What are CFDs?

A Contract for Difference (CFD) is an over-the-counter trading instrument that allows trading on markets such as indices and commodities without actually buying the underlying security, utilizing leverage in the spot market. FX Solutions offers 11 different CFDs for trading.

Simply put, a CFD is an agreement between two parties to settle, at the close of the contract, the difference between the opening and closing price, multiplied by the number of shares specified within the contract.

CFD example:

FX Solutions quotes the US SP 500 at 1270.7/1271.1 and you believe that the US SP 500 will rise. Below is an example of how your investment in CFD Indices might look:

Opening Position:

Closing Position:

After two days, the US SP 500 price rises to 1275.6, at which point you decide to sell the underlying contracts. If the sell price moves in the opposite direction you will realize a gross loss.



Source - http://www.fxsol.co.uk/cfd/what-are-cfds.asp