Contracts for Difference (CFDs) are arrangements between two parties to compensate the value difference of a contract, comparing opening and closing prices. A CFD is a financial derivative product that allows you to trade on the movements of an underlying security, whether it is an index or commodity, without actually owning the individual security. It is effectively an agreement between two parties to exchange the difference between the opening and closing value of the security. As a result, there are no exchange fees or settlement fees for the purchasing or selling of a CFD security. CFDs are specialised and popular over-the-counter (OTC) financial products that allow traders to easily take market positions in a variety of different financial markets and asset classes.