Index CFD definition

An index CFD is a contract for difference that tracks the level of a stock index, letting you take exposure to a whole index without owning any of the constituent shares. It settles the difference in the index level between the point you open the trade and the point you close it.

When you trade an index CFD, your profit or loss is the number of points the index moves multiplied by the value per point of your contract. You can go long if you expect the index to rise or short if you expect it to fall, and positions are typically leveraged, so a deposit controls a larger exposure. Leverage magnifies losses as well as gains, and most retail traders lose money trading CFDs.

This differs from buying the underlying stocks or an index ETF, where you own an asset outright and pay its full value up front. With an index CFD you hold no shares or fund units, you can use leverage, and you can short the index directly; ownership rights such as voting do not apply, though dividend adjustments may.