What is a CFD contract?

CFD contracts, or Contracts for Difference, are financial derivatives that allow traders to speculate on the price movements of various underlying assets, such as stocks, indices, commodities, or currencies, without owning the actual asset. When trading CFDs, you enter into an agreement with a broker to exchange the difference in the asset's price from when the contract is opened to when it is closed. CFDs provide opportunities for both long and short positions and are often traded with leverage, which can amplify both gains and losses. However, CFD trading carries significant risk and may not be suitable for all investors.