Contract for difference (CFD) - Financial definition
Financial acronyms
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Concise definition of the term contract for difference
A contract for difference is a financial derivative in which the seller agrees to pay to the buyer the difference between the agreed fixed price of an asset and its market value at contract time. If the difference is negative, then the payment is made by the buyer to the seller.
Comprehensive definition of the term contract for difference
Since with CFDs, there is no transfer of principal, they are generally used for hedging or speculative purposes.
CFDs exist on a range of assets including stocks, bonds, futures, commodities, indices, and currencies.