Spreads that get wider and hit everyones stops - Ive had stops hit when the underlying share price didnt even come close.
Delayed/refused orders - Can be annoying particularly in a fast moving market, seconds can make the difference between profit and loss.
Credit accounts - I would avoid these like the plague unless you really no what you are doing. IG tried to convince me to take out a credit account when they knew I had never spreadbet before (Which is extremely dodgy) they phoned me up a few times to ask when I was going to make my first deposit.
It is very easy to lose a lot of money quickly if you dont know what you are doing. When I started I was placing £5-£10 a point bets, which was stupid. I made money very quickly in the first week, but I had to pop out and I had a set too large a stop on a dow trade. It went against me by 70 points and wiped out 60% of my capital.
Spreadbet companies are out to make as much money as they can, they are a business and make money either by you losing or by hedging. Unlike a broker who make money from you commission and it is in their interest for you to make lots of money.
I've had similar horrendouse problems with d4f. Specially when trading sector indices. Even at £1 per point, they would requote by 20 points against me, then move the quote back to where it was. Also FTSE 250 stocks can be impossible to trade.
The No. 1 problem with spread betting and similar stuff like CFDs are really the spreads. While they tell you about no commission or no taxes etc. it is more of a smoke screen to keep you from thinking about the killer spreads. For example, finspreads quoted a 8 points spread in Dow Jones index futures. That means you lose 8 points when you buy and another 8 points when you sell for a total of 16 points for a round turn.
What happens if the market only "moved" 15 points In a regular futures transaction, 15 points translates into a profit of $ 150 before commissions. In FSB, you lose 1 point because you need 16 points just to break even. So what if there is no commissions or not taxes. So how can anyone make money in FSB (so that taxes and commissions are moot points really) when the deck is stacked against you from the very beginning.
I rather have a regular futures account and make the $ 150 and pay taxes and commissions than to lose the 1 point in a 15 point move.
FSB are really a simple scam behind a sophisticated smokescreen.
The reason that the direct access brokers require you to make a deposit of several thousand dollars when trading index futures is down to exchange rules. These rules exist because the exchange actually cares about its customers and in effect build in a certain amount of money management to protect your funds (ie its harder to lose big percentages of your trading capital). The same is not true of the spreadbet companies who see low NTR's as a way of drawing in business. People who trade at or near the NTR on given instruments are not implimenting a good money management system, even getting stopped out on dow cash for 20 points plus spread will reduce your account by a double digit percentage.
While I heartily agree that SB spread is greedy it's not this greedy! You only lose 8 pts on a round trip not 16. Imagine buying and selling without a market move - you'd buy at 10000 and sell at 9992 for an 8 pt loss.
Personally I use SB for trades of 1 day-4 weeks and direct access futures for learning to daytrade.