IMO there are 2 types of spread-betters
a) Those that buy on margin but don't have the underlying capital. This is risky and in time it is quite likely that a major fall will lead to a loss of all available funds
b) Those that have the underlying capital, but simply use spread-betting to reduce costs. For example, an investor has £100K to invest in shares. He could purchase these by depositing £10K in a spread-betting account (at 10% margin) and putting the remaining £90K in a high-interest account. The interest from the latter should offset interest charges from the SB account. This makes it a very low cost way of trading (especially if hold periods are weeks to a few months).
It is a mistake to assume that all spread-betters are day traders buying on margin.
