Forex Contract-For-Difference, otherwise known as Forex CFD were originally developed in the early 1990s in London. A Forex CFD is a contract between two parties, typically described as “buyer” and “seller”, stipulating that the seller will pay to the buyer the difference between the current value of a currency and its value at contract time. (If the difference is negative, then the buyer pays the price difference to the seller.)

In effect Forex CFDs allow investors to take advantage of prices moving up (long positions) or prices moving down (short positions) and are often used to speculate on the Forex market. It wasn’t until the late 1990s that Forex CFDs were first introduced to retail traders.