contract for difference (CFD)
A futures derivative based on an agreement that the buyer of an asset will pay the seller the difference between the current price and the value of the asset on the contract date. If the difference is negative, the seller pays the buyer instead. This arrangement allows a Forex Trader to profit from a rise or fall in price of the underlying currency without an actual transfer of ownership. This type of trading is akin to an ongoing side bet on price direction and degree of movement. Contracts for difference are popular over much of the financial world, but are prohibited by U.S. regulations.
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