A CFD is a contract that lets you trade on a price movement without owning the underlying asset.
CFD stands for “Contract for Difference”. It is an agreement to exchange the difference in an asset’s price between the moment a trade is opened and the moment it is closed. Because you never actually own the underlying asset, CFDs allow traders to take positions in either direction — profiting from rising or falling prices. CFDs are popular because they are flexible and accessible, but they also commonly involve leverage, which increases both potential gains and potential losses. As with any leveraged product, understanding the risks is essential before trading.
Imagine making an agreement with a friend: whatever a price does over the next week, one of you pays the other the difference. Neither of you ever buys the actual item — you’re only settling the change in its price. That’s the core idea of a CFD: you trade the movement, not the asset itself.
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