What is CFD Trading?
Contracts for Difference (CFDs) allow traders to speculate on the rising or falling prices of fast-moving global financial markets without owning the underlying asset.
CFD trading involves entering a contract with a broker to exchange the difference in the value of an asset from the time the contract is opened to when it is closed. This means you can profit from both upward and downward price movements — without owning the asset itself.
Since their inception in the 1990s, CFDs have opened doors for traders with lower capital by reducing the need for large upfront investments. This financial derivative is popular for its flexibility and leveraged trading potential.
Unlike binary options where profits are fixed, CFD profits depend on the price movement size — the more the asset moves in your favor, the higher the potential gain (or loss).
How It Works
- Predict whether an asset will rise (Buy) or fall (Sell)
- Trade on margin to control larger positions with smaller capital
- Profit or loss is determined by how much the market moves
- Go long or short — benefit from both bullish and bearish trends
Example: Trading Apple CFDs
You’ve read a financial report suggesting Apple Inc. stock is about to decline. You confirm your hypothesis using our live chart and decide to place a Sell order.
- Sell Trade: You expect Apple stock to fall below the current market price.
- Buy Trade: You expect the stock to rise beyond the buy price.
As the price moves, your profit or loss adjusts in real time. The greater the movement in your favor, the higher your potential return. But remember, CFDs carry risk — and leverage can amplify both gains and losses.