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How to calculate Margin, Pip Value & Swaps

Forex trading has been and continues to be hugely popular mostly because existing, as well as aspiring traders, are well aware that it can be both exciting and greatly rewarding if done rightly. However, getting it right and taming and mastering the foreign currency trading secrets is not a ride in the park. To aid and reward their trading efforts, all traders, old and new, but especially first-timers, have a lot to gain and benefit from the use of the right set of tools and calculators, which have been specifically designed and devised for forex trading. Such tools work towards greatly enhancing the chances for trading success for every trader and often result in impressive earnings and profit, which boost any trader’s Return on Investment (ROI).

Besides enhancing a trader’s potential and actual performance, the effective use of the most suitable tools and calculators enables traders to avoid serious trading mistakes that could gravely undermine their success, as well as accurately and wisely calculate their risk and adjust their trading decisions accordingly.

Table Of Contents

  • Beginners Guide to Using Calculators in Forex Trading Forex Calculators Explained
  • Analyzing Real-Time Currency Values through the use of Forex Calculators
  • The Significance of Forex Calculators
  • Accuracy in trading through the use of forex calculators
  • The most important calculators for forex traders
  • Concluding Remarks
  • FAQs on Forex Trading Tools

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Beginners Guide to Using Calculators in Forex Trading Forex Calculators Explained

It’s better done with the right tools: a guide to forex calculators that pave your way to trading success

This present post, therefore, aspires to provide a detailed, beginners guide to the wonders of forex calculators, showcasing their importance and value, as well as overviewing the most popular types available and how to use them to reap the many benefits to be had.

Analyzing Real-Time Currency Values through the use of Forex Calculators

When seeking to analyze the relative value of currencies, all stakeholders in the forex trading industry, be they brokers or traders, rely on the critical tool that is the forex calculator, and amongst them, those who use it effectively are the most successful and profitable. This being said, a forex calculator cannot on its own ensure trading success, since the personal experience and predictive ability and skill of each trader are key to their success, but a forex calculator can surely aid the endeavor. The highly competitive nature of the forex industry, which includes millions of people trying to trade the currency markets for profit, as well as the extremely dynamic and volatile nature of the exchange rate per se, which as a variable is at the heart of the whole forex trading equation, both mean that in order to be successful, a trader must use all the weapons available, i.e. not rely solely on his or her knowledge and skills but make the best use of any available tools as well.

Usually, a successful forex strategy comprises two pillars, the first being a long-term strategy that underlies and guides all your decisions and is derived after delving into the fundamental analysis. However, since the underlying fundamentals of trading are rapidly and constantly changing, simply relying on the principles of a long-term strategy will not do the trick. Therefore, the second necessary pillar is that of a short-term strategy, that is based on real-time information and currency values and it is to this end that a forex calculator is an indispensable aid.

The Significance of Forex Calculators

The importance of forex calculators lay exactly in the fact that they enable you to analyze the real-time values of various currencies and also be able to sort them according to your own goals as a trader, against the backdrop of an ever evolving, volatile environment. Without the effective use of a forex calculator it is almost impossible to evaluate the main trends of the global currency market and make the relevant successful trading decisions. Moreover, since time and speed are crucial when trading, a calculator allows you to be able to quickly react to such market trends and immediately convert from one currency to another, without having to swim against an ocean of information with the risk of drowning. Since manually calculating in real-time multiple currency ratios is impossible, a forex calculator saves you time and money and protects you from taking ill-informed trading decisions and positions, as all the information and parameters you need to wisely plan your trading steps are placed at your fingertips.

Thus, it can be argued that traders who trade with the assistance of a forex calculator gain a competitive trading advantage over those who don’t, especially since forex calculators not only calculate the value of all the major currencies traded, such as the USD, the GBP, and the Euro but also offer a detailed insight into the values of less-known currencies, which offer hold many lucrative opportunities and are not on the radar of other traders. Tracking such less popular currencies would be a very smart move and focusing on those may well mean that you outsmart your competitor traders and meet with many lucrative trading opportunities.

In a nutshell, a well-planned and masterfully executed forex strategy may never be based on blind luck, while if it is aided by the use of forex calculators it may well lead to the desired trading outcomes.

Accuracy in trading through the use of forex calculators

Unlike traditional calculators where one is called to enter data with the risk of making a mistake and obtaining the wrong result, forex calculators are embedded and work like spreadsheets. Therefore, they save you time and eliminate the chance for mistakes, giving you a solid impetus and basis for successful forex trading, since they allow you to view all data at once. Moreover, and perhaps more importantly, you can also view the values for different hypothetical trades simultaneously and immediately, such as the stop loss size, the profit targets, the exact pip size, and many more, depending on the actual forex calculator you are using.

It is this offered enhanced accuracy with numbers, especially when it is critical to be fast with decisions, i.e. in live trading conditions, that make forex calculators so vital. As already explained, during day trading traders need to pay attention to pip size, leverage, and their risk level, and profit targets, otherwise, they will not be able to execute their long-term strategy and overall money management plan. When there is a small change in number it may seem that its impact would be low, but when trading at high leverage or with big amounts even the tiny margin of error may result in huge losses. As accuracy is thus very important for day traders and scalpers, so is the use of embedded forex calculators. Moreover, because forex calculators allow the simulation of many different hypothetical results very fast, they allow you to quickly work out your optimal trade size and, through iteration, this leads to the improvement of your overall trading skills and money management aptitude.

This being said, accuracy is not essential for day traders alone, as carry traders, who do not need to be as fast, also need to be accurate if their long-term plans are to hold and not fall apart. As every forex exchange rate is different and unique and also carries differing interest rate differentials that are used in different carry strategies, it is essential that the trader can ensure the accuracy of several decimal points in all calculations, especially for large trading amounts. Therefore, calculators are essential for day traders as well as carry traders, vital for all traders, both novices and seasoned ones.

The most important calculators for forex traders

Taking into account the points discussed above, the importance of forex calculators for traders becomes evident and this is a fact known and understood by forex brokers as well, who in their effort to attract more customers and offer them an enhanced and differentiated trading experience, are often offering such tools to their clients. Therefore, when considering which forex broker to open an account with, it would perhaps also be a good idea to also check out and factor in what types of calculators they make available to you. Of course, you can obtain forex calculators independently from your forex broker, but it is more easy and convenient, especially for those that are just beginners in forex trading, if such tools are provided for you.

One example of a broker that offers a quite extensive array of such calculators is OspreyFx, a broker whom we have already discussed for the merits of its affiliate program. For the purposes of this present post, we shall present the most important calculators that every forex trader should ensure access to, with the note that all the below are offered to clients who open an account with OspreyFX.

Though more do exist and as the forex industry expands in size and volume more are added, the most critical calculators for forex traders are:

Having identified them, let us now explore each of these calculators in greater detail:

Concluding Remarks

Forex calculators are truly helpful for all traders, irrespective of their experience and skill level, as well as their preferred trading strategies and styles, as they allow the very fast calculation of different scenarios that are necessary for the planning and execution of forex trades. Through forex calculators, traders may easily and swiftly calculate important parameters for each trade such as the potential profit and loss, the pip value, the amount of required margin, and the volatility and correlation between different currency pairs.

Due to their proven significance, most major forex calculators are tools that are freely available online, either as standalone versions or via forex brokers or even financial news outlets, while some can be downloaded from trading platforms developers’ websites, such as the MetaTrader4 platform website.

While we urge and encourage traders to seek and make use of such forex calculators, we need to be clear that achieving consistent profitability while trading forex is indeed an extremely challenging endeavor, and suffering losses is very normal for most retail traders. This being said, the wise use of the proper forex trading tools, such as forex calculators, coupled with a well-thought-out and detailed trading plan that is based on solid knowledge and understanding of how the currency market works and how it can be traded effectively, can all combine to bring about significantly boosted chances for forex trading success and the associated profits that come with it.

FAQs on Forex Trading Tools


What is the difference between the Forex compound calculator and the forex swap calculator?

The forex compound calculator and the forex swap calculator are two different tools each showing different information, though both can prove useful for traders, especially those following the carry trades strategy. The swap calculator, as its name suggests, allows traders to find out the swap rates for different currency pairs, for both short and long positions. Thus, it provides extensively detailed information which is most useful for traders planning carry trades, since it enables the potential amount of earnings for each currency pair they plan to trade.

The Forex compound calculator on the other hand, gives a less detailed picture. Traders must provide their starting balance, the interest rate and the duration of the trade for the compound calculator to yield results, while the compound calculation is more complete if traders can also find and enter the respective swap rate themselves. Therefore, using a swap calculator can aid and enhance the use of a compound calculator.

Can I find a risk management Forex calculator online?

A Forex risk calculator, which can calculate all the risks involved in and associated with forex trading does not exist, either online or offline. However, there are several forex calculators available online, which address and aid different aspects of risk management in forex trading. In fact, mitigation of risk is one of the most important reasons why traders resort to the use of forex calculators.

For example, in order to reduce their risk exposure, traders need to identify less volatile currency pairs and they can do this through a forex volatility calculator. Another calculator that is very useful for risk-averse traders is the forex correlation calculator, which helps identify highly correlated currencies and allows traders to avoid trading them simultaneously.

What is the difference between the Forex position size calculator and the profit and loss calculator?

Though they do have similarities, these two calculators also have differences as well, which means that each is better suited to different types of traders, having different goals.

The profit and loss calculator is better geared for traders particularly interested in the amount of possible losses or gains from a specific forex investment, something which a position size calculator cannot measure. What it can do however, is to allow traders to determine their account size and risk ratio assumed, i.e. the percentage of their trading capital that they are risking for each trade. When using the profit and loss calculator traders can see the amount under risk in each trade and the associated position size expressed both in currency units as well as standard lots.

Can Forex calculators help my investment decisions?

Forex calculators are very useful tools for traders and when used correctly and appropriately they can definitely help both the planning and the execution of investment decisions. Perhaps the simplest, yet most useful such tool and the most helpful calculator for every trader is the currency converter.

Often consulting the currency converter and instantly knowing the conversion rate for a variety of currency pairs, enables traders to achieve currency diversification, thus mitigating the obvious risk of over exposure, when all one’s investments are tied to a single currency, or currency pair, rendering them very vulnerable in case that particular currency suddenly enters a period of extended depreciation.

The currency converter allows traders to better plan ahead and better decide on their investment moves, knowing at any time the expected return of any investment in their local currency.

How is the consumer price index (CPI) calculator helpful in Forex trading?

The CPI calculator enables traders to identify the latest inflation dynamics affecting different currencies across the globe. If the Consumer Price Index calculator for a specific currency shows that intended inflation rates for a currency are consistently and for long periods of time being missed and under what authorities would wish them to be, then the Central Bank issuing the specific currency is likely to reduce its rates or engage in quantitative easing to increase the supply of the specific currency. This will be a signal for a forex investor to sell the currency in question. Moreover, since long term purchasing power parity dynamics indicate that currencies with consistently lower inflation rates are stronger than those with higher inflation rates, the CPI calculator can also be used as an advisor for forex traders’ long-term trades as well, helping them determine which currencies to prefer to stick to and which to avoid.

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