Trading · 104 / 127 · 2 min

A contract for difference

A CFD pays the difference in price. You do not hold the coin. The broker holds the contract, and the broker can close it.

CFD

A worked case

A person buys a bitcoin CFD and says they own bitcoin. The broker widens the spread and liquidates the position overnight. There is nothing to withdraw. There was a contract about a price.

The product

You are betting on a number with a firm. There is a spread, overnight fees, and a margin line. The coin, if any, sits on their side.

The halt

The firm can widen the spread, stop the market, or liquidate you. A chart of the coin is not the contract you signed.

The difference, not the coin

A contract for difference pays the gap between the price when you open and the price when you close. In Britain and elsewhere it is a product sold by brokers, with margin, financing, and a right for the firm to close you out. No bitcoin needs to arrive in a wallet for the contract to exist.

A chart of the coin is the index they chose. The halt, the spread, and the liquidation are the broker's. Read the contract if you want to know which one you bought.

Read it yourself

• Contract for difference

These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.

Apply the check

Open a question. The line is about this topic. It is not a verdict that anything is safe.

Check yourself

Write it in your own words. The course's answer opens after that. Nothing is sent.