Editing Contract for difference (section)

{{short description|Form of financial derivative}}
{{Redirect|CFDs|other uses|CFD (disambiguation)|and|CFDS (disambiguation)}}
{{Use dmy dates|date=November 2023}}

In [[finance]], a '''contract for difference (CFD)''' is a financial agreement between two parties, commonly referred to as the "[[buyer]]" and the "[[seller]]." The contract stipulates that the buyer will pay the seller the difference between the current value of an [[asset]] and its value at the time the contract was initiated. If the asset's price increases from the opening to the closing of the contract, the seller compensates the buyer for the increase, which constitutes the buyer's profit. Conversely, if the asset's price decreases, the buyer compensates the seller, resulting in a profit for the seller.<ref>{{cite web|url=https://corporatefinanceinstitute.com/resources/knowledge/finance/contract-for-difference-cfd/|title=Contract for Difference (CFD)|website=[[Corporate Finance Institute]] (CFI)|access-date=17 May 2022|archive-url=http://web.archive.org/web/20240903124330/https://corporatefinanceinstitute.com/resources/derivatives/contract-for-difference-cfd/|archive-date=3 September 2024}}</ref>