CFD
A CFD (Contract for Difference) is a trading product that lets you speculate on price movements without owning the shares.
Quick Reference:
What it is: A contract with a broker. Ownership: You don’t own the shares.
Features: Can use leverage (borrowed money). Risk: Gains and losses are magnified.
Expanded explanation:
When you trade CFDs, you are betting on whether the price of a share (or another asset) will rise or fall, if you think it will rise, you “go long”. If you think it will fall, you “go short”.
CFDs allow leverage, which means you nly put down part of the trade’s value, and the broker lends the rest. This can lead to bigger gains, but it also means losses can be just as large. CFDs are risky and not recommended for beginners, since you miss out on dividends, don’t have ownership rights, and can lose more than your initial investment.
Related links + Articles:
• Broker.