CFD (Contract for Difference)

A CFD is a derivative contract that lets you speculate on the price movement of an underlying asset — a currency pair, index, commodity, or stock — without ever owning the asset itself. You and the broker agree to exchange the difference in the asset's price between when the contract opens and when it closes. CFDs are typically traded on margin and can be used to go long or short, but because they're leveraged, losses can exceed the initial deposit unless the account carries negative-balance protection. CFDs are banned for retail traders in some jurisdictions, including the United States.