A CFD is a contract between you and a broker to exchange the difference in an asset's price between when the position is opened and when it is closed. You never own the underlying asset, and you can open a position on a rising or a falling price. CFDs are complex instruments and come with a high risk of losing money.
Also called: contract for difference, contracts for difference, CFDs
Hypothetical example
Hypothetically, you buy a gold CFD at $2,000 an ounce on 1 ounce. If you close it at $2,050, the difference is a $50 gain; if you close it at $1,950, it is a $50 loss, before costs.
