What is Contract for Difference (CFD)?

A Contract for Difference (CFD) is a derivatives trading agreement that settles the difference between the open and closing prices of an asset in cash with no rewards in physical goods or other compensatory value. A CFD allows traders to bet against the anticipated direction of an asset price by using advanced trading techniques over a very short time period, often with extremely high leverage. CFDs are typically used by investors to trade forex (fx), crypto, commodities, and other markets.