What is a CFD (contract for difference)?

A CFD (contract for difference) is an agreement between a buyer and a seller that the buyer must pay the difference between the current value of an asset and its value at contract time. A CFD trader will never truly own the underlying asset but profit from its price movement.

How much does a CFD account cost?

The CFD market is not bound by these restrictions, and all account holders can day trade if they wish. Accounts can often be opened for as little as $1,000, although $2,000 and $5,000 are common minimum deposit requirements. Brokers currently offer stock, index, treasury, currency, sector, and commodity CFDs.

What is a share CFD?

CFDs are traded in standardized contracts (lots). An individual contract’s size depends on the underlying asset being traded, often mimicking how that asset is traded on the market. For share CFDs, the contract size typically represents one share in the company you are trading.

What are CFDs & how do they work?

CFDs essentially allow investors to trade the direction of securities over the very short-term and are especially popular in FX and commodities products. CFDs are cash-settled but usually allow ample margin trading so that investors need only put up a small amount of the contract's notional payoff.