Understanding Trading Calculator: A Beginner’s Guide

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Investing is subject to market risk and exposes you to the bigger world of risk and opportunities. Trading online is the new normal in our society. The days are gone when we used to contact brokers physically and then compromise their brokerage charges for trading. 

It’s the new investment world with smart opportunities. Technology is everywhere, and if you look at the particular technical aspects of the trading society, trading calculators are a key motivator for traders.

A trading calculator is a versatile tool to engage online calculations better. Well, there are some parameters to use while considering a trading calculator. 

  • PIPs cost
  • Commissions (for ECN and Prime accounts)
  • Margin
  • Spread
  • Swaps

If you want to get some useful results, a trading calculator is key. But using a trading calculator has its own format and calculative process. As a beginner, you must understand the facts and facets of online trading and its calculation.

Key functions of trading calculators

Though the modern trading world is full of opportunities, some instances of trading also make it risky. However, the new investors’ main problem is getting firm with the calculations of the forex world.

Profit trading is only possible through proper calculations. However, without any knowledge regarding trading calculations, it’s hard to accomplish the variety of trading and its fortune. So, the basic knowledge of trading is not enough; you also need proper calculator training.

However, various Trading Calculator provide easy learning options, including Forex profit calculators, to ensure a better trading practice for the investors.

Here you will get an idea of each and every trading function of the online calculators. Let’s focus on the key functions of the trading calculator.

Exchange rate calculations

This is one of the easiest and most basic functions of a trading calculator. Often in forex trading, you need to deal with multiple currencies. However, if you do not know the value of each currency, it is not possible to invest properly. 

Well, using trading calculators, it’s possible to know and convert the currency values with ease. Remembering the exact value and calculating it in your mind might be risky for trading, and thus trading calculators are there to help you with everything. 

Position size calculations

Understanding the position size of your trading is often overwhelming and confusing for beginners. Well, it’s hard to understand the appropriate position size of the market.

So, using a trading calculator can be your savior this time. Based on your risk tolerance and account balance, the calculator will help you to decide the trading position size. A long or short position, the stop loss level, and the account balance are judged properly to help you out.

PIP value calculations

PIP (Percentage In Point) is the measurement of change in value.

Well, have you ever heard about exchange rate fluctuations?

A currency value is not constant, and it gets up and down according to the current market situation. While you are trying to invest in forex, it’s essential to understand the current value of your intended currencies.

If you fail to do that, you will be in a big mishap of calculations which might result in a lack of profit. The good news is that you will also be able to measure the profits/losses of trading through PIPs calculation.

Calculation of trading results

Trading is all about planning. Investors always try to find out estimated trading results to get to know their profit margins. However, trading is not only about profit but loss as well. 

If you can calculate the trading results and plan accordingly, it is possible to minimize the loss risks. Here, trading calculators will inherit all your position sizes to inherit a better calculation of trading results. 

Margin calculations

Trading brokers often provide leverage on profit margins. But with trading loss, margin shortfall comes, and it becomes hard to maintain your position in the trading market. 

However, who doesn’t want to get the leverage offered by brokers?

Well, for that, you will need to see through the instances of trading margins. Your trading calculator will do that for you to avoid margin shortfall.

Target price level calculations 

The target price in the forex market depends on the risk/reward ratios. Optimal risk/reward ratio and management can bring you forex trading success. 

Here comes the important function of trading calculators to set your target price in a particular market. A target price level calculation function is available in such a calculator, and it will become easy for you to get rid of risks by setting the true price of the target.

Trading cost calculations 

Trading costs are simple to understand but important as well. Calculating all costs of trading, including the commissions and spread of your broker, is difficult without a calculator. While the trading calculator is with you, it’s super easy to get through the instances of overall trading cost. 

Rollover fee calculations

The interest rates are different for vicarious trading currencies. There will be applied to your trading options when you open your trade overnight. Well, the price will differ depending on the short and long-term trading process. These are known as rollover fees. 

You can easily calculate your rollover fees for each trade through a trading calculator. So, you are not alone this time. 

Apart from that, you can also use some additional functions like Pivot point calculations and Fibonacci level calculations to get rid of bigger risks in trading.

Give away tips for beginners

The trading calculation process is still evolving, and you might see more calculating options in the future. So, it will be weird to avoid trading calculators in such a volatile market.

If you are a beginner, don’t worry! Follow some tips to get rid of confusion and dilemma. 

  • Try demo trading and practice the trading calculator. 
  • Prepare a trading journal to note down all calculations that you have done. 
  • Try to double-check the values with calculations. 
  • Focus on slippage, which causes deviation results.

Rest assured; you are on top of your trading process with trading calculators. Know your calculator better to make a profit in the trading market.

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Roy M is a technical content writer for the last 8 years with vast knowledge in digital marketing, wireframe and graphics designing.

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