Forex CFD


Forex CFD is just as its name implies: a CFD with a currency pair as the underlying asset. The trading of Forex CFD does not involve the exchange or sale of actual currencies, but is based on the price trend of a certain currency or currency pair. The profit or loss of the trader depends on the price change of the CFD product.


Forex CFD uses the spot market price as the contract price. When the settlement is offset, the spot market price at the time of offset is used as the settlement price, and the margin currency is used as the settlement currency. In addition, since Forex CFD involves two currencies and there is an interest rate difference between the two, there will be a problem of deposit and loan interest rates.


Forex CFD originated from Forex futures contracts and was formally formed during the promotion period of CFDs. In the 1970s, the Chicago Mercantile Exchange (CME) established the International Monetary Market (IMM) department and launched Forex futures contracts for the first time. The main trading varieties are futures contracts of six international currencies. All Forex futures contract transactions are concentrated in the exchange. After entering the 21st century, major financial institutions or brokers discovered the huge market potential of CFDs and began to develop 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", which 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 there are still few who really understand it.