Profiting from a price increase
Let’s say you enter into a Gold CFD contract at a current market price of $1,291 per ounce, believing the value of the commodity will rise by a certain time. If the price of Gold has risen when your contract expires, you’ll make a profit based on the difference between the buy and sell price.
However, if it’s fallen below the buy price at the point when the contract expires, you’ll lose the trade.
Profiting from a price decrease
Let’s again say you want to enter into a Gold CFD contract at $1,291 per ounce, this time believing the price will fall. If it did fall by the time the contract expired, you’d make a profit. If it had risen, you’d incur a loss.
Profiting from downward price movements is one of the unique aspects of CFD trading; if you were purchasing physical bars of Gold you could only profit by selling it for more than you paid for it.