As a trader have you ever wondered what contracts for difference are? A contract for difference (or CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time.
CFDs were originally developed in the early 1990s in London as a type of equity swap that was traded on margin. The invention of the CFD is widely credited to Brian Keelan and Jon Wood, both of UBS Warburg, on their Trafalgar House deal in the early 90s.
So to look at some of the benefits and potential drawbacks of using CFD's we have attached a couple of links below to give a better explanation of CFD's. Please bear with the technical side of things as you will gain a real appreciation on how this type of trading can be very lucrative.
Resource 1 - What are contracts for difference http://www.australianstockreport.com.au/trading-advice/what-are-contracts-for-difference.html
Resource 2 - Contracts for difference https://en.wikipedia.org/wiki/Contract_for_difference
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