What is Forex?

The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with an estimated volume of over US$1 trillion per day. This is estimated to be greater than 30 times the average daily volume of the U.S. stock market. Until several years ago, the bulk of trading was done by major banks and institutions with recent adaptations in regulation opening the market for speculation by individual traders. While an estimated 5% of volume is traded by corporations and governments, approximately 95% is done for profit or speculation.

Forex, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. Hawaii Forex maintains its operation as an IB (introducing broker) and registered as a CTA "Certified Trade Advisor" with the National Futures Association (NFA). Our NFA ID: 0359300

The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.

The following links below provide a brief overview in comparing Forex trade over the stock (equities) and futures market.

Forex vs. Equities
Forex vs. Futures

Additional information can be found from the Federal Reserve Bank on ' "All About the Foreign Exchange Markets in the United States".

Also, see Psychology of Trading & Forex Myths on Trading

Buying / Selling

In this market you may buy or sell currencies. The objective is to earn a profit from your position and avoid a loss. If you have bought a currency, for example, and the price appreciates in value, then you may earn a profit by closing your position. A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. Price fluxuations from currencies can be seen changing real time in various time increments down to the minute. This can be monitored through the online trade station or through quotes via mobile devices.

"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.

What Every Currency Trader Should Know

The forex market is one of the most popular markets for speculation due to its enormous size, liquidity, and tendency for currencies to move in strong trends. An enticing aspect of trading currencies is the high degree of leverage available. FXCM allows positions to be leveraged up to 100:1. Without proper risk management, this high degree of leverage can lead to enormous swings between profit and loss. Knowing that even seasoned traders suffer losses, speculation in the forex market should only be conducted with risk capital funds that if lost will not significantly affect one's personal financial well being.

The FXCM Mini account was designed for those new to online currency trading. There is a smaller deposit required to open an FXCM Mini account at only $300 and trading sizes are 1/10th the size of a regular account. Margin requirement for mini accounts is 0.5% or $50 per lot to trade. The smaller trade size enables traders to take smaller risks. The FXCM Mini is intended to introduce traders to the excitement of currency trading while minimizing risk.

Our recommendation at Hawaii Forex for individuals new to Forex is to take time to read through the Learn section of our site while using our "live" 24 /7 chat with a customer service representative to answer questions as you learn basic strategies.

The next step is to obtain a Free Demo account where you can download the FXCM station to your computer with a $50,000 demo account to allow you to actual practise trades with "live" quotes and newsfeeds from Thomson Financial.