Forex CFDs
Foreign exchange contract for difference (Forex CFD), as the name implies: a contract for difference with a currency pair as the underlying asset. The trading of foreign exchange CFDs does not involve the exchange or sale of actual currencies, but trades based on the price trend of a certain currency or currency pair. The trader's profit or loss depends on the price change of the CFD product.
The foreign exchange CFD uses the spot market price as the contract price, and the spot market price at the time of the settlement is used as the settlement price when the settlement is reversed, and the margin currency is used as the settlement currency. In addition, since the foreign exchange CFD involves two currencies, and there is a difference in interest rates between the two, there will be a problem of deposit and loan interest rates.
The foreign exchange contract for difference originated from the foreign exchange futures contract and was formally formed during the promotion period of the contract for difference. In the 1970s, the Chicago Mercantile Exchange (CME) established the International Monetary Market (IMM) department and launched the foreign exchange futures contract for the first time. The main trading varieties are futures contracts of six international currencies. All foreign exchange futures contracts are traded on the exchange. Concentrate internally. After entering the 21st century, major financial institutions or brokers have discovered the huge market potential of CFDs, and have developed CFD products, including foreign exchange CFDs.
Therefore, many of our ordinary investors' foreign exchange transactions or precious metal transactions are CFDs, or "Foreign Exchange CFDs" or "Spot Gold CFDs", and these contracts are designed and provided by brokers.
With the rapid development of the foreign exchange retail market, foreign exchange CFDs have been tried by more and more people, but few people really understand it.
Foreign exchange contract for difference (Forex CFD) as the name implies: a contract for difference with a currency pair as the underlying asset. The trading of foreign exchange CFDs does not involve the exchange or sale of actual currencies but trades based on the price trend of a certain currency or currency pair. The trader's profit or loss depends on the price change of the CFD product.
The foreign exchange CFD uses the spot market price as the contract price and the spot market price at the time of the settlement is used as the settlement price when the settlement is reversed and the margin currency is used as the settlement currency. In addition since the foreign exchange CFD involves two currencies and there is a difference in interest rates between the two there will be a problem of deposit and loan interest rates.