One of the things I hate most is doing math in my head. Even at the store buying groceries – I do a ballpark calculation as I go, and I hope it’ll come out pretty much the same when I get to the register.
So the notion of getting into forex seemed like an impossibility for me. It’s way too mathematical. Fortunately, the gods of forex (or just a bunch of brokerage companies) graced the world with something called a forex calculator so that even math-dummies like me can trade!
What is a forex calculator?
Simply put, a forex calculator is a handy tool that a trader can use to manage the risks of the forex market. But it isn’t just one calculator like the one we took to school as children. There are over a dozen different types of forex calculators, which were created to ensure that anyone – whatever their mathematical prowess – can be a top-level trader. To make things even more comfortable, these calculators are available online for free. You can find them on a wide array of brokerage sites.
In this article, I will tell you a little about some of the most commonly used calculators. You can find much more in-depth information about the different calculators on the EverFX website.
Forex profit calculator
Starting with the one that intuitively sounds like the most important one: the profit calculator. The name is rather self-explanatory: this calculator can help traders evaluate possible profits or losses of potential transactions. The calculator provides a broad and diverse range of pairings, including exotics, minors, majors, and crosses.
You may think this is the only calculator you’ll ever need, but there are a few more you’ll probably use quite often.
Fibonacci was an Italian mathematician who lived in the 12th century. He came up with a formula titled “the Fibonacci ratio.” According to some people – everything in life is based on Fibonacci ratios.
The eponymous calculator can calculate retracements and extensions using the Fibonacci sequence. To make this calculation, the calculator must be fed the highest value of the current trend as well as the lowest and the current trend. From there, the calculator does the rest.
The pip calculator
Forex pips (unlike marshmallow pips) come in different sizes that derive from the value of the base currency of the transaction. A pip calculator helps traders to evaluate risk per trade. The data required for a pip calculator to give accurate output is the position size, the pair, and the base currency.
The pip calculator can provide traders with the pip value for a variety of account sizes, including micro, mini, and standard accounts.
A pip calculator is not a necessary tool you have to use, but professional, experienced traders all use this calculator. It is just one indication of how seriously a trader takes the trade and whether it is just a hobby or a significant source of income.
This calculator is one of the more important ones, especially for dedicated traders – although dabblers can benefit from it as well. This calculator can also be referred to as the Take Profit calculator. By using this calculator, a trader can communicate with the broker to minimize losses and leverage profits on a potential position.
This calculator can evaluate the potential of both short and long position trades, provided you feed it your position size, the trading instrument, and your base currency.
Hold on! Didn’t we do this one already? No, we didn’t. This one is like a sequel to the stop-loss calculator. This calculator evaluates how much you’re likely to gain or lose after your stop-loss or take-profit level has been reached. To make this calculation, you must feed into it your lot size, account types, current pair, take profit value, and stop-loss value.
This type of calculation can be easy to do on your own without a calculator when using USD. But in cases when other currencies are involved, the calculation can become more complicated.
Position size calculation
When getting into Forex, you must have a good handle on risk management. It would be best if you never risked sums you can’t afford to lose. However, you also shouldn’t destroy your account on one trade attempt. That makes a position size calculator a necessary tool for trade. This calculator will help you evaluate the position size required to keep the risk per position minimal.
Pivot Point calculator
A Pivot Point is effectively an indicator used by professional traders to determine shifting points in the market. The shift could mean a change in resistance levels or price movements.
A pivot point calculator helps traders to find these points in large parts of the field of forex, including stocks, bonds, options, commodities, and futures. The calculator can evaluate market direction on a daily, weekly, or monthly span.
A swap fee is charged from your account every time you leave an open position overnight. The swap calculator is a simple calculator designed to provide you with the total of this charge based on whether the position is short or long. The final sum arrived at by the calculator is the difference between the currencies that make up the trading pair.
When using this calculator, you need to feed it the trade size, the account currency, the account type, and the trading instrument.
For the most part, this calculator should be checked daily to see the updated rates.
Of course, this is not a tool you will need to use if you don’t leave a position open overnight.
Risk and reward calculator
This beautifully-titled calculator is designed to evaluate the optimal target of a position. Then it calculates the ratio of reward to risk, which is associated with these targets. This is an essential tool to use when trading: it demonstrates the potential risk of a trade before the trader opens the position.
The calculators described in this article are just a small part of all the available types of calculators. There are calculators for every purpose and all available for free online at any time. That means that no matter who you are, what your mathematical knowledge level is, and what type of trading you’re interested in – there’s a set of calculators for you.
As for the calculators introduced in this article, remember these simple points:
- The profit calculator will tell you the potential profit of a specific trade.
- The Fibonacci calculator will assess Fibonacci retracements.
- The pip calculator will provide the pip value of the base currency for specific position sizes.
- The stop-loss calculator will calculate the gains and losses for a specific trade.
- The profit loss calculator will calculate potential gains or losses after the stop loss/take profit level has been reached.
- The position size calculator will help you determine the size of a position to open.
- The pivot point calculator will locate market shifting points and evaluate the direction of the specific trading instrument on a daily, weekly, or monthly base.
- The swaps calculator will calculate the sum that will be charged from or to your account when you leave a position open overnight.
- The swaps calculator is not useful if a position is not left open overnight.
- When in use, the swaps calculator should be checked daily for updated sums.
- The risk and reward calculator will evaluate the possible risk and reward of a position before it is opened, which subsequently minimizes the risk of a trade.
EverFX is a trade name of ICC Intercertus Capital Ltd., authorised and regulated by Cyprus Securities and Exchange Commission (CySEC) with license number 301/16. ICC Intercertus Capital Ltd. operates in accordance with the Markets in Financial Instruments Directive (MiFID) of the European Union.
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