CFDs

Most retail traders working with a broker like the ones covered on this site’s broker comparison tool aren’t buying the underlying asset at all. They’re trading a CFD, a contract for difference, and it helps to understand exactly what that means before treating it like ownership. What a CFD is A CFD is an agreement between you and your broker to exchange the difference in an instrument’s price between opening and closing the position, and you never take delivery of the actual shares, barrels of oil, or currency involved. If GER40 rises 50 points after you buy a CFD on it, your broker pays you the cash equivalent of that move, and if it falls, you pay them, but at no point do you own any piece of the German stock market. ...