A Contract for Difference (CFD) is a type of derivative that allows you to speculate on the price movement of financial assets—such as currencies, commodities, or indices—without owning the underlying asset.
When you trade a CFD, you’re agreeing with a broker to exchange the difference in the asset's price between when you open and close the trade:
If the price goes in your favor, you earn the difference.
If it moves against you, you pay the difference.
You can:
Buy (go long) if you believe the asset’s price will rise.
Sell (go short) if you expect the price to fall.
CFDs are flexible—you can close your trade at any time, whether you're taking a profit or cutting a loss.