Leverage contracts have been asked about so many times, but I still need to explain it systematically.

What exactly is a CFD (Contract for Difference)? Simply put, it’s a "spread" contract between you and the trading platform. The key point is—you’re not buying the actual underlying asset itself.

For example, when you "buy" gold or a certain cryptocurrency on a platform, you’re not actually purchasing real gold or coins; you’re buying this contract. The platform and you are betting on whether the asset will go up or down. In the end, only the difference between the opening price and the closing price is settled, with no need for actual delivery of the goods.

Therefore, CFDs are essentially over-the-counter (OTC) trading—meaning there’s no centralized exchange matching orders, just you and the platform betting against each other. This is completely different from buying spot assets on an exchange, where you actually hold the assets.

Want to understand the difference between CFDs and perpetual contracts? Then you need to delve deeper into the mechanisms and fee structures of these two trading methods, but at least you should first understand the basic concept of CFD.