CFD’s Finansero explains how CFDs democratized trading What are CFDs? CFDs are type of financial contracts where you can trade the value of an asset. Unlike real stock trading, there’s no need to own them–the key feature is that it allows people worldwide to trade without having ownership of the traded CFD. A contract for difference (CFD) is an agreement between an investor and a CFD broker to exchange the difference in the value of a financial product (securities or derivatives) between the time the contract opens and closes. Investors can use the CFDs according to their own judgment to generate profits by 2-way trading “Buy” or “Sell”. With this way the Investor can make money if the price is rising or even though the price is falling. How trading in CFDs works: In a CFD trade, the investor expects the asset price to rise or fall. So, if the Investor expects that the price of the asset’s underlying market will rise, he/she can open a Long CFD position (Long CFD trading or Going Long) i.e. buy to profit from rising prices. On the other hand, if you expect that the price of the asset’s underlying market will fall, you can open a Short CFD position using a sell order to profit from depreciations in value (Short CFD Trading or Going Short). Opening Long and Short positions might result in losses as well. For example, if you open a long position because you expect that the price of the CFD will rise and the price of the CFD falls instead, you will end up losing your invested capital. Likewise, if you open a short position because you speculate that the price of the CFD will fall and the price of the CFD increases instead, you will end up losing your invested capital.