Börsenlexikon: CFD

CFD is the abbreviation for Contract for Difference. This term could be loosely translated as a price difference contract or agreement. A CFD is therefore the cash settlement of a difference transaction between the purchase and sale price of a stock market security. Through margin trading, where only a fraction of the actual trading volume is deposited, CDFs become a powerful tool with which one can participate disproportionately in the price movements of the underlying asset. Depending on the margin requirement, one can trade with a leverage of up to 100x. This is because margin requirements are extremely low in all areas of trading and investing. With a CFD, you can therefore profit from the price movement of an underlying asset without physically owning it.