What is CFD (Contract for Difference)? - Definition & Explanation

Definition

A derivative product that lets traders speculate on price movements without owning the underlying asset.

CFD (Contract for Difference) Explained

A CFD allows traders to speculate on price movements of forex, stocks, commodities, or indices without owning the underlying asset. Most retail forex trading is conducted via CFDs.

Related Terms

Leverage

The use of borrowed capital to increase the size of a trading position.

Broker

A company that provides access to the forex market for retail traders.

CFD (Contract for Difference) - Frequently Asked Questions

CFDs involve higher risk due to leverage, which magnifies both gains and losses. Most CFD traders lose money.

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