Glossary / CFD (Contract for Difference)

CFD (Contract for Difference)

CFD (Contract for Difference) is a financial instrument that lets a trader speculate on an asset’s price movement without owning the underlying asset, settling the difference in price between opening and closing the position. The instrument most CFD prop firms are built around.

Because no underlying asset changes hands, a CFD prop firm can run funded accounts on simulated infrastructure while still owing traders a genuine profit split, one reason the CFD side of the industry scaled faster than the futures side.