Trading in the foreign exchange market is all about currencies, with one currency’s value being exchanged against another in terms of value. A currency calculator is a valuable tool for any forex trader whether he simply wants to know what is the value of a unit of a currency, in terms of another currency, or he wants to find out how much in a certain currency he stands to win or lose in a trade. There are certainly many uses for a currency calculator in forex trading. Those who have been into forex trading for a long time would already have their own currency calculator downloaded into their home or office computers where their forex trading systems are installed. No arsenal of forex tools is complete without this and other finance calculators.
Other essential calculators aside from the currency calculator include the margin calculator and the pip calculator. These two calculators should be used by forex traders in order to determine whether or not the risks that they are taking are worth the returns that they are expecting to gain. Margin calculators are used to calculate how much a forex trader is required to have in his trading account to open a position. This calculator takes into account the leverage ratio. A currency calculator is also integrated in the margin calculator for instances when the trading account currency is different from the base currency being quoted in the currency pair.
The pip calculator, on the other hand, serves to let the forex trader know how much a pip can affect his trading account. A pip is technically defined as the smallest increment by which prices of a particular currency can move. There are different pip values for different currencies as well as for different transaction sizes. Computing for the pip value using an online pip calculator gives the forex trader the exact amount of a pip value.
For some calculators, the pip value is displayed only in US Dollars and a currency calculator is necessary to compute for the pip value’s equivalent in another currency. Those who maintain their trading accounts in other currency denominations could look for other pip calculators that display results in various currencies so they do not have to go through another step of currency conversions.
The numbers from these online calculators and tools are of great value to forex traders. All these should be taken into consideration in deciding how much to risk in a trade. Only when a forex trader knows how much he is risking and how much he stands to gain before entering a trade can he wisely decide on whether or not to get into position. Through this, however, the forex trader should remain objective in his risk analysis and take into consideration his trading strategy in his decision-making. It is difficult to keep emotions out of the way when a forex trader puts his money at risk. But, with the right tools for analysis and a good trading discipline to pull through with his strategy, the forex trader should end up right on the money on his trades.