Glossary
CFD: definition
A contract for difference pays you, or charges you, the change in a price between opening and closing, multiplied by the size of the contract. You do not become a shareholder, a warehouse receipt holder, or a participant in the underlying exchange.
In practice
CFDs are leveraged and the provider is your counterparty. Financing is charged or credited for positions held overnight. Spreads and commissions both appear. Regulators in the UK, EU and Australia have restricted retail leverage and required prominent loss warnings because a large share of retail accounts lose money. Those warnings are product history, not a slogan. Spread betting in the UK is a related but distinct tax and product regime.
A worked example
A share CFD and the share can show the same price on one screen. Only the share can be transferred to another broker as a security. The CFD closes against the provider under its terms.
Sources and review
Written by: WiT Markets Editorial. Writes and structures WiT Markets pages. Separates a sourced fact from a cell that is Not confirmed.
Review: Editorially reviewed. This is not a qualified specialist review and it is not a legal sign-off.
Last reviewed: . Next review due . The date is an editorial pass. It is not a live check of every third-party fee.
Regulatory and official sources
- Financial Conduct Authority — checked 13 October 2026
- Australian Securities and Investments Commission — checked 13 October 2026
- European Securities and Markets Authority — checked 13 October 2026
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