How risky is financial spread betting?
Spread betting betting has varied amounts of risk depending on what market you are betting on. Some markets are exceptionally volatile, for example gold and the USD/JPY currency pairing can move much more intraday than the Nasdaq 100 Index.
You can also limit your risk by setting a stop loss so you can only lose a certain amount (although the market can "gap" against you) or a guaranteed stop loss (which won't gap but will cost you a premium via a wider spread). Both of these leave your profits potentially "unlimited", although you can set a limit order to close your position when you have made a certain amount of profit.
It is called "risky" as your losses are potentially unlimited if you do not use the tools outlined above. All you need to do is know your risk, set your stops at a level you are happy with and do your research!
It should be noted that the "win rate" on spread betting is the same as actually trading the financial markets in a study carried out by the Cass Business School.
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