# What is a CFD?

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IMPORTANT: CFD trading is HIGH risk. Please seek professional financial advice before you embark on CFD trading. You may lose all, if not more, of your capital.
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Contract for Differences, or CFD for short, is simply a contract to purchase the underlying asset and to sell it in the future, hopefully for a profit. The underlying asset can be any tradable financial assets such as equities, metals, commodities, forex and even indices. 

**Hence, this makes CFD trading appealing for traders as CFDs give access to markets like spot gold, wheat, nickel, oil, USD/EUR and even equities.**

It is important to note that a CFD investor does not actually own the underlying asset. For example, a trader who buys a CFD for AAPL (Apple stock) does not actually own AAPL shares. Hence, if and when AAPL declares a dividend, the CFD holder is not entitled to the dividend. The same goes for a CFD trader who holds Spot Gold CFDs. He or she does not actually own the physical gold.

So, in a sense, a CFD is like a synthetic product based on the underlying asset. Think of it like a futures contract but without any expiration date.

**What are the advantages of trading CFD?**

* Access to a broad range of financial assets through a single broker account
* Trading with leverage allows you to buy the asset at a fraction of the cost
* Ability to go Long or Short

**What are the disadvantages of trading CFD?**

* It is **high risk** due to its complexity, leverage and margin calls. If your maintenance margin buffer falls below the requirements, your entire capital maybe liquidated if not topped up within a margin call window.
* You could lose more than your entire capital

Hence, before you trade CFDs, make sure that you seek professional financial advice.