In trading Forex (Foreign Exchange) and CFD (Contract For Difference), both transactions of this investment instrument at a glance look almost the same.
- Products And Trading Service
Forex trading has been specifically focused on trading foreign currency (forex). Forex trading methods calculate the difference of ‘pairing’ traded foreign exchange.
Meanwhile, CFDs present varying 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. Thus, you are free to choose contracts or trades with various currencies and increment values depending on the territory of the country where cfd trading assets originate.
- Factors Affecting the Market
In trading forex and CFD, there are market dynamics that are influenced by several factors. These factors tend to be different for forex and CFD trading.
In forex trading, trading exchanges generally occur dynamics (fluctuations) that are usually influenced by global situations and events. Trading involving foreign exchange rates is strongly influenced by factors of political and international security conditions, natural disasters and wars, welfare and global economic development, Human Resource (SDM) and Natural Resources (SDA) governance as a factor of economic production of a country trading forex.
For CFD trading, factors affecting the trading market more specifically lead to demand and commodity supply or trend changes from the commodity business sector traded through CFD contracts. Examples of factors that impact CFD trading are fluctuations in stock and bond markets, and then there are changes in international prices for products or commodities that are most demanded.
- Reasons Investors Investing
The difference between forex and CFD trading also lies in the reason of investors in choosing to invest in forex or CFD. The majority of investors choose forex trading, caused by several reasons such as for ‘hedging’ purposes, speculation, but the most important is for international investment and trading activities.
Those are some of the points that differentiate forex and CFD trades are still ‘blur’ for some traders. Thus, the description may be your reference to the trader to decide the wise choice to carry out your trading activity, forex or CFD