They're a lot higher risk than normal shares as you are trading on margin, plus the "punter" psychology can kick in , so be very careful.
Why is it riskier? You can buy shares through a stock broker T+10 or longer with margin. Maybe the CFD outfits are encouraging the gambling aspect but that doesn't make a CFD trade riskier. I read somewhere that the average trading lifespan of a CFD client is 12 months, so presumably it does attract gamblers rather than investors, but that doesn't make it riskier. What has the more risk, buying 1000 Barclays with traditional broker or buying 1000 Barcleays via a CFD. In fact you could run the CFD longer (at a cost obviously)
Buy 1000 Barclays shares via a stockbroker and if the shares moves down 10% you'll lose 10% oif your invested capital.
Buy 1000 Barclays shares via CFDs and if they go down 10% you'll lose 100% or maybe 200% of your invested capital.
True, but you lose the same in money terms (£300).
Is there a higher risk in losing £300 by buying the stock or by buying through CFD?
one that makes their own markets.