Contracts for difference (CFD) definition
Contracts for difference (CFD)
A contract for difference (CFD) is a financial contract in which you agree to exchange the difference in the settlement price between the open and closing trades on a particular asset. CFDs enable traders and investors to speculate on whether a market will go up or down, and profit from the price movement without owning the underlying asset.
CFD trading meaning
CFD trading is the buying and selling of CFDs with the aim of earning a profit. CFDs track live financial markets. You trade them via your broker or derivatives provider just as you would buy and sell the underlying market.
The value of a CFD does not consider the asset's underlying value: only the change between your entry and exit prices. CFD trading is a popular method of speculating on the price movements of shares, indices, forex, commodities and more over the short to medium term.