Currency Exchange Rates
Foreign Currency Exchange Calculator
How to Choose a Foreign Currency Exchange Calculator
When trading forex, it’s very helpful to have a good foreign currency exchange calculator at your fingertips. Fortunately, there are many excellent foreign exchange calculators available for free on the Internet.
A foreign currency exchange calculator is a piece of software that allows you to plug an amount of currency into a box, then push a button and it tells you how many units of another currency you could get for your selected number of units of the original currency.
For example, the American dollar is currently worth about .64 British pounds. So if you were to convert dollars to pounds, you would get .64 pounds for every dollar. If you were to convert pounds into dollars, you would get 1.56 for each pound.
Here are three things to think about when looking for a currency exchange calculator:
1. Exchange Rate Data Must Be Current and Relevant
Currency conversion software is actually pretty easy to program, because the math is relatively simple: the foreign exchange calculator just divides one currency’s value by another currency’s value and that gives you the exchange rate.
However, you must be careful to work with a calculator that uses data that’s current and meaningful for the forex trader. Some foreign currency exchange calculators give you data from yesterday, for example, a delay that’s not acceptable in the forex markets, but might not be a big deal if you’re traveling to another country and want to get a rough idea of how much it’s going to cost you to get a hotel and meals per day.
In our opinion, it’s best to use a foreign currency exchange calculator from a trusted forex source, rather than using a general calculator that is not specifically aimed at the needs of forex traders. One calculator that we like as traders is the one at Bloomberg.com.
2. Currency Converter Data Sources Must Be Valid
Some forex brokers, such as Oanda.com, offer a currency converter tool that is partially based upon the prices the broker sees people buying and selling at on the broker’s own trading platform. FXCM.com uses proprietary data sets in a similar way.
Both of these brokers can put out a good currency converter based at least partially on their own insight into the markets, but not all brokers can do this. Meanwhile, certain news websites that are not FX trading-focused may pull data from official government sources, which may or may not be in line with actual market pricing.
Whenever you’re evaluating foreign currency exchange calculators, take a moment to evaluate the validity of the data sources that form the mathematical basis for the currency converter. An FX currency converter is only as good as the data that underlies it.
3. Foreign Currency Exchange Calculators Are “Big Picture” Tools
No matter what currency converters you choose, you must understand that these tools don’t represent actual prices in the marketplace. In order to get actual prices, you must be actually plugged into the market and have a means of acquiring a currency pair.
In other words, the pricing offered by currency converters is not “live.” Your forex broker’s prices will not match up exactly with your currency converter’s prices.
Therefore, we recommend that you employ currency converters to develop an overall “big picture” of how currencies are interacting with each other, rather than relying on a foreign currency exchange calculator to help you make trades in the moment.
The best FX currency converters go beyond simple conversion to offer you historical data on the relationship between one currency to its various counterparts. Especially for a beginning forex trader, a day spent playing with a good foreign currency exchange calculator is a day well spent.
Important Forex Information
The most important step in currency trading is finding the right broker; our forex experts can help. See our
reviews of forex brokers for more information. 
Foreign currency exchange trading is the practice of trading x for y in hopes that the value of y will increase. Learn the basics of foreign currency exchange rates.
There are many excellent foreign exchange calculators available for free on the Internet. Let us tell you how to choose a currency exchange calculator.
Unfortunately, far too many beginning traders start trading FX without spending the time to gain necessary knowledge. Find out what you must know about exchange rates.