferred currency along with the trade size. After this, the pip calculator will compute the pip value with standard, micro and mini lots with the ongoing market rates. In most currency pairs, the pip value lies on the fourth decimal place. Forex pip calculators are an essential part of forex trading as it helps in analyzing growth of an account in a very easy format and enables a trader to plan trading strategy accordingly.

Let’s look at an example to understand the working of a forex pip calculator properly.

We shall assume that a trader chooses his base currency as EURUSD. The pip value of the currency pair EURUSD accounts to $10 per pip with a standard lot size where 1 lot=100,000 units and a USD account. The pip value is then calculated as 0.0001/1*100,000 which equals $10.

There are certain tips to be kept in mind in order to use a forex pip calculator accurately:

  • Use the Right Currency Pair – The initial step to use a forex pip calculator accurately is to choose the right currency pair. As a trader, it’s important to know the base and quote currency of the preferred currency pair. For example, if a trader is trading USD/JPY, USD should be taken as a base currency and JPY should be used as the quote currency.
  • Using the Accurate Decimal Places – Using the right decimal place is essential for the proper calculation of profit and loss in a forex pip calculator. In the majority of the currency pairs the value of the pip lies on the fourth decimal place, there are however, a few exceptions to this.
  • Using an Easy Pip Calculator – Some pip calculators are relatively user friendly as compared to others. Finding an easy one will enable a trader to understand and evaluate better.
  • Trade Size – The size of the trade has an equivalent relationship with the pip value. With a bigger trade size, the pip value also increases.
  • Spreads – The value of a pip has a close relationship with forex spreads. Spreads basically help a trader to estimate the cost of trade by evaluating the difference between the bid and ask price along with the number of pips in the spread. This analysis helps the traders to make wise trading decisions and easy estimation of profit and loss.

Benefits of Using a Forex Pip Calculator

  • Pip value calculators enable a trader to keep a check on potential profits and losses on a regular basis.
  • Forex pip calculators are technically designed computer calculators that eliminate the chances of a potential calculation error or bias.
  • Since forex pip calculators are computerized systems, they are able to generate results within seconds that in return saves a lot of time and effort.
  • Forex pip calculators also help to determine the pip value in various other currencies. A trader can use a pip calculator for trading a currency pair that is not in their own native currency.

What is a Forex Margin Calculator?

A forex margin calculator computes the margin required for each trade. It estimates the minimum amount that is needed to be kept in a traders account in order to open and maintain a buy-sell position. Forex margin calculators allow a trader to check the availability of funds to proceed with the trading strategy. Margin calculators are an essential part of forex trading as they help a trader to work out the position size and the level of leverage needed. The margin calculator computes the margin based on the lot size or notional value along with the maximum leverage offered by the company.

In order to calculate margin requirements a trader needs to enter a base currency of preference, select  the currency pair, select the leverage and then enter the size of position in lots. The forex margin calculator gives accurate results in seconds without the chance of potential error and bias.

Benefits of Using a Forex Margin Calculator

  • A forex margin calculator enables a trader to evaluate the amount needed to maintain and open a trading position.
  • Margin calculators are an important part of forex trading as they guide a trader to determine the lot size along with the leverage.
  • Due to the transparency provided by forex margin calculators, a trader knows exactly how the money is growing and where exactly it goes.
  • Forex margin calculators help in outlining the financial map for a trader by determining the amount of money and leverage needed to run transactions. This in return, helps in formulating wise trade strategies.

Forex Profit Calculators

Forex profit calculators are powerful trading tools designed to enable a trader to evaluate potential profit and loss based on the outcome of the trade. In other words, a profit calculator computes the profit and loss in monetary value of a particular trade position using trade directions, market data and number of lots traded. The forex profit calculator allows to compute profit loss situations for all major currency pairs including cross currency sets.

Follow These Steps to Use a Forex Profit Calculator

  • Selecting the Currency Pair – Select the currency that has a comparable value against the other for example USD/JPY, EUR/USD etc.
  • Select the Opening Price – The initial cost of the currency pair at time of purchase is called the opening price.
  • Volume of Trade – The amount of securities or lots sold during a particular trading period is known as the volume of trade.
  • Closing Price – Refers to the final or last price at which a currency was traded at the end of a trading session.
  • Operation – Refers to the position of the asset owned by the trader with the motive of buy or sell.

Benefits of Using a Forex Profit Calculator:

  • The results generated by forex profit calculators are 100% accurate as they are system generated and are calculated by proper mathematical algorithms.
  • Prediction of potential profit and loss has become convenient with the help of profit calculators.
  • Calculations are performed in seconds which saves a lot of time and effort of the trader.
  • Forex profit calculators are a great benefit to novice traders since they lack experience and deeper knowledge of the functions of the forex market.
  • Profit calculators can easily be used on various available software and devices such as Windows, IOS, Linux etc.

The forex market is one of the largest and the most liquid markets in the world. With each passing day, more and more people are joining the forex market in order to maximize returns and reap benefits like other experienced traders. There are plenty of forex trading tools available online that can be easily put to use for magnifying gains and minimizing losses. A trader should use tools that fit his trading requirement and strategy easily. Forex pip calculators are a great tool to calculate the smallest changes in the currency pairs along with a margin calculator for calculating the required margin and leverage to run trading strategy smoothly. And forex profit calculator should also be used to strategize accordingly. By making use of various tools that are available, a trader can make his trading journey easier and increase chances of success in the market.