A CFD (Contract for Difference) is an actionable instrument that reflects the movements of the underlying asset traded with a CFD. With CFD, you can trade without owning the underlying assets in, for example, shares from around the world, such as Google and Yahoo commodities such as oil and gold, index trading such as the S & P500, or currency pairs JPY vs USD. CFD trading allows for gains or losses reflecting the underlying asset price changes during the contract. Still, the actual underlying asset is never owned or exchanged ownership.
Essentially, a CFD trade is a contract between the trader and the CFD broker. Trading CFDs has several significant benefits (which we touch on below), and these benefits have increased the popularity of this type of trading in recent years.