Contracts for Difference (“CFDs”) are financial derivatives that allow traders to take advantage of price fluctuations on underlying financial instruments and are often used to speculate on those markets, without actually having to physically own the particular financial instrument.

Trading CFDs offer two main advantages; firstly, by the use of margin, investors can trade a significant number of CFD instruments with limited funds, and secondly, trading CFDs eliminates the hassle of having to settle any trade, as it is only a contract to trade the difference in the price.

CFDs are typically traded over-the-counter with a broker or market maker who will define the terms of the contract.