Contract for difference. A contract between two parties, 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. An over the counter derivative similar to a future, in that CFDs are liquid derivative instruments that mirror the underlying assets in all aspects, and can therefore be traded by closing out and re-opening at any time before the expiry date, at the prevailing market rate. CFDs reduce traders capital investment amount required, while increasing profit potential. See CFD Overview for a detailed description.
