Contracts For Difference (CFDs) are specialised and popular Over The Counter (OTC) financial derivative products, which enable you to trade on the price movement of financial assets, including Indices Futures, Commodity Futures, Shares, and Exchange Traded Funds, without actually owning the underlying Asset.
The main benefit of trading CFDs is the flexibility to trade against price movements without actually buying or selling the physical financial assets. AvaTrade’s CFDs derive their price from the underlying asset. You can trade CFDs if you believe the price of a financial instrument is likely to go up in value (strengthen,) and also if you think it is likely to go down (weaken). Your profit or loss in online CFD trading is determined by the difference between the price you buy at and the price at which you sell.