First of all, the spot market.The 'spot market' is a general term used by Forex traders to describe the online marketplace where currencies are bought and sold according to their current prices and delivered immediately - on the spot.
In modern times, none of this is particularly difficult to imagine. A trader receives price quotes from his broker, who in turn receives them from a liquidity provider and everybody is connected into a one big loud market simultaneously - trading Forex online.
Prices are defined by two ever competing forces: supply and demand. When there is excess supply, the price of an asset goes down. When there is excess demand, the price goes up. The more people are buying – the higher the price and vice versa.
Second of all, Contracts for (Price) Differences.
CFD is another neat trick that transformed the financial marketplace into what we have today.
In the old days of Charles Dow there was no trading. Only investment. Buying prominent company stock and holding it was the only thing available. Should the particular asset rise in value - one will have made profit. However, should the asset depreciate - one will be haemorrhaging value, stuck with something nobody wants to buy off him.
CFD untied a trader's other hand, making it possible not only to purchase when the price of an asset is rising, but also sell when it's dropping. How? Through making physical ownership over an asset unnecessary, thus making trading available to more people - thus increasing liquidity and assuring that there is more often a buyer to a seller's sinking stock.
What do I do next?
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NB.: FX, forex, foreign exchange, currency market, online forex trading are synonymous terms.