CFD refers to a trading method that does not involve the exchange of physical commodities or securities, but only uses the difference between the settlement price and the contract price for cash settlement. Investors buy and sell at the price of a certain commodity (physical product or financial product) without involving the transaction of the commodity entity. The commodity of CFD can theoretically be anything with floating prices, including national indices, foreign exchange, futures, stocks, precious metals and other commodities. CFD is essentially a financial derivative instrument.