CFDs, or Contracts for Difference, are financial derivatives that allow traders to speculate on the price movements of assets without owning the underlying asset itself. CFDs are commonly used to trade a wide variety of markets, including stocks, indices, commodities, forex, and cryptocurrencies.
How CFDs Work
When trading a CFD, a trader enters into a contract with a broker. The contract is based on the difference between the entry price and the exit price of the underlying asset. If a trader believes the asset’s price will rise, they open a long position (buy). If they expect the price to fall, they open a short position (sell). When the po...