CFD is a financial derivative instrument that enables traders to trade on financial contracts with margins and leverage. Derivatives are financial investments that are derived from an underlying asset. Traders do not actually trade commodities, but only trade the price of commodities to profit from price fluctuations.
CFDs are very similar to forex margin trading, except that CFDs can trade a more diverse range of financial markets, such as trading on gold, commodity, forex, cryptocurrency, stock indices, etc.
Due to the low cost of transactions and the high flexibility of leverage multiples, CFD has even become popular globally.