In plain English
What Cash CFD means
Cash CFD describes the settlement method, not the asset class. An index CFD, share CFD, commodity CFD, or other CFD may be cash-settled so that the trader pays or receives the net difference in price. The position is closed by offsetting the trade, not by taking delivery of shares, commodities, or tokens.
Why it matters
This distinction matters because cash settlement changes what you receive at expiry or close-out. It also separates CFDs from contracts that can result in physical delivery. For retail users, cash settlement is one reason CFDs are usually treated as synthetic exposure rather than ownership.
Example
If a cash CFD is opened at 50 and closed at 53 with 20 units, the simplified gross profit is 60 currency units before spread and fees. No physical asset changes hands in this example.
Quick answers
Common questions
Is a cash CFD the same as a spot trade?+
No. It is a derivative with cash settlement, not a direct purchase of the asset.
Can a cash CFD still reference futures prices?+
Yes. The settlement method and the price reference are separate design choices.
Sources