Price discovery
Price discovery is the process through which trading interest and transactions establish market prices. It reflects participants' information, expectations, and willingness to trade, but the resulting price is not necessarily a measure of an instrument's underlying value.
In an illustrative market, an earnings announcement changes buyers' and sellers' expectations. Updated quotes and subsequent trades establish new prices as participants respond.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Glossary definitions are general education only and are not investment advice. Risk disclosure