Advantages and Disadvantages of Margin Calculators
A margin calculator is a useful tool to determine specific information relative to Forex trading. However, like all tools for every advantage, there is a concomitant disadvantage. This article will tackle both aspects of a margin calculator and then formulate a conclusion relevant to the discussion.
Margin Calculator: Currency Value
Currency value is based on the difference between currency pairs. By using a calculator, it is not only easier to determine the quote and the base value but it is also more accurate. More often than not, you can determine the number of decimal values, which is especially helpful when trading in large lots. Of course looking at the currency value as shown in the calculator only shows the status quo. A calculator cannot show price history, external market forces, provide other indicators, etc.
Margin Calculator: Puts You in the Know
A calculator allows an investor the ability to determine the status quo of his/her investments and determine if the particular course of action, as directed by him or as implemented by the broker is agreeable or not. If it is agreeable then the investor sleeps easy, if not then the investor can call up the broker and require a different trade. Stated simply, a calculator places the investor “in the know”. The problem is, a broker maybe working on information that transcends mere computations such as external market forces, trading house directive, a reputable tip or information, etc. Remember, crunch the numbers but listen to your broker and the explanation for a play.
Margin Calculator: Allows You to Manage Different Spreads and Bigger Lots
Your spread determines the frequency by which your investments are traded while your lot determines the volume of each and every trade. By using a calculator, you get to manage more spreads with higher volume. This also allows you to compute your thresholds as well provide last minute directives based on real time data. The problem with relying heavily on calculators is that sometimes you put too much emphasis on balancing the worksheet that you forget the bigger picture, in that you may want to take a loss at one or two trade to get a better position for a bigger trade.
Margin Calculator: Interface
Calculators have various interfaces. Of course, the simplest one would be the one on top of your desk. However, with a desktop calculator you need to list down important formulas, unlike when you use an online calculator or download one on your hard drive. Remember; most calculators require constant updates. Therefore, if you downloaded one online you need to make sure that you are using the most recent version. Otherwise, you may screw up on your trade.
In Closing
Calculators used properly and together with proper education, training, and experience can be a helpful trading tool. However, it is not the only tool available to you. That is why you need to make sure that you either cover all the bases or delegate tasks in order to come up with a complete scenario before making a Forex trade. Of course, everything has to be done real fast in order to keep you ahead of the competition.
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