I have been trading forex for sometime now. But I noticed that for my account my broker offers CFDs like metals, gold, silver, oil etc. I have been reluctant to trade those assets because I thought their concept is different from trading forex. Is it so or am I wrong? Are there differences between ways of trading forex and CFDs?
Thanks
Are you not already trading forex using CFD’s? Otherwise, how are you accessing the forex market at this time?
Trading commodities is very different to trading forex and I would definitely advise demo trading these one at a time and learning from the specialists, some of whom only trade gold, only oil etc. so they really have much experience.
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Are there online resources where on can learn?
CFD stands for Contract for Difference, and it is a contract to exchange the difference in the value of an asset from the time the contract is open, to the time the contract is closed. CFD trading works in such way: you open a trade on an asset at a certain price, wait for the price to increase or decrease, and then make a profit (or a loss) on the difference. The biggest differences between CFD trading and traditional investing is that you never actually own the asset.
Then, it’s just like forex trading only that the lots are different. In forex trading, you profit or loss based on the pips gained or lost.