Why is Spread Betting Considered High Risk!? βοΈ
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Why is spread betting considered high risk? Is spread betting dangerous? We always see risk disclaimers warning us that spread betting is a high risk trading instrument. But why is it high risk? You have to compare spread betting with trading conventional shares. Say you have 10k and you buy 10k worth of shares, you're buying an asset. Whatever happens to that asset will impact you directly. If you buy into Amazon or HSBC, say, the chances of Amazon or HSBC going down to zero are pretty slim. The one thing that changes the dynamic with spread betting compared to shares is margin - i.e. using leverage to trade with. Because of margin, it becomes a high risk product but it is up to you to control this risk. OK.
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