What Is Forex Forecasting Software?
Forex forecasting software is an analytical toolkit used to help currency traders with foreign exchange trading analysis through technical charts and indicators. Forex forecasting software provides charts and graphs of currency pairs that display price changes over time as well as indicator overlays such as moving averages, which help analysts and traders to determine appropriate and profitable entry and exit points for their forex trades.
As with charting software used with trading other types of securities, forex forecasting software is applied primarily by technical analysts to short-term forecast future price movements.
Key Takeaways
- Forex forecasting software refers to computer-based technical analysis software geared to currency markets.
- The goal is to automate identification of technical indicators or chart patterns across a range of currency pairs in order to identify trade entry and exit points.
- In addition to technical analysis tools, macroeconomic data may be incorporated, combining both bottom-up and top-down indicators.
- Several platforms exist, many offering free demos to potential users to try them before you buy them.
Understanding Forex Forecasting Software
The forex market is always changing and challenging to predict. Forex forecasting software, while not guaranteed to be entirely accurate, makes it easier to apply technical analysis and make short-term predictions about the market's direction. This information is helpful to individual traders looking to minimize losses and maximize profits.
Forex forecasting software incorporates data from various sources. Technical indicators and overlays such as moving averages, Bollinger Bands, and Fibonacci sequences often come standard. The data provided may also incorporate macroeconomic figures such as gross domestic product (GDP), inflation deflectors, stock market prices, and consumption metrics. Combining technical charts with macro factors that can influence exchange rates across national currencies makes for a more holistic approach.
Different suppliers of this technology will offer various features and software functionality. Some versions of the software are available online for free, and many brokerages provide a version of this software for their clients.
How to Choose Forex Forecasting Software
There is a wide range of forex forecasting software platforms used for currency prediction and for analyzing markets. Each will vary somewhat in appearance and functionality. Users should look for several things in forex charting software, including:
- Is it free, or is there a nominal charge?
- What are the additional features available?
- What technical indicators are available?
- Does it incorporate macroeconomic and country data?
- Is the software Windows, Mac, or web-based?
- Can you trade directly from the charts?
- Is historical data made easily available through the software?
- Is the graphical user interface (GUI) visually pleasing and easy to read?
- Is the GUI conducive to monitoring a lot of information at once?
- Is the GUI customizable?
- Are tutorials available?
Most forex brokers allow you to open a demo account before funding a standard or mini account. This try-before-you-buy option will enable users to try out each broker's software during a trial period and determine which software and broker best suit their needs.