A CFD—Contract for Difference—is a derivative contract between two parties that allows speculation on the price movement of an underlying asset without actually owning it.
The profit or loss is determined by the difference between the price at which the position is opened and the price at which it is closed. CFDs are typically traded with leverage, meaning only a fraction of the total position value must be deposited as margin. As a result, both gains and losses can be significantly amplified relative to the invested capital.
CFDs are available on a wide range of underlying assets, including stocks, indices, commodities, and currency pairs.
Due to leverage risk and complexity, CFDs are subject to specific regulatory requirements and risk disclosures in many jurisdictions.
