CFDs and Forex are the two most popular choices among traders. They both have important similarities and differences that you should be aware of before entering the markets. Both Forex and CFD transactions are executed over the counter (OTC). They also carry similar transaction costs, commissions, spreads as well as the overnight roll-over swaps. Both can be traded in rising and falling markets, which means that you can choose to go long or short. Wheather you want to trade CFD or Forex, the most important to remember is that you do not own the underlying asset, that is being traded.
You only speculate on wheather its price will rise or fall. The biggest difference between the CFD and the Forex contract is the fact that CFDs cover a diverse range of markets, such as commodities, indices, stocks, while Forex is limited to the currency market only. Based on the contract you choose for CFD trading , you can expect variations in the base currency and the lot size as well. On the contrary with Forex the lot size is always uniform, regardess of which currency pair you trade. By learning what makes Forex and CFDs different, you can now make better informed descisions and build your own trading strategy. Trade smart. Open an account with ThinkMarkets today. .
What’s the difference between CFDs and Forex? Learn about the fundamental similarities and distinctions between CFD trading and forex trading.