Disadvantages of Spread Betting

The potential disadvantages of spread betting explained.

Spread betting holds a number of potential disadvantages over conventional share dealing or fixed odds betting.

Disadvantages over share dealing / financial trading

• If a bet is closed before the make up is declared you pay for the spread a second time.
• Many spread betting markets are very volatile. Unless you place a 'guaranteed stop loss', you can incur very large losses if events go against you.
• Losses cannot be offset against capital gains on other ordinary investments.
• It is less suited to long term investment as additional costs are often incurred each time the spread bet is extended to a new expiry date.
• You have no rights as an investor, including no voting rights.
• You will not benefit from dividends.

Disadvantages over fixed odds betting

• If a bet is closed before the make up is declared you pay for the spread a second time.
• Many spread betting markets are very volatile. Unless you place a 'guaranteed stop loss', you can incur very large losses if events go against you.

More Information:

• Introduction
• Advantages of Spread Betting
• Limiting Your Liability

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