Market guide
CFD education guide
Contracts for difference are leveraged derivatives. A responsible guide should explain exposure, margin, financing and risk before discussing possible uses.
What CFDs are
A CFD is a contract between a client and issuer based on the price movement of an underlying market. The client does not own the underlying asset. CFDs can provide long or short exposure, but because they use margin and leverage, both profits and losses can be magnified.
Key terms
Margin
Collateral required to open or maintain a leveraged position.
Leverage
Exposure larger than the initial margin amount.
Long and short
Long seeks exposure to rising prices. Short seeks exposure to falling prices.
Overnight financing
A charge or adjustment that may apply when a leveraged CFD position is held overnight.
What to learn next
- How margin calls and close-out rules work.
- Why spreads, commissions and financing costs affect outcomes.
- Why leveraged products require strict risk controls.
- Why product disclosure documents and issuer terms matter.
Useful references
Related guides
General education only
This content is general education only and does not consider your objectives, financial situation or needs. CFDs are leveraged products and carry a high risk of loss. Availability and suitability depend on account approval and relevant terms.