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Forex Analysis Software Comparisons and Reviews

The best Forex analysis software ranked and compared

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What to look for when buying Forex analysis software:

Free evaluation software:
Before paying a considerable sum of money for some analysis software you want to be able to take it for a test drive to check out the features. This will allow you to make sure it offers everything you need to be able to analyze the market effectively. It will also help you find out how easy the software is to use.

Forex Tester offer a free evaluation software download

Range of tools:
You are buying analysis software so that you can easily evaluate the market. Therefore, you need to be sure that there are a variety of different charting tools on offer so no matter what your style you have something that suits you.

Customizable spreadsheets:
When you output the data you will probably want to be able to manipulate it yourself. This is particularly true if you are trading a certain strategy that requires some data input to give alerts. A customizable spreadsheet allows you to see the data however you wish and use it in whatever format you need to.

Easy, step-by-step wizard:
This is essential if you have little experience or knowledge of how analysis software works. With a good easy to use wizard you can always perform the analysis you need to with the data.

Signal quality:
Some software packages come with in-built signal alerts. This usually allows you to use either the softwares preset system or one of your own to alert you to the next market opportunities.

What is the best method of analysis for forex trading?

Forex analysis is used by retail forex day traders to determine buy or sell decisions on currency pairs.

Forex analysis could be technical in nature, using resources such as charting tools. It can also be fundamental in nature, using economic indicators and/or news-based events. The day trader's currency trading system uses analysis to determine buy or sell decisions when they point in the same direction. Automated forex trading strategies that incorporate technical and fundamental analysis are available for free, for a fee or can be developed by more tech-saavy traders.

Types of Analysis Used in Forex

Fundamental Analysis

Fundamental analysis is often used to analyze changes in the forex market by monitoring factors, such as interest rates, unemployment rates, gross domestic product (GDP) and many other types of economic data that come out of countries. For example, a trader conducting a fundamental analysis of the EUR/USD currency pair would find information on the interest rates in the Eurozone more useful than those in the U.S. Those traders would also want to be on top of any significant news releases coming out of each Eurozone country to gauge the relation to the health of their economies.

Technical Analysis

Technical analysis comes in the form of both manual or automated systems. Forex systems use past price movement to determine where a given currency may be headed. A manual system typically means a trader is analyzing technical indicators and interpreting that data into a buy or sell decision. An automated trading analysis means that the trader is "teaching" the software to look for certain signals and interpret them into executing buy or sell decisions. Where automated analysis could have an advantage over its manual counterpart is that it is intended to take the behavioral economics out of trading decisions.

Automated technical analysis and manual trading strategies are available for purchase through the internet. However, it is important to note that there is no such thing as the "holy grail" of trading systems in terms of success. If the system was a fail-proof money maker, then the seller would not want to share it. This is evidenced in how big financial firms keep their "black box" trading programs under lock and key.

Weekend Analysis

There are three basic reasons for doing a weekend analysis. The first reason is that you want to establish a "big picture" view of a particular market in which you are interested. Since the markets are closed and not in dynamic flux over the weekend, you don't need to react to situations as they are unfolding.

Secondly, the analysis will help you to set up your trading plans for the coming week. Weekend analysis is akin to an architect preparing a blueprint to construct a building to ensure a smoother execution. Remember, shooting from the hip can leave a hole in your pocket! Finally, a weekend analysis helps build a routine so you can establish the necessary mindset for the upcoming week. (For further reading, see "9 Tricks of the Successful Trader.")

Forex Analysis: The Bigger Picture

Analysis can seem like an ambiguous concept to a new forex trader. Therefore, it's important to think critically about the tenets of analysis, which we've outlined in four steps below.

1. Understand the Drivers.

The art of successful trading is partly due to an understanding of the current relationships between markets and the reasons that these relationships exist. It is important to understand causation, remembering that these relationships can and do change over time.

For example, a stock market recovery could be explained by investors who are anticipating an economic recovery. These investors believe that companies will have improved earnings and, therefore, greater valuations in the future and it is a good time to buy. However, speculation, based on a flood of liquidity, could be fueling momentum and that good old greed is pushing prices higher until larger players are on board so that the selling can begin.

Therefore the first questions to ask are: Why are these things happening? What are the drivers behind the market actions?

2. Chart the Indexes.

It is helpful for a trader to chart the important indexes for each market on a longer time frame. This exercise can help a trader to determine relationships between markets and whether a movement in one market is inverse or in concert with the other.

For example, in 2009, gold was being driven to record highs. Was this move in response to the perception that paper money was decreasing in value so rapidly that there was a need to return to the hard metal or was this the result of cheap dollars fueling a commodities boom? The answer is that it could be both, or as we discussed above, market movements driven by speculation.

3. Is There a Consensus in Other Markets?

We can gain a perspective of whether or not the markets are reaching a turning point consensus by charting other instruments on the same weekly or monthly basis. From there, we can take advantage of the consensus to enter a trade in an instrument that will be affected by the turn. For example, if the USD/JPY currency pair indicates an oversold position and that the BOJ could intervene to weaken the yen, Japanese exports could be affected. However, a Japanese recovery is likely to be impaired without any weakening of the yen. (For further reading, see "The U.S. Dollar and the Yen: An Interesting Partnership.")

4. To Trade or Not to Trade

There is a much higher chance of a successful trade if one can find turning points on the longer timeframes then switch down to a shorter time period to fine-tune an entry. The first trade can be at the exact Fibonacci level or double bottom as indicated on the longer term chart, and if this fails then a second opportunity will often occur on a pullback or test of the support level.

Patience, discipline and preparation will set you apart from traders who simply trade on the fly without any preparation or analysis of mulitple forex indicators. (For more trading tips, read "The Most Reliable Indicator You've Never Heard Of.")

The Bottom Line

There is no "best" method of analysis for forex trading between technical and fundamental analysis. The most viable option for traders is dependent on their timeframe and access to information, while it does not hurt to conduct a weekend analysis when the markets are not in a constant state of fluctuation. For a short-term trader with only delayed information to economic data, but real-time access to quotes, technical analysis may be the preferred method. Alternatively, traders that have access to up-to-the-minute news reports and economic data may prefer fundamental analysis.

For more on this topic, see "Forex Trading Strategy."

How to Choose the Best Forex Analysis Software

When it comes to forex analysis software, there are many viable candidates to choose from. You can opt for the popular programs used by virtually every trader or you can go for niche options that have specific areas of application. If you choose to go the popular route, the Metatrader options like MT4 and MT5 will be the most accessible.

Regardless of the route you take, one of the key issues you must consider is the features that the software programs come with. The provision of a demo account as part of the software (Bulgarian traders refer to it as “Търговия с демо сметка”), for instance, is extremely useful for novice traders. Nonetheless, here are some tips that can help you choose the best forex analysis software.

Simple User Interface
Forex analysis is all about following the data. The first thing you must consider when selecting a forex analysis software is the user interface. The manner in which elements are arranged in the program window can be the main deciding factor as to how usable a software program is. Forex software that arranges the icons, charts, windows and other elements in a practical manner is the best for analysis. This is because a clean interface is not just attractive to look at but it also allows efficiency.

Features and Speed
Secondly, the software features and its speed are essential factors. Starting with the features, a program that is fully-equipped can analyze different trading metrics right within the same interface. This makes work easier and saves resources that would be spent on additional programs. Regarding the speed, a program that is properly optimized is not just a joy to use but it is crucial in an occupation like day trading. Speed can be the difference between a profitable investment and a wasted opportunity. The best software for forex analysis should thus be speedy and fully equipped.

Support for multiple platforms
Modern software programs are created for convenience. You can choose to analyze the markets when you are in the car, in the office or at night just before you sleep. In order to do that, you must have a program that is available for both desktop computers and handheld devices. You will find multitudes of programs working with different mechanisms and supporting divergent hardware infrastructure in the market. Since program users are spread across the different devices in the market, a modern program needs to either have multi-platform support or have alternatives for the different device platforms. When you are considering a good forex analysis software, go for that which has multi-platform support and you will never have to face inconveniences.

To sum up, forex analysis is a fairly detailed process that involves the use of indicators, market metrics, and oscillators among other tools. In order to carry out forex analysis competently, you need a software program that is not just full of features but is also user-friendly and convenient to use. When selecting a great forex analysis program, therefore, always consider both the technical and general aspects of the program. Doing this will lead you to the best software that makes it easy for you to analyze the forex market.

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