What is CFD in Stock Trading?

A Stock CFD (Contract for Difference) is a derivative that allows a trader to speculate on the price movement of a stock without directly owning the underlying shares.

CFD Trading Explained

In CFD trading, the trader enters into a contract based on the price of an underlying asset. 

Now, there could be two potential scenarios:

The result is generally based on the difference between the opening and closing prices, after applicable charges. 

Note: A stock CFD only provides price exposure rather than ownership of the company’s shares. Therefore, CFD traders generally do not receive the same shareholder rights as investors who directly own the stock.

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