Home/What are CFDs
Basics
Financial derivatives that let you speculate on price movement without owning the asset. That distinction changes the entire nature of the product.
Important: 80% of retail investor accounts lose money when trading CFDs with this provider.
A CFD (Contract for Difference) is a derivative. You enter into a contract with the platform provider, and the outcome depends on the price difference of the underlying asset between opening and closing the position.
Open a position on a rise and the price rises, you profit. If it falls, you lose. With leverage applied, both sides of that equation are multiplied.
Long is a position opened on a price rise, short on a fall. CFDs therefore allow a position in a falling market — with the same loss risk in the opposite direction.
The offering covers thousands of CFD instruments. The correct description is always a CFD on the asset — never the asset itself.
This is the point beginners most often miss. If you open a CFD derived from a company's share price, you do not own that share. No ownership or voting rights arise, and it is not a purchase of a security.
The distinction has practical consequences for how you should think about the position, how taxation works, and what rights you hold against the underlying asset — namely none.
Saying "I trade shares" is inaccurate with CFDs. It is a CFD derived from a share price. Not a formality — it changes the nature of the product.
ESMA classifies CFDs as complex financial instruments. The reason is a combination of factors that compound one another:
Allows a position substantially larger than the capital deposited. Losses are calculated on the full exposure.
Prices can move very fast, particularly around macroeconomic data releases.
Spread, overnight funding and currency conversion all apply simultaneously.
Real money changes decision-making in ways demo mode cannot simulate.
Risk warningCFDs are complex instruments and carry a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford the high risk of losing your money.