Forex and CFDs · Rookie
Contract for difference
Also searched as: CFD, CFDs
What does Contract for difference mean?
A contract for difference, or CFD, is a derivative whose result reflects a change in the underlying reference price. The trader does not own the underlying asset through the CFD.
Example
A share CFD tracks a price change without giving the trader ownership of the shares.
Illustrative example; not a provider’s quoted offer.Why it matters for prop traders
Check financing, contract size and provider terms; a CFD is different from an exchange-traded futures contract.
Sources and further reading
The following primary sources support the terminology. Provider rules describe their own products and may change.