A contract for difference (or CFD) is a contract between two parties, buyer and seller, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. (If the difference is negative, then the buyer pays instead to the seller.) For example, when applied to Commodity, such a contract is an commodity derivative that allows investors to speculate on commodity price movements, without the need for ownership of the underlying commodity.

Commodity CFD

Commodity CFDs, unlike most of the other forms of CFDs are actually priced from the value of the commodity trading on the global futures market. This is because in real life, the only way to trade commodities on any type of exchange is through futures, thus this is the most quoted and traded price. The reality of this is that Commodity CFDs mimic the futures value of the commodity including its trading times and individual tick value. In addition to this, commodity CFDs do have an expiry date and, identical to if clients were holding the future its self.