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Danny

How is CFD trading Similar to Forex trading?

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Hi Danny,

CFD and Forex trading carry along with similar characteristics. They trade in almost a similar way such that in both cases, investors have the flexibility to enter and leave the market depending on varying market prices.
They trade on the same platform and use the same charts and prices to execute their trade. Forex and CFD markets carry their transactions online, and their trades are carried out Over-the-counter (OTC). 
Trading from Over-the-Counter or off-exchange means that a trade takes place directly between two parties without the supervision of a central exchange.
Contrarily to other financial exchanges, CFD and Forex exchanges only incur spreads as their trading cost. The spread is the deviation from the opening price and the closing price.
The trades of both CFD and Forex take place from a connection of various banks.
While trading in either CFD and Forex, you have access to margin. When you are given margin, you are will only contribute a fraction of the full amount required as your deposit, and the broker will 'lend' you the rest amount.
The main similarity between these two is that you do not own the underlying asset you are trading. When you buy an asset, you will not possess it; rather, you will be speculating on the changes in the price and therefore decide on whether you will buy or sell the asset depending on how the price moves.
Depending on what your market strategies are, you get to choose the one that suits your objectives. However, you can opt to invest in both of them.

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