CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.94% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

78.94% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Learn To Trade
 
Indicators & Chart Patterns

Deepen your knowledge of technical analysis indicators and hone your skills as a trader.

Find your detailed guides here
Trading Glossary

From beginners to experts, all traders need to know a wide range of technical terms. Let us be your guide.

Learn More
Knowledge Base

No matter your experience level, download our free trading guides and develop your skills.

Learn More
Learn To Trade

Trade smarter: boost your skills with our training resources.

Create a live account
Market Analysis
 
Market News

All the latest market news, with regular insights and analysis from our in-house experts

Learn More
Economic Calendar

Make sure you are ahead of every market move with our constantly updated economic calendar.

Learn More
Technical Analysis

Harness past market data to forecast price direction and anticipate market moves.

Learn More
Live Webinars

Boost your knowledge with our live, interactive webinars delivered by industry experts.

Register now
Market Analysis

Harness the market intelligence you need to build your trading strategies.

Create a live account
Partnership
 
Affiliate Programme

Grow your business and get rewarded. Find out more about our Affiliate Programme today.

Learn More
Money Manager

Increase your income and get compensated for your trading knowledge with ThinkInvest, putting you in control.

Learn More
API Trading

Create your own trading platform or data tools with our cutting-edge APIs.

Learn More
Introducing Broker

ThinkMarkets ensures high levels of client satisfaction with high client retention and conversion rates.

Learn More
White Label

We supply everything you need to create your own brand in the Forex industry.

Learn More
Regional Representatives

Partner with ThinkMarkets today to access full consulting services, promotional materials and your own budgets.

Learn More
Partnership

Plug into the next-gen platforms and the trades your clients want.

Create a live account
About ThinkMarkets
 
About Us

Find out more about ThinkMarkets, an established, multi-award winning global broker you can trust.

Learn More
Security of Funds

Security of your funds is our number one priority. Find out more about our insurance policy with Lloyd's of London.

Learn More
Trading Infrastructure

When it comes to the speed we execute your trades, no expense is spared. Find out more.

Learn More
ThinkMarkets News

Keep up to date with our latest company news and announcements.

Learn More
Contact Us

Our multilingual support team is here for you 24/5.

Learn More
About ThinkMarkets

Global presence, local expertise - find out what sets us apart.

Create a live account
search
Create account

CFD vs Forex - Learn about their Differences

What's the difference between CFDs and Forex? We explain both the similarities & differences between the two.

 

CFD vs Forex

Watch the video below to learn about the fundamental distinctions between CFD trading and forex trading.

Similarities of CFDs and Forex

CFD trading and Forex trading have many similarities. First, both types of trading involve a similar trade execution process. Traders can easily enter or exit the market in both rising and falling markets. Second, both CFD trades and Forex trades are executed on the same platform, using similar looking charts and pricing methods. In both cases, trades are executed in the over-the-counter (OTC) market, which is run entirely electronically within a network of banks, with no physical location or central exchange. Another similarity between CFD trading and Forex trading is that the only cost of trading is the spread, as opposed to other types of trading instruments that charge commissions and other finance fees.

The primary similarity between CFD trading and forex trading is that neither entitles the trader to actual ownership of the underlying asset. When one buys EURAUD, for instance, one is not actually purchasing euros and selling Australian dollars; rather the trader is simply speculating on the exchange rate. Likewise, when a trader purchases a CFD contract on the FTSE 100, the trader is not actually owning the stocks in the FTSE index, but rather is speculating on its underlying price. In many ways, forex is simply another kind of CFD.

Differences of CFDs and Forex

The main differences between CFD trading and Forex trading is that CFD trading involves different types of contracts covering a diverse set of markets, such as indices, energy, and metals, whereas Forex offers pure currency trading. When you trade CFDs, you have the opportunity to select different contracts that vary in increment value and currency type, depending on the country in which the underlying asset originates. Forex trading is about trading one currency against another currency and always involves trading in uniform lot sizes.

A final difference between CFD trading and Forex trading relates to the general factors that tend to influence the different markets. CFD trading is mostly influenced by specific factors, such as supply and demand of a given commodity or trend changes associated with business sectors. Forex trading on the other hand is mainly driven by global events, like large employment shifts or international political changes.

To learn more about trading CFDs and trading forex, see our free trading guides.

Back to top