Contract for Difference
a.k.a. CFD
A contract with your broker to exchange the difference in an asset's price between when you open and close, without owning the asset.
With a CFD, you never own the gold, the shares or the index. You and your broker simply agree to settle up the price change. Buy a CFD and the price rises, the broker pays you the difference; it falls, you pay the broker.
CFDs are usually traded on leverage, which magnifies wins and losses alike, and they often carry overnight financing charges. Regulators in many regions require brokers to publish what share of retail CFD accounts lose money, and it is typically a majority. They are banned for retail clients in the US.
Treating a leveraged CFD like owning the real asset, then being stunned when a small move eats the whole deposit.
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