How to Start Trading and Investing in the UK
Investing UK has been a reliable trading tutorial and investment comparison site for both beginners and experienced traders since 1996. We compare all top brokers and trading products on the market and provide detailed reviews. Join all the traders who got their financial education on investing.co.uk!
We have expert reviews of the best brokers and financial service providers in the UK, plus some exclusive sign-up deals and promotions. Whether you want to trade derivatives like CFDs or forex and stocks – our reviews will highlight the best brokers based on criteria like trading costs, customer service and the quality of mobile trading apps.
Top 3 Brokers in the UK
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AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for trading, alongside a comprehensive education center and multilingual customer support.
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XTB is one of the largest stock exchange-listed forex and CFD brokers in the world, offering access to over 5800 trading markets on their xStation platform. They boast 700,000 active traders, 20 years experience and authorization from tier-one regulators, including the UK's FCA.
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Eightcap have a global presence and are FCA regulated. They boast low trading fees and are the highest rated brand by TradingView users - and users can trade directly from TradingView. New traders can also sign up for a live account in just a few minutes.
Popular Investing Topics
How to Invest Money
Investing can be defined as making money grow. The opportunities to invest and make money online trading from the comfort of your home are plentiful and easily accessible. Investing.co.uk is designed to give everyone a solid starting point in their investing journey. So if you are a beginner wondering how and where you can invest, or a millionaire looking for trading opportunities, we list and review all your financial product and broker options.
When done successfully, the quickest route to money growth is through trading – the buying and selling of assets on the financial markets. The financial products listed below are the currently most popular and effective, while also being immediately accessible to traders of all skill levels.
CFDs
A CFD (Contract for Difference) enables the trader to speculate on currencies, stocks and other assets without paying stamp duty. Profits can be made when the price of an asset goes up or down, making them suitable in both rising and falling markets. CFDs can also be leveraged to generate profits much larger than the actual money invested, but losses are equally leveraged. Make sure to check our list of the best CFD brokers for UK traders.Forex
Forex involves trading currencies and using differences in exchange rates to make money. The forex market is the world’s biggest and most popular asset trading market. Trading can be done 24/7. A trader does not have to own currencies directly, but can also profit from up and down price movements through derivatives such as CFDs. Using derivatives can often be a much easier way to trade the forex market. Use our list of the best forex brokers for UK traders to find a great broker to trade with.Bitcoin
Cryptocurrencies like Bitcoin is a brand new asset class that has seen tremendous growth and volatility since they entered the trading scene. There are many options within the cryptocurrency trading space outside of Bitcoin also, like Ethereum and hundreds of other “coins”Stocks
Directly investing in stocks is a well-established but very slow method to grow money, where realistic returns are in the 3-7% per year range. You will also have to pay stamp duty on every investment, which makes short-term stock trading expensive. Picking stocks that pay dividends can mitigate the wait somewhat. Short-term stock trading is best done with CFDs, as stamp duty does not apply and results can be multiplied significantly due to leverage. Social / Copy Trading
Use social trading to automatically copy other investors’ trades. If you follow successful traders you will benefit from their superior experience and hard work. Copy trading can be a source of passive income if done successfully, and it’s also a great opportunity for beginners to learn from experienced traders.Day Trading
Day trading is when you invest in a financial product and then sell (close) that position before the day is over and the markets close. For some this is a way to make a living, but for that to be possible you need to make decent returns most days of the month or succeed with a few big trades. To make this possible, a day trader is most likely to use derivatives such as CFDs that allow for big gains in a short period of time.Investing Styles
If you are reading this, then the likelihood is that you either have money to invest, or are already investing, or just wish to find out more about different trading opportunities. There are plenty of options open to you and your money, but deciding which is best for you is not as easy as you might think. Before selecting an investment you should certainly understand two things about yourself, both of which will have a large bearing on what investments you choose, and how you trade.
Are you active or passive?
If you have time to commit to selecting, watching, monitoring, and managing your investment portfolio, and you want to do so, then you might consider yourself an active investor interested in short-term trading. You’ll keep abreast of the financial news, analysing the companies in which you are invested or that you see as targets for your investment money, and make buy and sell decisions accordingly.
Your aim is to beat the return that you could achieve by having a portfolio that was designed to give a return equal to a benchmark market. You may decide, for example, that the banking sector will be weak while the oil sector will be strong over the next few months, and put a bigger weight of your investment into oil companies rather than the big banks.
On the other hand, you may have cash that you wish to invest, but no time to spend researching and selecting investments. You might like the idea of achieving the long-term trading gains that the stock market has produced historically, but don’t want the hassle of monitoring a portfolio of shares. You might decide to invest passively by buying units in a find that tracks the stock market, or perhaps shares of an Index ETF. In such a way you will gain exposure to the potential returns, without the time needed to manage a portfolio actively: you will be investing passively.
Many of these choices will reflect your trading psychology, and even your attitude to capitalism generally, or ethical investing.
What risk are you prepared to accept?
Risk acceptance is both emotional and financial. Some people don’t have the resources to be able to accept taking a large risk with their money. If you had saved £1,000, could you afford to lose it by investing it in the shares of a new company that promised a lot but had no track record? Your answer to this question will tell you about your capacity for risk: your ability to withstand a financial loss.
Changing the wording of the question slightly, if you invested £1,000 in a company, and that investment went down in value, how would you feel about it? The answer to this question will tell you about your attitude to risk, how you feel about accepting risk to make better gains.
Combining the answers to these questions about how you want to invest and the level of risk you are prepared to accept will help you select the appropriate investments.
When thinking of financial risks, one must also consider the bank or broker used to make trades or hold investments. Some investors and traders have lost all their funds due to a fraudulent broker going bankrupt. Please read the section on trading scams to stay safe.
Long Term Investing
There are many assets in which to invest, and which you pick – or what proportions of each you select – will depend primarily upon your attitude to risk and the type of investor you are. We list the most effective investment products higher up on this page.
Cash Savings
Considered the safest investment, placing money in a savings account with a good interest rate will mean that your original capital is always there for you when needed. Some accounts offer higher interest rates for committing to a fixed term. You will pay tax on the interest (unless you are a non-tax payer), though you can protect yourself from this liability by investing in Cash ISAs.
Government and Corporate Bonds
Governments and companies need to borrow money: governments to meet the requirements of public spending, and companies to gain access to funds that will help them expand their businesses. Whilst there is a risk here – both companies and governments may default on their commitments – the risk is considered only a little greater than holding cash.
Of course, corporate bonds will carry the higher risk but offer a better rate of interest accordingly. As with all investments, the higher the potential return, the higher the risk to your investment. Government gilts will be perceived as safer.
Property
You could decide to invest in property directly, buying office or residential space, or invest in property funds or REITs that do the same. The advantage here is that you could receive rental income as well as see the capital value of the property rise. Of course, if the property remains empty for a time, then maintenance and other charges still have to be paid without the income generated from the rental. As has been seen through the mid-2000’s, there is no guarantee that property prices will rise all the time either.
Stocks and Shares
Investing in shares of publicly listed companies gives you a holding in the fortunes of those companies, the business sectors in which they operate, and the wider economy. The level of research required will be greater, and the risk is proportionate to the potential reward. Within this category, there will be stocks seen as lower risk, big multi-national corporations for example, and new start-up companies that are just setting out but could grow rapidly and produce great returns. You can also be paid dividends when owning certain stocks.
Gold and Other Commodities
Investing in gold and other commodities has been popular for thousands of years, and few investments have kept pace with inflation like gold in particular. People who were paid a salary in gold 2000 years ago would still have considerable purchase power today with that same amount of gold, as opposed to most currencies over time. Some would argue that gold is a “protector of value” rather than an investment, and thus more of an alternative to cash. Your specific investing goals will determine whether gold is right or not for you.
Methods of Investing
You can invest in all of the asset classes either directly or through pooled investments, such as investment funds or unit trusts. You can invest actively, and manage your portfolio on a daily basis, or passively. If investing through funds, you can also select funds that manage your investment either actively or passively, perhaps, for example, an index tracking fund or ETF.
However you decide to invest, you should have definite goals for your investment. Understand that the potential returns will also carry possibility of loss, and how you would feel about a loss is all part of your make up as an investor. Knowing what type os an investor you are will help you to select the right investments and investment approaches to achieve your financial ambitions.