CFD stands for “Contract for Difference”.
A CFD is a tradable financial tool that reflects the movements of the asset underlying it.
A contract for difference (CFD) is an agreement between a “purchaser” and a “seller” to swap the difference between the current price of an underlying asset and its price when the contract is closed.
What a CFD allows you to do is speculate on the likelihood of the PRICE of an asset moving up or down, without having to own the actual asset.
The logic behind trading CFDs is simple.
If the price of an asset goes up by 5%, your CFD does the same. If, on the other hand, the price goes down by 5%, your CFD too will go down 5% in value.
CFDs allow you to bet on rising or falling prices without taking ownership of the underlying asset and can be used to trade a variety of markets which include shares, indices, forex, commodities, and crypto.
For this lesson, we'll be focusing on forex CFDs.
Forex CFDs allow you to trade on the strength (or weakness) of one currency in contrast with another.
CFD trading is the buying and selling of contracts for difference (“CFDs”) via an online provider, who market themselves as “CFD providers”
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