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Find the best trading platform, whether you’re looking to trade stocks and shares, forex, commodities, interest rates, or cryptocurrencies – you’ll need to find an online trading platform that meets your needs. With hundreds of trading platforms now active in the UK marketplace, knowing which broker to choose can be challenging.
While some platforms allow you to buy and sell thousands of assets, others focus on industry-leading fees. Either way, you need to ensure that the platform in question meets your individual trading requirements.
As such, we’ve created the Ultimate Guide on How to Find the Best Trading Platform for Beginners in the UK. Within it, we’ll show you the many factors that you need to look out for when choosing a new platform, followed by our top 5 broker picks of 2021
Table of Content
What is a Trading Platform?
In its most basic form, a trading platform is an online broker that allows you to buy and sell a range of asset classes. In a time not so long ago, you would have needed to call a stockbroker to make an investment. Not only was this a cumbersome process, but fees were often sky-high. With the said, the age of digitalization now permits trading from the comfort of your own home.
The overarching concept of a trading platform is simple. You open an account, verify your identity, deposit funds, and then trade. Most platforms in the UK will offer heaps of asset classes, which typically includes stocks shares, forex, and thousands of CFDs. You’ll be in full control of the trades that you make, so there’s no reliance on a third-party advisor to guide you.
As such, it’s crucial that you have a firm understanding of how online trading actually works. Nevertheless, online trading platforms make their money by charging you a fee every time you place an order. This usually comes in the form of a commission, which is calculated as a percentage against the size of your order. Additionally, online trading platforms also make money from the spread.
This is the difference between the ‘buy’ and ‘sell’ price. It is important to note that all trading platforms operating in the UK must be regulated by the Financial Conduct Authority (FCA). If it isn’t, then the trading platform is operating illegally.
What can I Trade at an Online Trading Platform?
So now that you know what a trading platform is, you now need to think about the types of financial instruments that you wish to invest in. Before we do, it’s important to note that trading platforms are catered to those that wish to engage in a short-term investment strategy. In other words, if you’re looking to invest in assets on a long-term basis, you’ll be best off using an online stockbroker.
Nevertheless, there are typically two branches to consider when looking at the types of instruments a trading platform supports – CFDs and Forex.
If you’re looking to engage in day trading, the vast majority of your trades will be structured as CFDs (contract-for-difference). CFDs allow you to invest in virtually any asset class without actually owning the underlying asset. Instead, you are simply speculating on whether the real-world price of the asset will go up or down in the open marketplace.
For example, let’s say that you wanted to trade natural gas, so you buy a CFD at £50 per contract. If the price of natural gas increased to £70 in the global marketplace, your CFD would also be valued at £70. As such, CFDs merely track the real-world price of an asset, making it perfect for those that wish to trade online.
Below we have listed some of the most popular asset classes that you’ll be able to buy and sell in the form of a CFD.
✔️ Stocks and Shares
✔️ Stock Market Indices
✔️ Precious Metals
✔️ Interest Rates
The second major asset class that you will be able to buy and sell at an online trading platform is forex. Forex (also referred to as FX or foreign exchange) is a multi-trillion pound industry that involves trading one currency for another. The overarching concept is that you will strive to make a profit from the price movement of two currencies. Each trading instrument in the forex space is known as a ‘pair’, which consists of two competing currencies.
For example, one of the most liquid trading pairs is GBP/USD. If you felt that GBP would increase in value against the USD, you would place a buy order. This is because GBP is on the left-hand side of the currency pair. Alternatively, if you felt that the USD would increase in value against GBP, you would place a sell order – as the USD is on the right-hand side of the pair.
Forex trading pairs are typically split into three main categories – majors, minors, and exotics.
As the name suggests, major currency pairs consist of two major currencies. This would include the likes of the US dollar (USD), Pound Sterling (GBP), Japanese Yen (JPY), and the Euro (EUR). As there is a huge demand for major currencies, liquidity is always high.
As such, you’ll benefit from tight spreads and lower fees. You’ll also be able to obtain higher levels of leverage on major pairs, as volatility is much lower.
Minor pairs will include one major currency, and one currency that is strong, albeit, less liquid. NZD/JPY is a prime example of a minor pair. On the left side of the pair, you have the New Zealand dollar, which is regarded as a minor currency. On the right side, you have the Japanese Yen, which is a major currency.
Exotic pairs will always contain one major currency, and one currency from an emerging economy. For example, if you were to trade the Euro against the Turkish Lira, EUR/TRY would be regarded as an exotic pair. If you do decide to trade exotic pairs, the spread will be much higher in comparison to majors and minors.
This is because there is less demand for emerging currencies, meaning you need to pay a higher price to access the market. Moreover, exotic pairs experience much higher levels of volatility.
How to Choose a UK Trading Platform?
So now that you know what financial instruments you can access at an online trading platform, we are now going to show you what factors you need to look out for when choosing a new broker. This will allow you to perform your own due diligence prior to opening an account.
Without a doubt, the most important factor that you need to look out for is whether or not the trading platform is regulated. In the UK, all CFD and forex brokers must be licensed by the FCA. As such, you should be able to find the broker’s FCA registration number listed on the platform.
If you can’t find it, you should check the FCA register, which you can access here. Crucially, if your chosen trading platform is not regulated by the FCA, then it doesn’t have the legal remit to accept UK clients.
Have you thought about how you intend on depositing and withdrawing funds at your chosen trading platform? Most brokers in the UK space allow you to transfer funds from your bank account. With that said, you’ll likely need to wait a few days before the funds are credited.
As such, if you’re looking to deposit funds instantly, choose a trading platform that supports debit/credit cards, or an e-wallet like PayPal or Skrill.
Online trading platforms are in the business of making money, so you will need to pay a fee to utilize the services that the broker offers. The fees that you pay will depend on the type of asset that you wish to trade. For example, forex usually attracts a variable commission, which is calculated against the size of your trade.
If trading CFDs, most brokers offer this on a fee-free basis. However, you’ll also need to look at the size of the spread. Certain CFDs – such as stocks and shares, often come with high spreads, so be sure to check this out before registering.
🥇 Tradable Instruments
You also need to explore the broker’s trading arena before signing up. This is to assess what financial instruments you’ll be able to trade. In most cases, online trading platforms will offer between 50 and 100 forex pairs. This will cover most majors and minors, and a number of exotics.
In the CFD department, trading platforms typically host thousands of instruments. At the very least this should cover stocks and shares, ETFs, futures, commodities, indices, and cryptocurrencies.
🥇 Technical Analysis Tools
If you’re looking to engage in day trading, it’s crucial that you use a platform that offers heaps of technical indicators. This will allow you to perform an in-depth analysis of historical pricing trends, and how these trends could impact the future price of the asset.
Some of the most popular technical indicators include the Stochastic Oscillator, Moving Average Convergence Divergence (MACD), Bollinger Bands. and the Relative Strength Index (RSI).
You should also stick with online trading platforms that offer top-notch research tools. This will allow you to assess fundamental news events in real-time, and thus, determine how the event will impact the future price of the asset.
For example, if the Federal Reserve announces that it is going to hike interest rates, you’ll want to be made aware of this as soon as the decision goes public.
How to Sign-Up With the Best Trading Platform?
If you’re confident that you have the required tools to get your online trading career started, we are now going to give you a step-by-step overview of what you need to do. The below steps typically remain constant regardless of which trading platform you go with.
Step 1: Choose a Trading Platform
First and foremost, you need to choose a trading platform that meets your individual requirements. You should follow the guidelines that we listed above and then perform some due diligence on the broker. This includes key factors such as fees, regulations, payments, and research tools.
If you don’t quite have the time to perform independent research, we would suggest checking out the five recommended trading platforms that we list further down in our guide.
Step 2: Open an Account
As is the case with any online investment platform, you will now need to open an account with your chosen broker. You will initially need to provide some personal information, such as your full name, home address, date of birth, and national insurance number.
After that, you’ll need to provide some information on your prior investment experience. This should include the type of financial instruments that you have traded in the past, the length of time that you have been trading online, and the average size of your trades.
Step 3: Verify Your Identity
In order to remain compliant with the FCA, online trading platforms will need to verify your identity. Known as KYC (Know Your Customer), the process simply requires you to upload some supporting documentation. If you’re an everyday retail trade that’s looking to deposit smaller amounts, then a passport or driver’s license will suffice.
Some online trading platforms will also ask you to upload a document that proves you live at your stated address. If it does, you’ll need to upload a recent copy of a bank statement, tax statement, or utility bill.
Step 4: Fund Your Trading Account
Once the trading platform has verified your ID, you will need to deposit some funds. Most brokers allow you to deposit funds with a debit/credit card or bank transfer, and some even allow e-wallets. Just be sure to check whether or not your chosen payment method attracts any fees, and how long it takes for the trading platform to credit the funds.
Step 5: Start Trading
Now that you have funded your brokerage account, you are ready to start trading. If you’ve never traded before, you have a number of options to get you up to scratch. You might decide to use the broker’s demo account platform, which will allow you to practice without risking any money.
With that being said, demo accounts do not prepare you for the emotional side of winning and losing. As such, it might be best to trade with real money, albeit, with super-small amounts.
Best Trading Platforms in the UK
So now that you have a firm grasp of what you need to look out for when choosing a trading platform, as well as the steps that you need to take to get started, you’re now armed with the required tools to begin trading.
However, if you don’t quite have the time to find a broker independently, we have listed our top five UK trading platform picks below.
1. AVATrade – 2 x $200 Forex Welcome Bonuses
The team at AVATrade are now offering a huge 20% forex bonus of up to $10,000. This means that you will need to deposit $50,000 to get the maximum bonus allocation. Take note, you'll need to deposit a minimum of $100 to get the bonus, and your account needs to be verified before the funds are credited. In terms of withdrawing the bonus out, you'll get $1 for every 0.1 lot that you trade.
- 20% welcome bonus of upto $10,000
- Minimum deposit $100
- Verify your account before the bonus is credited
2. Capital.com – Zero Commissions and Ultra-Low Spreads
Capital.com is an FCA-regulated online broker that offers heaps of financial instruments. All in the form of CFDs - this covers stocks, indices, commodities, and even cryptocurrencies. You will not pay a single penny in commission, and spreads are super-tight. Leverage facilities are also on offer - fully in-line with ESMA limits.
Once again, this stands at 1:30 on majors and 1:20 on minors and exotics. If you are based outside of Europe or you are deemed to be a professional client, you will get even higher limits. Getting money into Capital.com is also a breeze - as the platform supports debit/credit cards, e-wallets, and bank account transfers. Best of all, you can get started with just 20 £/$.
- Zero commissions on all assets
- Super-tight spreads
- FCA regulated
- Does not offer traditional share dealing
If you’ve read our guide from start to finish, you should now have the required tools to choose a UK trading platform that meets your needs. We’ve outlined some of the most important factors that you need to look out for when choosing a new broker, such as fees, regulation, and payments.
As such, you are best advised to perform enhanced due diligence on a trading platform prior to signing up. With that being said, if you don’t have the time to perform heaps of research, we’ve also listed five of the best trading platforms active in the UK investment space.
Ultimately, just make sure that you have a firm grasp of the risks of online trading, and never invest more than you can afford to lose.
How do I deposit funds at a trading platform?
The specific payment methods will vary from platform-to-platform. Most platforms allow you to deposit funds with a bank account or debit/credit card, and some support e-wallets.
Do all trading platforms offer leverage?
Most trading platforms in the UK will offer leverage. However, UK brokers are required to comply with the leverage limits imposed by ESMA. This places a cap of 30:1 on major forex pairs, and 20:1 on minors and exotics.
What is the minimum deposit required at an online trading platform?
Most online trading platforms require you to deposit at least £100 to get started. Some will ask for even more, so be sure to check this before signing up.
Who regulates online trading platforms in the UK?
All trading platforms active in the UK will need to be regulated by the FCA.
Do UK trading platforms support short-selling?
If the trading platform hosts CFDs (which most do), then you will be able to engage in short-selling.
Will I own the asset when I buy CFDs at a UK trading platform ?
CFDs allow you to speculate on an asset, or group of assets, without owning the instrument. As such, you are merely speculating on the asset's future price.
Should I use a fee-free trading platform?
Fee-free trading platforms allow you to buy and sell assets without paying a commission. However, you will still need to take the size of the spread into account, as this is a fee that you will pay indirectly.