Forex CFDs

Forex and CFDs are common terminologies of one discipline and sometimes can be mixed up. However, it is crucial to remember that they are two different concepts. While the fundamentals of Forex trading and CFD trading are similar, there are some key differences.

Forex market is the greatest financial market, which offers a variety of trading opportunities for people looking to capitalize on currency value fluctuations. It also serves the primary exchange mechanism for global trade and business.

CFD is a derivative trading instrument, providing an opportunity to trade on price fluctuations of various financial assets, not owning the asset.

Forex and CFDs: Similarities

Forex and CFD trading is trading with leverage. Forex and CFD trading have the following common features:

CFD and Forex trading is carried out in the over-the-counter market, which has no central exchange or physical location and runs electronically within the bank networks.
Both market segments assume similar process of trade execution. In both cases during rise and fall of the markets traders can easily enter or exit the market.
Forex and CFD trading can be executed on the same platform, using similar methods of price formation and display the charts.
For Forex and CFD trading spread is the only obstacle for realizing large numbers of transactions during the trading session.

Forex and CFDs: Differences

Despite the similarities Forex and CFD trading have the following key differences:

Forex offers only currency trading, whereas CFD trading involves different types of contracts including a distinct set of markets, such as metals, indices, commodities, energetic resources and many more.
CFD trading is highly influenced by such factors, as demand and supply of the base assets, corporate events, whereas Forex trading is influenced mainly by global events.
The main goal and reason of large popularity of Forex trading is the support of market processes of international trade and investment, whereas CFD market was created for hedging purposes, i.e. protection of investments during trading.

IFC Markets is a leading innovative financial company, offering private and corporate investors wide set of trading and analytical tools. The company provides its clients with Forex and CFD trading through its own-generated trading platform NetTradeX, which is available on PC, iOS, Android and Windows Mobile. The company also offers MetaTrader 4 platform available on PC, Mac OS, iOS, Android, Windows Mobile and Smartphone. You may compare the advantages of both platforms.