A Contract for Difference (CFD)<\/strong> is a financial derivative that allows traders to speculate on the price movements of an asset without owning the underlying asset itself. Instead of buying or selling the asset, traders enter into an agreement to exchange the difference between the opening and closing prices of a position.<\/p>\n In simple terms, a CFD enables traders to profit or incur a loss based on whether an asset’s price rises or falls during the period of the trade.<\/p>\n CFDs are available across a wide range of markets, including:<\/p>\n Forex<\/a><\/p>\n<\/li>\n Shares<\/a><\/p>\n<\/li>\n Indices<\/a><\/p>\n<\/li>\n Precious Metals<\/a><\/p>\n<\/li>\n Bonds<\/a><\/p>\n<\/li>\n Exchange-traded funds (ETFs)<\/a><\/p>\n<\/li>\n<\/ul>\n Because there is no ownership of the underlying asset, CFD traders focus solely on price movements rather than physical delivery or long-term asset ownership. <\/p>\n CFD trading is based on the difference between an asset’s opening and closing price.<\/p>\n If a trader believes an asset’s price will rise, they can open a buy (long) position<\/strong>. If they expect the price to fall, they can open a sell (short) position<\/strong>. <\/p>\n When the trade is closed:<\/p>\n A favourable price movement may result in a profit.<\/p>\n<\/li>\n An unfavourable price movement may result in a loss.<\/p>\n<\/li>\n<\/ul>\n Unlike traditional investing, CFD trading is typically conducted using leverage, meaning traders only need to deposit a percentage of the total trade value to open a position. <\/p>\n CFDs offer several features that make them popular among active traders.<\/p>\n\n
How do CFDs work?<\/h2>\n
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Key features of CFD trading<\/h2>\n