How To Choose The Best CFD Broker ? What is a CFD? CFD stands for contract for difference, the contract is an agreement to exchange the difference in value, in between opening price and closing price. The difference will be exchange between both parties, buyer and seller. How is CFD Traded? You make a small cash deposit as collateral. Is call initial margin. Then buy to open a long position or you sell to open a short position. Profits and losses accrue in real time. Then, you close your position by selling - if you went long - or buying - if you went short.