I'm new to this, trying to fit in. I learned more from one forum than I did at uni all year. Thanks.
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How is CFG forex trading different from Spot Forex trading?
- Thread starter salamanderforex
- Start date
Can someone tell me the exact difference of the two as it pertains to making money and trading all together? I get it that it's a contract vs the actual currency that one holds.
1- Why should one trade one or the other?
2- How is one risky more than the other?
3- What are the severe very little of chance of things that can happen to one that may not happen to other?
4- How are commissions and fees different on one or the other?
5- How is one harder or easier to trade than the other?
6- What can you do with Forex CFD trading that you can't do with spot currency trading?
I am talking specifically about currency CFDs and not other equities.
If you are interested only in making money from price fluctuations and don't want/need to hold currency physically your choice should be CFD. It is cheaper, allows fractional/micro/nano lots, etc. The drawback is that a dealer sets bid/ask for you and becomes counterparty on your orders. The trading conditions he offers to you is a trade-off between the need to be good (so you continue to make business with him) and incentive to put you at disadvantage where possible (so you don't win money from him).
Thanks for feedback. Clarification on following is appreciated:
A- CFD will be cheaper:
I don't see any difference on IBKR. Which broker do you see that has CFDs priced cheaper than actual currency?
B- CFD allows fractions:
IBKR allows buy/sell of $1 to $7M in any fraction. I don't see any advantage to CFD on this point with broker I use.
C- Rest of what you said was drawback and sounds opposite to your first point that CFD is cheaper or maybe I didn't graphs it.
Please explain each point. Thanks
A- CFD will be cheaper:
I don't see any difference on IBKR. Which broker do you see that has CFDs priced cheaper than actual currency?
B- CFD allows fractions:
IBKR allows buy/sell of $1 to $7M in any fraction. I don't see any advantage to CFD on this point with broker I use.
C- Rest of what you said was drawback and sounds opposite to your first point that CFD is cheaper or maybe I didn't graphs it.
Please explain each point. Thanks
I agree, you are making risk on every trade you make. That risk is the reason I almost gave up starting forex trading. I got really interested in it last year. It was interesting to study and learn about it. I had demo accounts, and it was looking like I would be able to do it. The more I got into it, the more often I was bumping into the stories about people losing their money on forex. I only started doing it when I was sure I will be able to do good, and that was after I subscribed to forexkings.com. So far, it has been decent for me, but there is room for improvement.
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