In trading Forex (Foreign Exchange) and CFD (Contract For Difference), these two investment instrument transactions at first glance look almost the same. Both involve the same trading execution process, use spreads as the ‘cost of trading’, the platforms used are the same (price and chart methods), both are traded OTC (Over-The-Counter).
Several aspects that distinguish forex and CFD trading include aspects of the types of trading products and services, factors that affect the trading market, and aspects of the reasons investors choose to trade forex or CFDs.
Trading Products and Services
Forex trading has specifically focused on trading foreign currencies (forex). The forex trading method calculates the difference in the forex ‘pairing’ traded. Meanwhile, CFD provides a variety of trading products and services in the form of derivative contracts from several financial instruments such as energy commodities and metals, stocks, indices, equities, and including forex as well. So, you are free to choose contracts or trades in various currencies and the increment value depends on the region of the country where the CFD trading assets originate. Also, read admiral markets review Trading Products and Services.
Factors Affecting Market
In forex and CFD trading, there are market dynamics that are influenced by several factors. These factors tend to be different for forex and CFD trading. In forex trading, the trading exchange generally involves dynamics (fluctuations) which are usually influenced by global situations and events. Trading involving foreign exchange rates is strongly influenced by factors of international political and security conditions, natural disasters and wars, prosperity and global economic development, governance of Human Resources (HR), and Natural Resources (SDA) as factors of economic production of a trading country. forex. For CFD trading, the factors that affect the trading market are more specific to the demand and supply conditions for commodities or changes in the trend of the commodity business sector traded through CFD contracts. Examples of factors that have an impact on CFD trading are stock and bond market fluctuations, then changes in international prices for products or commodities with the highest demand.