Spread Betting Risks

However here is where we give some examples of the risks and ways to minimise them.

1. Limited Risk Accounts

A limited risk account is a type of spread betting account where they automatically close your bet for you if you reach a certain threshold.  While the threshold will vary for different bets, this does mean that you always know the maximum you can lose.  However the amount you can win is not capped.

For most people this account is a good decision.  The main draw back is illustrated by this almost real but slightly modified example.

Imagine you Buy Man Utd superiority against Spurs at 1.2 for 50 pounds a goal.  The shield stop loss is 5x your stake meaning that when Spurs go up 3-0 just before half time and seem to be dominating the quote becomes Spurs/Man Utd 3.5-3.8.  At this point your bet is closed at 3.8 (-3.8 in Man Utd superiority terms) and you lose 5x50 = 250 pounds.

The match finishes 4-3 to Man Utd and had your bet not been automatically closed you would have just lost 10 pounds (1.2-1.0 x 50).  What's more when you reflect on the match, Spurs were never more than 3 up so your loss was never more than 4.2x50 = 210 pounds, however the spread caused your bet to close.  In this (very rare but very real) situation the Shield account is bad news.

Of course don't forget that had Spurs ended up winning 7-0 then you would still have lost 250, not 410 pounds.

2. Close out

If things don't seem to be going your way, or if you think you have been lucky then close your bet in running at a loss or profit.

3. Known downside

A known downside bet is one such as buying goals.  If you buy goals at 3.0 for 50 pounds per goal then your max loss is 150.  What's more if its 2-1 at half time then you can watch the second half knowing that you can't lose and that every further goal is worth 50 quid to you.

Next:  Spread Betting Strategy