Please disable your adblock and script blockers to view this page.

Jump to content

Established on 28th of March 2010 as "paid to post" forum, ITalkMoney had soon turned into one of the best places to discuss online money making opportunities. Here you will find many ways of earning good income on Internet, like various investment opportunities, online gambling and betting, playing with HYIPs or discuss Forex. You can interact with many famous Forex brokers, discuss different trading styles and platforms, EAs, binary options, stock market and indices. There are also various "Get paid To..." opportunities and don't forget the advertising section where you can advertise your own opportunities and look for referrals. Join in and have fun!

<a href="http://www.instaforex.com/?x=KYNZ">InstaForex</a>

Our Supporting Monitors

Advertisements





<a href="http://www.instaforex.com/?x=KYNZ">InstaForex</a>

Friendly Forums


Our Partner Monitors

Traffic stats


Photo

Forex Or Cfds: What To Trade ?

5stars forex online trading

  • Please log in to reply
No replies to this topic

#1 James Berry

James Berry

    Newbie

  • Member
  • Pip
  • 18 Posts:
  • Locationsweden ,510

Posted 18 September 2015 - 10:39 AM

 

forex_cfds.jpg

Today, opening a Forex brokerage account is about much more than trading currencies. With more and more brokers offering an increasingly wide range of assets beyond currency pairs, it is easy to either feel like a kid in a candy store, or completely overwhelmed. These states of mind can be unhealthy for you and your trading account, so it pays to take a closer look at what your broker – or your next Forex broker – is putting on the table.

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.

Difference between Forex and CFDs

Range of Markets

CFD trading spans a larger set of financial markets, as these contracts can involve various commodities or equity indices of several countries. Some brokers even offer CFDs on stocks traded in different exchanges, opening a very wide realm of trade opportunities!

Compared to spot forex trading which is limited to the currency market, CFD trading does seem to offer a much broader array of trading choices. Bear in mind though that some assets are often limited to their local denomination (ex: S&P 500 against USD or shares of Royal Dutch Petroleum against GBP).

Price Factors

Factors that affect price movement in CFD trading depends on the markets in which the asset is part of. For instance, crude oil CFD prices are mostly driven by supply and demand or by seasonality. Prices of equity CFDs can be determined by business factors or company-specific events, such as earnings or acquisitions.

Meanwhile, price movements in the spot forex market are mostly influenced by fundamental factors, such as economic growth and monetary policy expectations. Risk sentiment also plays a role in currency price action, along with geopolitical tension and to an extent, environmental factors.

Trade Execution

CFD and forex trades are generally executed in the same manner in an OTC market under a decentralized exchange. Both types of trading don’t involve the physical transfer of the assets, as profit or loss are calculated based on the opening and closing prices. Because of these similarities, several brokers actually offer platforms that cater to both CFD and spot forex trading.

Margin

Both spot forex trades and CFD trades make use of margin, with the former generally quoted through a leverage ratio (ex: 1:100 or 1:10) and the latter stated as a fixed percentage (ex: 1% or 5% margin factor).

Trade Costs

With forex trading, transaction costs are generally based on the bid-ask spread quoted by the broker. In CFD trading, transaction costs can involve commissions, which vary depending on the underlying asset. The costs of trading equity CFDs are still generally lower compared to purchasing actual shares while index-based CFDs don’t usually carry commission costs.

CFD positions held open overnight can also incur overnight financing costs, which consists of a daily charge based on the size of the contract and often linked to LIBOR or central bank benchmark rates. With that, trades kept open for much longer are subject to increasing interest charges, which can wind up eating a huge chunk of your trade returns. On the other hand, financing costs on short CFD positions are typically received by the trader.

Visit Us:

https://www.5starsforex.com/

 







0 user(s) are reading this topic

koddos.net
Hey.lt - Nemokamas lankytoju skaitliukas Increase Page Rank ScanVerify.com Trust Seal Website Security Test ???????@Mail.ru Google

04fac709f7845290839b3d09dd56a12f

Skin Designed By Evanescence at IBSkin.com