Best UK Trading Accounts for Traders in 2021 – Full Guide!

Samantha Forlow
9 April 2020 | Updated: 11 June 2021

Online trading accounts, whether its stocks and shares, oil, gold, natural gas or indices – if you want to trade assets online, you will need a trading account.

This allows you to deposit funds into a regulated UK broker, and subsequently buy and sell thousands of financial instruments at the click of a button. With that said, there are hundreds of brokers in the online space offering trading accounts, so knowing which platform to opt for can be challenging.

As such, we would suggest reading our in-depth guide on the Best UK Trading Accounts for Traders in 2021`.  Within it, not only do we explore the best five providers currently in the market, but we also give you some handy tips on how trading accounts actually work.

Note: Although metrics such as fees, commissions, payments, and leverage are important things to consider when choosing a UK trading account, you must ensure that the platform is regulated. This will ensure that your funds remain safe at all times.

Table of Content

     

    Eightcap - Regulated Platform With Tight Spreads

    Our Rating

    • Minimum deposit of just $250
    • 100% commission-free platform with tight spreads
    • Fee-free payments via debit/credit cards and e-wallets
    • Thousands of CFD markets including Forex, Shares, Commodities, and Cryptocurrencies
    Start your journey towards reaching all your financial goals right here.

     

    What are Trading Accounts?

    Trading accounts are merely online platforms that allow you to buy and sell financial instruments from the comfort of your own home. They are offered and facilitated by traditional brokerage firms, most of which are regulated by key licensing bodies like the Financial Conduct Authority (FCA). In other cases, the broker might hold a license with international regulators – such as ASIC in Australia or CySEC of Cyprus.

    Either way, in order to trade with an online broker, you’ll need to open a trading account. The process remains largely the same regardless of which platform you opt for. For example, you will need to provide a range of personal information, such as your full name, home address, and date of birth. In order to comply with anti-money laundering regulations, brokers will also need to verify your identity.

    This requires the provision of your government-issued ID, such as a passport or driver’s license. Once you’ve bypassed the initial set up, you will then need to fund your trading account. In doing so, you will be able to invest in a whole range of financial assets. This includes everything from stocks and shares, commodities, indices, interest rates, bonds, and even cryptocurrencies.

    The overarching benefit of using opening an online trading account is that you can invest in assets at the click of a button. Not only does this include desktop PCs and laptops, but some of the best online trading accounts come with a fully-fledged mobile app. As such, this is perfect if you want to buy and sell assets while on the move.

    Pros and Cons of Using an Online Trading Account

    The Pros

    • Hundreds of broker online trading accounts to choose from
    • The account opening process takes minutes
    • Deposit funds with a debit/credit card, e-wallet, or bank account
    • Thousands of financial instruments to invest in
    • Some online trading accounts offer commission-free trading
    • Spreads are getting more and more competitive in the UK
    • The vast majority of UK brokers are regulated by the FCA

    The Cons

    • Not all online trading accounts are regulated – tread with caution
    • You will need to invest on a DIY basis
    • Leverage caps apply to UK traders

    What Investments can I Make With an Online Trading Account?

    If you are in the hunt for the best UK online trading accounts of 2021, then we would 82% success rate and averaging 35-45% a month profit trading assume that you are looking to buy and sell assets on a short-term basis. In other words, you are looking to profit from short-term pricing movements, as opposed to holding on to an investment for a number of years.

    Nevertheless, online trading accounts typically come in two forms – CFDs and forex. Let’s explore these two asset classes in more detail.

    CFD Trading Accounts

    Contracts-for-differences, of simply ‘CFDs’, allow you to trade a financial instrument without you owning the underlying asset. Instead, you are simply speculating on the future value of the asset. This is highly beneficial if you are a day trader, as it gives you access to thousands of assets that would otherwise be difficult to invest in.

    For example, in early 2021 the value of oil hit new lows, at a price of just over $20 per barrel. If you wanted to speculate that the future price of oil would increase over the coming days or weeks, all you would need to do is place a ‘buy order’ via a CFD trading account.

    Without the use of a CFD if would be virtually impossible to invest in oil, as you would need to physically own and store the asset. With that said, it’s not just oil that you can invest in via your CFD trading account. On the contrary, you can buy and sell dozens of asset classes.

    This includes:

    ✔️ Stocks and Shares

    ✔️ Stock Market Indices

    ✔️ ETFs

    ✔️ Precious Metals

    ✔️ Energies

    ✔️ Interest Rates

    ✔️ Futures

    ✔️ Cryptocurrencies

    As we cover in more detail further down, CFD online trading accounts also give you the option of applying leverage, meaning that you can invest more than you have in your account. Furthermore, you will also have the option of short-selling an asset. This means that you can speculate on the value of the asset going down.

    Forex Trading Accounts

    The vast majority of online trading accounts also give you access to the multi-trillion pound forex space. For those unaware, this particular asset class refers to the buying and selling of currencies. The overarching concept is to profit from small price movements between two currencies – known as a ”forex pair’.

    For example, let’s say that the exchange rate between EUR/USD Is currently 1.10. This means that for every Euro, the buyer gets 1.10 US dollars. If you think that the price of EUR will increase against USD, you would place a ‘buy order’. Alternatively, a ‘sell order’ would be placed if you thought the opposite.

    Crucially, the exchange rate between EUR/USD – and dozens of other forex pairs, moves on a second-by-second basis. As such, it’s perfect for those of you that plan to day trade. Moreover, the forex space operates on a 24/7 basis, so you can trade currencies without needing to worry about market hours.

    Forex trading pairs are typically split into three main categories – majors, minors, and exotics.

    ✔️ Majors

    Major pairs are the most traded currencies in the world. This means that you will benefit some very tight-spreads, as well as guaranteed liquidity both day and night.

    The key characteristic of major pairs is that they will always contain the US dollar. The other currency that makes up the pair will be a strong currency. Think along the lines of the pound sterling (GBP), euro (EUR), and Australian dollar (AUD).

    Popular major pairs include:

    • GBP/USD
    • EUR/USD
    • USD/JPY 
    • USD/CHF
    • AUD/USD

    ✔️ Minors

    Minor forex pairs also contain two strong currencies, but they do not need to contain the US dollar. You will still benefit from competitive spreads when trading minors, but not as tight as majors. Moreover, liquidity will still be strong, but again, not as strong as major pairs.

    Popular minor forex pairs include:

    • GBP/JPY
    • CHF/JPY
    • NZD/JPY
    • EUR/GBP
    • AUD/NZD

    ✔️ Exotics

    If you want to gain exposure to emerging currencies, then you might want to explore whether your forex trading account hosts exotic forex pairs. Each pair will consist of a currency from an emerging economy (such as Turkey or Brazil), alongside the U.S. dollar. 

    Unlike majors and minors, exotics can be extremely volatile, and they often suffer from weaker levels of liquidity. Moreover, you will find that the spreads on exotic pairs are often much wider.

    Types of Trading Accounts

    Trading accounts typically come in one of two options – a retail account or a professional account. If you are an everyday trader that is looking to buy and sell assets on a more casual basis, you will fall within the threshold of a retail investor.

    This means that you will be restricted in the amount of leverage that you can apply. Also we cover the ins and outs of leverage in more detail further down, as a UK resident you are bound by the regulations imposed by ESMA. This means that you will be capped to leverage of between 2:1 and 30:1 – depending on the asset that you wish to trade.

    At the other end of the spectrum, professional traders are able to apply much higher amounts of leverage via their UK trading account – often as high as 500:1. Professional traders are usually accustomed to more competitive fees too , as their volumes are much larger than retail investors.

    Trading Account Deposits and Withdrawals

    If you’re looking to invest real-world money into the online trading space, you will need to think about your preferred deposit method. Most online brokers give you a range of options to choose from, such as:

    • Debit Card
    • Credit Card
    • Paypal
    • Skrill
    • Neteller
    • Local Bank Transfer
    • International Wire

    Trading Account Fees

    In order to trade online with a UK broker, you will need to pay fees. After all, brokers are in the business of making money. The specific fees that you need to pay can vary quite wildly depending the platform in question.

    Nevertheless, below we outlined some of main fees that you will need to take into consideration before choosing a trading account.

    🥇 Deposit and Withdrawal Fees

    Some brokers will charge you fee when you elect to deposit or withdraw funds. If they do, then it’s all but certain that this will come in the form of a percentage charge. For example, let’s say that the trading account provider charges 2% on Visa deposits. If you were to then deposit £1,000 into your trading account, you would pay a fee of £20.

    Some brokers will add this on to the transaction amount, meaning hat £1,020 would be taken from your card. Alternatively, they might subtract it from your balance. In this instance, you would start with a trading account balance of £980, even though your card was debited for £1,000.

    🥇 Trading Commissions

    You might need to pay a trading commission every time you make an investment with your trading account. If this is the case, brokers utilize a variable percentage model. In Layman’s terms, your trading fee will be expressed as percentage, and then multiplied by the size of your trade.

    For example:

    • The trading account brokerage charges a 1% commission
    • You invest £5,000 into a gold CFD
    • This amounts to a commission of £50

    You will also need to pay a commission when you exit your trade.

    • Your gold CFD investment is now worth £6,000
    • At a trading commission of 1%, you pay a fee of £60

    As such, you will need to pay the trading commission at both ends of the trade. With that said, most of the trading accounts that we recommend on this page allow you to trade on a commission-free basis. This has the potential to save you heaps of wasted money in fees.

    🥇 Spreads

    Regardless of the trading account that you sign up with, you will always need to pay an indrect fee in the form of the ‘spread‘. This is the difference between the ‘buy’ and ‘sell’ price of an asset. In the case of forex trading, the spread is expressed in ‘pips‘. In CFD trading, it is referred to in ‘points’.

    Either way, it’s best to calculate the spread in percentage terms, as this will give you a birds-eye view of how much you are paying.  For example, let’s say that you are trading stock CFDs. The difference between the buy and sell price is 0.5%, meaning that you are paying a spread that is equal to 0.5%.

    So, this means that when you place your trade, you need to make at least 0.5% in gains to break even. As such, the wider the spread, the more challneging it is to make a profit.  This is why we only recommend trading accounts that come with tight spreads.

    Leverage on UK Trading Accounts

    If you’re looking to open a UK trading account, the good news is that you will be able to apply leverage on the vast majority of assets that the broker supports. The bad news is that you will be limited in how much leverage you can apply if you are a retail trader.

    As we briefly covered earlier on, you will be deemed a retail client unless you are looking to invest as a professional trader. You would need to prove your professional status by uploading documents linked to your net worth and experience in trading assets.

    As a retail client in the UK, you will be bound by the leverage limitations imposed by the European Securities and Markets Authority (ESMA) – which we’ve outlined below.

    • Major forex pairs: 30:1
    • Minor/exotic forex pairs, gold and major indices CFDs: 20:1
    • All other CFD commodities: 10:1
    • CFD stocks and shares: 5:1
    • Cryptocurrencies: 2:1

    As you can see from the above, your trading account limits will be determined by the risks of the specific asset class. For example, major forex pairs come with the highest limits, because volatility is generally low. At the other end of the spectrum, cryptocurrencies like Bitcoin and Ethereum only permit leverage of 2:1 as they are highly speculative assets.

    How to Find the Best UK Trading Accounts?

    So now that you know the ins and outs of how trading accounts work – as well as the many assets that you can trade, you now need to start thinking about the specific platform that you wish to use.

    On the one hand, there are literally hundreds of FCA regulated brokers that active in the UK market, which is great for consumer choice. On the other hand, this does it make it somewhat difficult to know who to sign up with.

    As such, we would suggest reading through the following tips on how to find the best UK trading accounts.

    🥇 Regulation

    Your first port of call should be to ensure that the trading account provider is regulated. This is crucial, as it will ensure that your funds remain safe at all times. Moreover, regulated brokers are required to keep client funds in segregated bank accounts.

    This acts as a safeguard in the event the broker ceased to exist. If you’re in the UK, then it’s probably best to use an FCA regulated broker. Alternatively, the likes of CySEC and ASIC are also globally respected licensing bodies.

    🥇 Payments

    You are going to be trading assets in exchange for real-world pounds and pence, so you need to ensure that your preferred payment method is supported. The easiest way to get money into a trading account is to use a debit or credit card. In doing so, your trading account will be credited instantly.

    Most trading accounts can also be funded via a bank transfer. Although this is a much slower process in comparison to a debit/credit caRD, you’ll often benefit from higher limits. Some brokers will also support e-wallets like Paypal and Skrill.

    🥇 Fees

    As we discussed earlier in our guide, you will need to make a range of considerations when it comes to fees. This starts at the very offset with deposit fees, and then commissions for each trade that you make.

    You also need to explore what spreads you will need to pay on your favourite asset classes. All-in-all, concentrate on trading accounts that offer free deposits and withdrawals, tight spreads, and zero-commission trades.

    🥇 Tradable Instruments

    You then need to explore what asset classes the broker supports. For example, it’s all good and well if the platform offers low fees, but you’ll be left disappointed if you want to trade a specific currency and it is not supported. As such, browse through the broker’s list of tradable instruments prior to opening a trading account.

    🥇 Technical and Fundamental Analysis Tools

    In order to analyse the financial markets and thus – predict which way a specific asset is likely to move, you will need the assistance of research tools. At the forefront of this is technical analysis, which refers to the process of reading historical chart patterns.

    As such, you’ll want to open a trading account with a broker that supports heaps of technical indicators. Similarly, fundamental research is just as important when trading online. This refers to real-world news events, and how the news can impact the future price of an asset.

    🥇 Educational Resources

    If you’re an absolute newbie in the world of online trading, it’s best to use a broker that offers educational material. This will allow you to improve your skills and knowledge of online trading without needing to use external resources. Think along the lines of videos, step-by-step guides, trading ideas, webinars, and seminars.

    🥇 Customer Support

    Finally, don’t forget about customer support – after all, there might come a time when you need assistance on your trading account. It’s best to stick with brokers that offer 24/7 customer support across a number of different channels. Live chat is the most convenient, although some traders prefer telephone support or email.

    How to Open a Trading Account: Step-by-Step Guide

    So now that you know how to find a trading account that best meets your needs, we are now going to explore the account opening process. The good news is that the end-to-end process of registering, verifying your identity, depositing funds, and placing a trade rarely takes more than 10-15 minutes.

    As such, simply follow the step-by-step guidelines outlined below to get started right now.

    Step 1: Choose a UK Trading Account

    To get the ball rolling, you will need to find a trading account provider. The best way to do this is to follow the handy tips we outlined in the section above.

    With that said, if you don’t have time to research a broker yourself, we have listed the top five recommended UK trading accounts towards the bottom of this page.

    All of the trading accounts are backed by a tier-one regulatory body like the FCA and CySEC, and fees are super-competitive.

    Step 2: Open a Trading Account and Verify Identity

    Head over to the homepage of your chosen broker and elect to open a new trading account. As is the case with all online investments, the broker will need to collect some personal information from you.

    This will likely include:

    • First and Last Name
    • Date of Birth
    • Nationality
    • Home Address
    • National Insurance Number
    • Prior Trading Experience

    In order to comply with anti-money laundering laws, the broker will need to verify your identity. Some brokers allow you to do this at a later stage, albeit, you will need to do this before you are permitted to make a withdrawal. As such, it’s best to get the process out of the way now.

    To complete the KYC (Know Your Customer) process, you’ll need to upload a clear copy of your passport or driver’s license. Some, but not all, trading account providers will also ask for a recent proof of address – such as a utility bill or bank account statement.

    Step 3: Deposit Funds

    You will now need to fund your newly created trading account. As noted earlier, the specific payment method available to you will depend on your chosen broker. Nevertheless, this typically includes a debit/credit card, e-wallet, or bank transfer. Be sure to meet the broker’s minimum deposit amount.

    Step 4: Place a Trade

    Now that you’ve deposited funds, you are ready to place your first trade. It’s likely that your chosen trading account provider offers thousands of financial instruments across heaps of asset classes, so you are best to search for the instrument that you wish to trade.

    Next, you will then need to set up an order. This can be quite confusing if you have never traded before, so be sure to review the points listed below.

    • Buy/Sell Order:  This refers to the direction that you think the markets will go. For example, if you think the asset will increase in value, place a ‘buy’ order. Alternatively, if you think the value of the asset will go down, you can short it by placing a ‘sell’ order.
    • Stake: This refers to the amount that you wish to stake on your trade. Enter this in pounds and pence.
    • Market/Limit Order: If you are happy taking the next available price on your chosen asset, leave the order box set to a ‘market’ order. If you want to choose a specific price to enter the market, change this to a ‘limit’ order.
    • Leverage: This is the stage that you will be able to apply leverage to your order. Don’t forget, your limits will be determined by the asset you are trading.
    • Stop-Loss: You can enter the price that you want your trade to be close at if the markets move against you.
    • Take-Profit Order: This allows you to automatically lock in your profits when the asset hits a certain price target.

    Finally, confirm the trade to execute your order.

    Best UK Trading Accounts for Traders in 2021 – Our Picks

    If you’re ready to start buying and selling assets right now, but you can’t seem to find a broker that meets your needs, below we have listed our top five UK online trading accounts of 2021.

    Each broker meets our strict set of requirements. This includes metrics surrounding regulation, low fees, tight spreads, payment methods, and customer support.

     

    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.

    Our Rating

    • 20% welcome bonus of upto $10,000
    • Minimum deposit $100
    • Verify your account before the bonus is credited
    75% of retail investors lose money when trading CFDs with this provider

     

    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 £/$.

    Our Rating

    • Zero commissions on all assets
    • Super-tight spreads
    • FCA regulated
    • Does not offer traditional share dealing

    82.61% of retail investors lose money when trading CFDs with this provider

     

    Conclusion

    The UK investment space is home to hundreds of online trading accounts. This makes it super-easy to buy and sell assets from the comfort of your own home  -as well as via your mobile phone. However – and as we have covered extensively in our guide, no-two brokers are the same. As such, this can make it a daunting task in knowing which trading account is best for your personal needs.

    To help you along the way, we have discussed some of the many factors that you need to look out for when choosing a trading account provider. This includes regulation, low or zero commissions, tight spreads, heaps of everyday payment methods, a good selection of research tools, and customer support. Crucially we have also listed our top UK trading accounts of 2021 for those of you that do not have time to perform your own research.

     

    Eightcap - Regulated Platform With Tight Spreads

    Our Rating

    • Minimum deposit of just $250
    • 100% commission-free platform with tight spreads
    • Fee-free payments via debit/credit cards and e-wallets
    • Thousands of CFD markets including Forex, Shares, Commodities, and Cryptocurrencies
    Start your journey towards reaching all your financial goals right here.

     

    FAQs

    How do I deposit funds into my trading account?

    You can normally deposit and withdraw funds with a debit or credit card, bank transfer, or e-wallet.

    Do all trading accounts offer leverage?

    Yes, most UK trading accounts allow you to apply leverage. However, you will be limited in how much leverage you can apply - as per ESMA regulations. This varies from 2:1 to 30:1, depending on the asset that you trade.

    What is the minimum deposit required when funding my trading account?

    You normally need to deposit in the region of £50 and £150 when setting up your account. The specific amount will vary depending on your chosen broker.

    Who regulates online trading accounts in the UK?

    Most trading account in the UK are regulated by the FCA. Other notable licensing bodies includes ASIC, CySEC, and MAS.

    Do UK trading accounts support short-selling?

    Yes, as most trading accounts support CFD products, you will have the option of short-selling your chosen asset.

    Will I get stock dividends when from my trading account?

    If you are using a trading account that offers stocks and shares in the form of CFDs, you won't be entitled to dividends. This is because you do not own the underlying asset. If it's dividends you're after, you'll need to open a share dealing account with a regulated stockbroker.

    Are commission-free trading accounts really free?

    On the one hand, commission-free brokers allow you to trade assets without paying any broker commissions. However, you will still need to take the spread into account, as this cannot be avoided regardless of which broker you are using.