Forex vs Forex CFD's

Hi there,
Please forgive me if this is a silly question… I have completed the Baby Pip’s course and I am now doing research to choose a broker (I am in Australia). It seems as though all the brokers I look at offer Forex CFD’s and not pure Forex. Are Forex CFD’s really the only option because they are what provide the leverage? Or should I try and find a broker that offers pure Forex trading? Thanks for your help!

hi I am living in Oz too and have joined Forex course and want to progress

In forex your orders do actually go into the real forex market, albeit being traded on a very small fx portal.

Forex CFDs on the other hand are a contract between you and your broker, a market is made that mimics the underlying market.

Its probably better to trade real Fx if your plan is to trade solely FX, but if you also like indexes and other commodities a CFD broker is a good option.

In my experience trading indexes is a better entry product that Forex, where intraday volatility can be insane and shake you out of positions too easily.

To confuse things further, there are some brokers like FXCM that offer real fx, and CFDs on non fx markets

To be honest i really dont see much difference between fx and fx CFDs, both use leverage.

But some traders do get stuffy about trading synthetic FX markets via CFDs.


Can you please explain more that difference between Forex and CFD Forex, how it works etc…
Do they literally make a contract, they don’t trade on market?

They are pretty much the same thing in terms price action and the mechanics of trade placement.

No it’s not like going to a lawyer and drawing up a contract, they are called contracts which is really just a classifier term for a derivative

The big difference is that with real forex the order goes into the real market whilst the CFD is a bet between you and your CFD broker.

I have never had any problems with CFDs, unlike some - however the broker I use (FXCM) offers real forex, but CFDs on stocks, indices and commodities.

To be honest I don’t even know if the gold market I trade with them is spot gold or CFD gold.

Some pure forex traders look down at CFDs, and my suggestion is if FX is all you want to trade, open a FX account.

But for those who wish to have a range of asset classes to trade with leverage, CFDs are great.

Right now I’m trading alot more Stock CFDs, I actually find fewer opportunities in the currency space.

My apologies if this reply is repeating much of my past posting, but I really don’t spend much time worrying whether I’m trading with a traditional broker, bucket shop or off the floor of the exchange itself (oh if only)

Markets pretty much all trade in the same manner IMO - though I’m sure others would disagree

But isn’t forex already a CFD because you trade currencies that you don’t have and you earn from difference in price. Honestly I have never heard for a CFD forex and I still don’t realise what is the difference.

Forgive my crude analogy, but I guess it’s like being at the racetrack and getting with the official bookmaker (FX) or staying outside the stadium and betting on the outcome of the race with a back street bookie

But confusion highlights a point, for us retail traders the difference means very little.