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What is a CFD?


Contracts for Difference (CFDs) are derivative instruments that allow traders to speculate on the changing values of underlying assets without having to take ownership of them. In a contract for difference, a buyer and a seller agree that the seller will, upon expiration of the contract, pay the buyer the difference between the value of the asset at the time of the contract agreement and the contract expiration. If the difference is negative, the buyer must pay the difference to the seller. When trading CFDs, traders buy (go long) when they are expecting a rise in value, and sell (go short) when expecting a drop in value.
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