CFD trading was introduced in 2002 and has been the biggest trading innovation in my memory. They have revolutionised trading allowing the small private trader to access the majority of their domestic markets and the majority of global markets at the click of their mouse. From shares, to indices, to currencies and commodities CFDs have brought world markets into people’s living rooms.

Essentially CFDs are “mini me” imitation futures contracts. A CFD (contract for difference) is a contract between a buyer and seller stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. If the difference is negative then the buyer will instead pay the seller.

A major reason for their popularity is that CFDs allow people to trade on a 5-10% margin.

For more information see the following links:
Wikipedia
http://en.wikipedia.org/wiki/Contract_for_difference