CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Excess volatility increases risk further. Be cautious. Past performance is not an indication of future results.
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Where it lives

What is a CFD? · India

«Contract for difference» is what the three letters stand for. The question on this page is a question of placing: which parts of that contract are held on the device in your hand, and which of them carry on once it is face down on the table.

Two sides agree to settle the difference between an opening price and a closing price. That price belongs to something else — a stock index, a currency pair, an ounce of gold — and neither side ever holds the thing itself. None of the agreement is kept on a phone.

Nothing in the story is inside the device

Open a gold CFD, then go looking for the gold. Nothing is stored, shipped or delivered anywhere; the price alone is copied. Now go looking for the contract itself — the app will not produce that either. What the screen shows is a summary line: an agreement between two sides, and how it stands at this second.

The pattern holds across the range. Nobody is handed euros at the end of a currency trade, and no shareholding appears at the end of an index trade. The device contributes exactly two things: a view, and the moment a hand decides.

Which part of a CFD lives where

The middle column is the one that matters: it decides what a switched-off device can still change.

Part of the tradeWhere it livesWhat the device does with it
The price being followedOn the marketPrints it, changes nothing
The contract, once openedBetween two sides, on the trading serverShows one line about it
The spreadIn the two prices quotedShows both beforehand
Swap, for a night heldCounted by the calendarStates the charge beforehand
An instruction to close at a set levelStored on the trading serverSends it, then is not needed

Two directions, and the device holds neither

A CFD can be opened on a rising price or a falling one. The choice is made once; after that it belongs to the contract.

The wordWhat the contract does with itWhat is left for the device
LongBuys: gains on a rise, loses on a fallIt carried the decision, then reports the result
ShortSells first: gains on a fall, loses on a riseThe same — putting the screen away swaps nothing

Leverage keeps counting while the screen is dark

Almost every CFD carries leverage: the money set aside covers only a part of the position, and the contract then behaves at its full size. Movement is scaled the same way in both directions, so a loss grows at whatever pace a gain would have.

That scaling is written into the contract rather than into the app, which is why closing the app pauses none of it. Leverage is a setting, not an obligation — a lower one makes the same move land more softly.

One cost waits for your hand, the other does not

Two costs come up first, and they differ on exactly this point:

  • The spread. Two prices are quoted at once — a higher one to buy at, a lower one to sell at. The distance between them is the spread, and it is taken at the instant a trade opens. That is the one cost that does wait for a hand.
  • Swap. Holding through the night can add a charge called swap. It is stated in advance, and it returns for every further night the trade is left open. Nights arrive with nobody looking at a screen.

What to settle before the screen goes away

Most of what a device is useful for happens before it is put down. Three notes, made in this order, survive being out of sight:

  1. Write down what is open

    Which market, which direction, and the price it was opened at. A line in a notebook reads the same tomorrow, whatever happens to the app in between.

  2. Name the exit while you are still looking

    Decide the level at which the trade should end, and send that instruction before the phone goes into a pocket. It then waits on the trading server, which needs no hand nearby.

  3. Read the note again afterwards

    Compare what was written down with what the trade actually did. The distance between the two is the part worth learning from, and no screen keeps it for you.

Three things running at once, none of them yours to pause

CFDs are commonly labelled complex products, and the warning attached to the label — many people lose money trading them — is honest. Three things move at the same time: the price, the scaling that leverage applies to it, and the charge for each night held. Not one of the three waits for attention.

Worth holding on to before a first contract

  • A closed app is not a closed trade. The contract runs until it is closed as a trade; shutting the screen only ends the viewing.
  • Scaling does not sleep. Leverage enlarges a loss on the same scale it enlarges a gain, watched or unwatched.
  • Selling first is not a safe setting. A trade opened on a falling price is the one that loses when the price climbs.
  • Reach is what makes hurry easy. Real money too early, and too much of it, is the usual way beginners are hurt — and a device within arm’s reach removes the pauses that used to sit in the way.

Practice comes first in the order that works. A demo account runs both directions on virtual money, and the basic safety rules belong in the same sitting.

Questions about where the contract sits

Does a contract end when the app is closed?

No — closing the app closes a view of it. The trade stands until it is closed as a trade, and the difference settles then.

Where is the contract kept, if not on the device?

It is an agreement between two sides, and the instruction to close it at a set level sits on the trading server, not on your phone.

Is the price on the screen produced by the device?

No — the market sets it. The screen prints what it is handed, and putting it away does not stop the price moving.

Does swap stop for the nights the app is never opened?

No. Swap answers to the calendar, not to the screen: a night held is a night charged, and those amounts accumulate week by week.

Is a contract opened in a browser different from one opened in an app?

Exness Terminal runs in a web browser, the Exness Trade app is built for phones. Neither of them holds the contract; both are ways of looking at it.

What does depend on the device, then?

How much can be seen at once, and the moment a hand moves. Neither is small — but neither is the contract.

Read next

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Your first trade

What gets settled before the device is picked up.

Walk through it

Demo account

Long, short, spread and swap, with virtual money.

Start on demo

Watch one contract carry on unattended

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