CFD (Contract for Difference)
A derivative that pays the difference between your entry and exit price without you owning the underlying — common at forex/CFD prop firms, and not available to US retail traders.
A CFD, or contract for difference, is an agreement between you and a broker to exchange the price difference on an asset between the moment you open a position and the moment you close it. Go long the S&P 500 as a CFD, the index rises 40 points, and you’re paid the value of those 40 points. You never own a share, an index unit, or a futures contract — just the difference.
CFDs are popular at international prop firms because they’re flexible. One platform can offer indices, currencies, metals, energies, and single stocks with tiny minimum sizes, which makes evaluations easy to package. If you’ve traded on MetaTrader with a global firm, you’ve almost certainly traded CFDs.
Two facts every US trader should have straight:
- CFDs aren’t offered to US retail traders. They aren’t exchange-traded products, and the US regulatory framework doesn’t permit them for retail. This is one of the main reasons the US prop scene is built on futures.
- The price is the broker’s price. Because there’s no central exchange, the quote, the spread, and the fill come from the counterparty — which is why the A-book / B-book question is worth asking of any CFD-based firm.
Futures give you the same market exposure with a different plumbing: the E-mini S&P 500 is an exchange-listed contract with one public order book, standardized tick sizes, and a clearinghouse behind every trade. Same directional bet, transparent execution.
If you’re in the US and weighing your options, that transparency is a real advantage — you can price your risk to the tick and know your fill wasn’t anyone’s discretion. Compare US-friendly futures firms in our directory and start where the rules are clearest.