What it means
CFDs are common in Europe, the UK and Australia but not allowed for US retail traders. European regulators found that 74% to 89% of retail CFD accounts typically lose money.
In practice
CFDs make it easy to trade indices, gold, oil and stocks from one account with small sizes, long or short. Traders use them when futures contracts are too large for their account or are not offered where they live.
The broker sets the price, the spread and the overnight financing, so two CFD brokers can quote the same market slightly differently. Costs are built into the spread and the swap rather than charged as a visible commission.
What to watch for
You are trading against your broker, with leverage, on a product that charges you for every night you hold it. Those three things together are a large part of why most retail CFD accounts lose money. Size by your stop, not by the leverage on offer.