Contract For Differences - CFD

Loading the player...

What is a 'Contract For Differences - CFD'

A contract for differences (CFD) is an arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities.

BREAKING DOWN 'Contract For Differences - CFD'

This is generally an easier method of settlement because losses and gains are paid in cash. CFDs provide investors with the all the benefits and risks of owning a security without actually owning it.

RELATED TERMS
  1. Cash Settlement

    A settlement method used in certain future and option contracts ...
  2. Cash Delivery

    1. The same-day settlement of a currency trade in the forex market. ...
  3. Window Settlement

    A form of settlement between dealers whereby trades are settled ...
  4. Last Trading Day

    The final day that a futures contract may trade or be closed ...
  5. Delivery Versus Payment - DVP

    A securities industry settlement procedure in which the buyer's ...
  6. Cash Contract

    A financial arrangement that requires delivery of a particular ...
Related Articles
  1. Professionals

    Forward Markets and Contracts: Settlement Procedures

    CFA Level 1 - Forward Markets and Contracts: Settlement Procedures. Learn the differences between being long or short in a forward contract. Also contrasts how physical and cash deliveries are ...
  2. Brokers

    Interested in Derivative Products? Try CFDs

    A short article about the main risks and rewards of CFDs. These derivatives can help boost returns using leverage, but they could also magnify losses.
  3. Trading Strategies

    Contract for Difference (CFD) Risks

    Contracts for differences are flexible, highly leverageable trading instruments. They offer potentially outsized returns accompanied by noteworthy risks.
  4. Investing Basics

    Explaining Contract for Differences

    A contract for differences is an agreement to exchange the difference in value of a financial product between the time the contract opens and closes.
  5. Options & Futures

    An Introduction To CFDs

    The benefits of these securities abound, but high leverage also magnifies potential losses.
  6. Professionals

    Offsetting Contracts, Settlements And Delivery

    Offsetting Contracts, Settlements And Delivery
  7. Professionals

    Fundamental Differences Between Futures and Forwards

    CFA Level 1 - Fundamental Differences Between Futures and Forwards. Learn the fundamental differences between futures and forward contracts. Contrasts how and where they trade and discusses marking ...
  8. Options & Futures

    The Foundation Of Structured Settlements

    This annuitized payment setup should be arranged through impartial attorneys and tax agents.
  9. Investing Basics

    Getting Market Leverage: CFD versus Spread Betting

    Leveraged products offer investors the opportunity to get significant market exposure with a small initial deposit. Contracts for difference and spread bets offer two ways to get more leverage.
  10. Term

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
RELATED FAQS
  1. How do futures contracts roll over?

    Learn about why futures contracts are often rolled over into forward month contracts prior to expiration, and understand ... Read Answer >>
  2. What is the difference between forward and futures contracts?

    Fundamentally, forward and futures contracts have the same function: both types of contracts allow people to buy or sell ... Read Answer >>
  3. What's the difference between cash-on-delivery differ and delivery against payment?

    Find out more about cash on delivery and delivery versus payment transactions and the difference between these two types ... Read Answer >>
  4. How can a futures trader exit a position prior to expiration?

    A futures contract is an agreement to buy or sell a commodity at a pre-determined price and quantity at a future date in ... Read Answer >>
  5. How do I learn technical skills for trading commodities?

    Learn what resources are available to learn about trading commodities, and understand some of the differences between stocks ... Read Answer >>
  6. How will debt settlement affect my credit score?

    Learn how a debt settlement arrangement, though sometimes the best option to eliminate an outstanding debt, can negatively ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center