Forex (Fx) / Contracts For Difference (CFD) were developed to allow customers to enjoy all the benefits of possessing a forex pair or commodity position, indices’ or stocks without having to physically own the underlying instrument itself.
For example, a customer can buy 1,000 CFDs of Microsoft. A $5 per share fall in the price of Microsoft would give the CFD customer a $5,000 loss or a $5 per share rise in the price of Microsoft would give the customer a $5,000 profit, just as if he had purchased the actual shares.
Customers can also trade on margin using leverage. Fx/CFD trading means customers can trade a financial portfolio without having to tie up large amounts of capital.