Contract for Difference (CFD)

A contract for difference is a leveraged derivative that settles the price change in an underlying reference without transferring ownership of that underlying asset.

The customer and provider exchange the difference between opening and closing values, adjusted for size, financing, fees, and other contract terms. Because only margin is posted, a small market move can produce a large percentage gain or loss on committed funds. The customer also faces provider, pricing, liquidity, close-out, and overnight-financing risks and generally does not receive ownership rights attached to the referenced asset.

CFDs are complex, high-risk products; leverage can cause rapid losses and forced liquidation during adverse market moves.