How it works
Spot FX involves exchanging currencies, while a CFD is a derivative whose value follows an underlying market without delivering the currencies themselves. Retail platforms often use CFD-style products even when the screen simply shows a currency pair.
What to check
Check the product name in the customer agreement, how positions are settled, whether leverage is involved and which entity is the counterparty. The trading interface alone does not tell you whether you are buying currency or entering a derivative contract.
- Identify the legal product
- Check whether currency is delivered
- Read leverage and financing terms
Limits and risks
The distinction matters for leverage, financing, client protections and insolvency treatment. A product that follows EUR/USD is not automatically the same as holding euros and dollars.
Primary sources
BIS 2025 Triennial Central Bank Survey↗FCA: Contracts for difference (CFDs)↗General information only. Investment products can lose value, and terms, fees and regulation can change.