Using Forex tools is essential if you plan on making money in the Forex market, the only thing you can do WITHOUT tools in Forex trading is to lose money. You need the tools to help you predict or identify a trend in the market. I will try to name out some of the tools traders use everyday to trade the market. This is not a lesson so don’t try to use these explanations to teach yourself to trade.

Fibonacci Retracement – This tool is by far one of the MOST commonly used tools in Forex. What this does is basically find a retracement where the market will bounce and head back in the opposite direction in a nutshell. This works well on charts with candlesticks on, you draw this tool from the highest to the lowest peaks and vice versa. Once this is done it projects some ‘support’ and ‘resistance’ lines in which ever direction you chose. This tool works wonderfully on high time frame charts and must be drawn 20pips or higher.

Trend Line – This is the easiest of them all, it helps to identify trends either UP or DOWN. If the trend is up you draw this line under the higher lows and often you will see it bounce up from the line, you do the opposite in a down trend draw the line over the lower highs. Pretty simple and straight forward, but don’t get me wrong this tool is also one of the most powerful along with Fibonacci. All traders use trend lines on their charts for analysis.

Bollinger Bands – This tool is more of an indicator it works like this, it forms an outer wave above the HIGHS and below the LOWS. This is a helpful tool for scalpers (short term traders) and very effective on 5min, 15min and 30min charts. It also depends how the market is moving at the time. If the Forex market is in a seesaw movement it works beautifully, when the HIGHS touch the upper wave it’s a high probability that it will bounce and head back down towards the lower waves below the LOWS. Once it the LOWS touch the lower waves then again its high probability that the market will head right back up again to the upper waves. This strongly depends on how the market is reacting at the time.

That’s just some of the widely used tools in Forex Market, I personally use these 3 tools above mainly Fibonacci + Trend line combo. Before making an entry with a trade is sure to confirm with at least three tools, if all three agree then you can make you’re entries. That will most likely be a high probability trade.

For easy and profitable Forex Trading, we should use Forex Tools which will reduce our time as well as it is more profitable than normal Trading.