Contract For Differences - CFD

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DEFINITION of 'Contract For Differences - CFD'

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.

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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.

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