Options & derivatives
Contract for difference
Also called CFD
A leveraged contract paying the difference in an asset’s price, without owning it.
How it works
CFDs allow large exposure from a small deposit and can be taken long or short. They are banned for retail investors in some jurisdictions and heavily restricted in others.
Costs include the spread, overnight financing on the position, and in some cases commission.
Where it misleads people
Regulators require CFD providers to publish the share of retail accounts that lose money. The figures are consistently between roughly 70% and 80%, and they are printed on the provider’s own advertising.
Related terms
- LeverageUsing borrowed money to increase exposure beyond what your own capital would buy.
- Margin callA demand from your broker to add cash or sell holdings, because your account equity has fallen too low.
- DerivativeA contract whose value comes from the price of something else.
- Spread bettingA leveraged bet on price movement, structured as a wager rather than an investment.
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Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.