What is CFD

CFD (Contract for difference) is an agreement between two parties, “buyer” and “seller”, on paying each other the difference between the opening and closing prices of the traded instrument.”
It is a universal trading instrument offering a simple method of trading in different markets without physically possessing instruments.
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CFD Meaning

Thus, What are CFDs? CFDs are derivative financial instruments by their nature that provide traders with an opportunity to make profit on price movements of various assets, allowing opening long positions when the asset prices go up and short positions, when the prices go down. The CFD value linked to the underlying asset moves in the same direction as the price of the underlying asset and depends on the same factors. At the same time being much more flexible and accessible, contracts for difference present a number of advantages, such as low cost, trading with leverage and market diversification, compared to trading the underlying asset directly.

CFD Example

If you are still asking “What is a CFD?” it is worth to bring a CFD Trading Example that will help you to imagine it in practice. Let's say the initial price of Apple stocks is $100. You conclude (buy) a CFD contract for 1000 Apple stocks. If the price then goes up to $105, the sum of the difference, paid to the buyer by the seller will equal to $5,000. And vice versa, if the price falls to $95, the seller will get the price difference from the buyer equal to $5,000. The contract does not imply physical ownership or purchase/sale of the underlying stocks that enables investors to avoid the registration of the ownership rights for the assets and the associated transaction costs.

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Principles of CFD Trading

What is CFD Trading

Margin Trading

Day Trading

Trading Stocks, Commodities, Indices and Currencies

Trading on both Rising and Falling Markets

Hedging the Investment Portfolio

CFD trading instruments at IFCM

You can study CFD trading more thoroughly and see CFD trading examples in the section How To Trade CFDs Visit Educational Center
You can trade CFD for free, by downloading our CFD Trading Platform NetTradeX. Download