Forex and CFDs are not the same product
Forex usually refers to trading currency pairs. CFDs are contracts that track the price movement of an underlying market without owning the underlying asset. Some brokers offer spot forex, some offer forex CFDs, and some offer both depending on country and entity.
How pricing and financing differ
Both products can involve spreads and overnight costs, but the exact pricing model differs by broker and instrument. CFDs often make financing especially visible for positions held overnight.
Why leverage changes the risk
Leverage lets a trader control a larger position with a smaller deposit. It also magnifies losses. A small market move can become a large account move when position sizing is too aggressive.
Regulation and client protection
Product classification can affect leverage limits, risk warnings, client money rules and compensation coverage. Always verify your account entity and local product documents before trading.
What to check before trading
- Is the instrument spot forex, a forex CFD or another derivative?
- What leverage and margin rules apply?
- How are overnight costs calculated?
- Does negative balance protection apply?
- Can you close the trade quickly on web and mobile?