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Contract For Difference

In finance, a contract for difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time (if the difference is negative, then the buyer pays instead to the seller).
In effect, CFDs are derivatives that allow traders to take advantage of prices moving up (long positions) or prices moving down (short positions) on all underlying financial instruments. They are often used to speculate on markets. A CFD is a tool of leverage with its own potential profits and losses. It allows an investor to enter the global trading market without directly dealing with shares, indices, commodities or currency pairs.

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