CFD stands for Contract for Difference, a financial derivative that allows traders to speculate on the price movements of various assets, such as stocks, commodities, or indices, without actually owning the underlying asset. By entering a CFD agreement, traders can profit from both rising and falling markets by essentially betting on the price difference from the time the contract is opened to when it is closed. However, CFDs carry significant risks, including leverage-related losses, making them suitable primarily for experienced traders.