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Entering the forex markets as a beginner trader can be quite overwhelming. Aside from the risks and charts that tend to intimidate budding investors, there’s also a whole bunch of FX “lingo” that can be difficult to get the hang of.
Perhaps the first of these “forex-isms” you’ll come across is the term “CFDs”.
But don’t be discouraged by the fancy abbreviation! This acronym is effectively just a 3-letter depiction of the concept of the forex markets. And we’ve simplified it all for you today.
Breaking Down CFDs
A contract for difference, or CFD, is an agreement between a forex broker and trader that allows you to speculate on the price movement of a financial instrument.
In the forex markets, the financial instruments you can speculate on are currencies, commodities, indices, energies, and equities.
As an FX trader, you choose a financial instrument and speculate on whether its value will increase or decrease. In...
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