Online Brokers in the UK 2022
The UK is one of the financial capitals of the world, making it a hotspot for online forex and stock brokers. But the vast numbers on offer can make a comparison of the top brokerage firms tricky. In this article, we show you how to compare online brokers in the UK, including how to assess costs, leverage, platforms and more. Plus, we’ve included our list of the best online brokers in the UK below.
UK Brokers List
How To Choose Online Brokers In The UK
To compare online forex, stock and penny trading brokers in the UK, you’ll need to assess a few factors. While cheap fees are important, they’re not the only thing to look out for. We’ve compiled the top things to consider in your comparison.
The best online forex brokers in the UK will provide a trading platform that is both easy to use and intuitive. We’ve listed the main options you’ll find on the market below.
MetaTrader 4 (MT4) & MetaTrader 5 (MT5)
MT4 and MT5 are two of the most popular third-party platforms in the forex world. They were created by the developers MetaQuotes, who’ve been in the online trading market since 2005. There are over 150 online brokers in our list that offer the software, including top names such as Pepperstone, CMC Markets and Avatrade. It is free to download and use, you’ll just need to set up an account with your chosen broker and login with the credentials they provide upon sign up.
MT4 and MT5 are popular for a number of reasons, but there are two stand-out benefits that forex traders love:
- Breadth Of Analytical Tools – MT4 has 30 built-in indicators, 24 analytical objects and 9 time-frame charts. It is designed for traders who love to do their research, making it the top choice for some of the most successful global forex traders. MT5, the most recent software release, goes even further, with 38 indicators, 44 analytical objects and 21 time-frames.
- Customisability – But even better than its built-in tools, MetaTrader platforms are famous for their flexibility. There are 2000 free custom indicators, plus 700 that can be purchased from the Codebase.
A proprietary platform is one that is owned and created by the broker. Sometimes, these can be lacking in the required functionality so online brokers may offer this option alongside MT4 for traders who need access to a variety of tools. However, some of the best online brokers in the UK use proprietary software, which tends to be much more user-friendly and intuitive. They’re ideal for traders that have a certain strategy in mind and require a platform tailored to this.
Top platforms for:
- Social Trading – eToro is a social trading broker that offers its own platform. It’s perfect for those keen to share tips and tricks with their fellow traders. It has a Tipranks Research Tab that allows you to gain insights from the most successful on its books, including those from top institutions. Plus, you can also review other’s trades and choose to copy or ‘mirror’ them if you’re a fan of their strategy.
- Mobile Trading – While MT4 and MT5 do have mobile apps, deep analysis is best completed on your desktop. If you’re looking to trade on the go, there are many proprietary apps from online brokers that specialise in making trading simple from a small screen. Trading 212 is perhaps the most popular for stocks, while XTB’s xStation Mobile is great for CFDs, with over 1,500 instruments as well as news and insight available at the touch of a button.
- Asset Variety – For one of the largest selections of assets offered by online brokers in the UK, check out Plus500. It has over 2000 tradable instruments available on its in-house platform and boasts real-time quotes as well as round the clock customer support for all customers.
- Professional Traders – Interactive Brokers is an online broker that is favoured by professional traders. It has an excellent proprietary platform and ECN links to top exchanges that are perfect for day trading. However, high minimum deposit thresholds price some small-time investors out of the market.
There is a huge selection of tools out there to help you with your trade analysis, many of the best online brokers in the UK will offer these for free to clients.
News & Insights
Fundamental analysis is the study of economic factors that can influence an asset’s value. Macroeconomic factors, such as the Bank of England’s interest rate, the UK inflation rate and British public policy are all factors. Microeconomic factors include a company’s management, strategy, and P&L. These can all be gleaned by following business news closely. Many of the top online brokers in the UK offer blog posts, opinion insights and news articles as part of their service.
Whether you’re a beginner looking to learn the ropes, or a veteran seeking out the latest strategy, most online forex and stock investors will benefit from access to education. How-to videos and tutorials from a broker are a fantastic way to learn new tips and tricks that may also be relevant to the trading platform you use. Online brokers in the UK that offer this type of resource are a definite advantage.
EAs & Bots
Automated trading is popular among those who prefer a hands-off approach to trading. Therefore, online brokers in the UK that offer access to trading robots (also known as Executive Assistants) are increasingly popular. There are some specialised brokers that offer bots created in-house, but those that provide access to MT4 and MT5 have a much broader selection, as the MetaTrader Codebase hosts thousands that are both free and available to purchase. Always remember to test your bot on a demo account before you trade with real money since there is no guarantee that EAs will be profitable.
A demo account allows you to trade with virtual currency before you take the plunge into the live trading environment. Most online brokers offer this service, which is vital for anyone new to the trading platform. You can use it to practice strategy or trial the features and functionality of the platform.
Fees & Commission
Online/discount trading brokers have the cheapest fees of all services in the UK. But there’s a lot of variability depending on the asset traded. We’ve listed the most commonly found fees and what they mean below:
- Spreads – Most online forex brokers charge a fee through ‘spreads’. Spreads are the difference between the buy and sell price of an asset. They’ll either be fixed or variable. Fixed spreads tend to be slightly higher but have the benefit of being constant. Variable spreads change with market volatility.
- Commission – Stocks bought through an exchange are usually charged through commission. Often, this is a fixed amount per trade, e.g £8 or 0.2% of the value. Some online brokers will offer ‘commission-free stocks’, in this case, they usually charge a spread instead.
- Account Fees – Some companies charge just for keeping your account open. While this is rare with online brokers in the UK, it’s one to look out for.
- Rollover Fees – When trading CFDs, rollover fees apply if you keep positions open overnight. Day traders should have no issues, but those looking to invest long term should be aware.
Look out for hidden costs in online brokers offering their services for free. It’s more likely that the asset will be quoted marginally above market rate to cover their running costs. When using online brokers, cost comparison is key to profitability. Check out our online brokers table above for recommendations.
The top 10 online brokers in the UK will all offer the opportunity to trade with leverage. Leverage allows you to maximise the results of a trade by multiplying by a chosen factor. For example, if you have a £100 deposit and you trade with leverage 1:5, you can open a position with a value of £500.
All FCA regulated brokers in the UK are limited to what leverage they can provide. They’re capped at between 1:30 and 1:5 depending on the volatility of the asset traded. Forex trading is usually between 1:20 and 1:30, whereas stocks are slightly lower, at around 1:10.
Unregulated online brokers in the UK sometimes offer higher leverage limits. However, we recommend you select a regulated firm as the limits are in place to protect retail traders from undue risk. Leverage amplifies losses as well as profits, so risk management is vital.
Online brokers operate primarily with one of two trading models: dealing desk or non-dealing desk. A dealing desk broker, or ‘market maker’ creates liquidity on its order book by taking the other side of a trade. For example, if you’re looking to sell Google stocks, but there is no trader on its books willing to buy them, the broker will buy them instead. This ensures that orders are always filled, but it does mean that market makers are trading against you and other clients. If you lose money, they benefit, creating a conflict of interest.
A non-dealing desk broker (or ECN broker) connects to other institutions through an electronic network. This creates a larger order book, making it easier to find another investor willing to take the trade.
Both models are popular with online brokers, and neither is right or wrong. However, some traders prefer to limit the conflict of interest by selecting an ECN broker where possible.
If things don’t go as planned and you need help, an online broker with strong customer support is vital. Look out for a phone number or live chat service, these are key indications that they’ll be on hand when you need them. An email address or ‘contact us’ page is not sufficient. If you ever need it, there’s no doubt you’ll be wishing you’d selected a broker that puts this service as a high priority.
In the UK, any firm offering financial services must be regulated by the Financial Conduct Authority (FCA). The FCA was created in 2013 with the aim of managing risk as a result of the 2008 financial crisis. It currently regulates around 51,000 businesses in the UK. FCA regulation is a good indication that the trading broker can be trusted.
The FCA places a number of requirements on online brokers in the UK, which encourages transparency with retail traders. You may not have realised, but the following policies are FCA mandated:
- Risk Disclosure – Online brokers offering CFDs must disclose the percentage of retail traders that lose money with this instrument.
- Negative Balance Protection – When margin trading, it is possible to lose more than your deposit amount since the results of a trade are multiplied. Negative balance protection aims to prevent this by issuing a margin call. All traders regulated by the FCA will provide this.
- Limits On Leverage – As mentioned above, there are limits on how much leverage a broker can offer depending on the volatility of the instrument provided. This is capped at a maximum of 1:30. Online brokers offering higher leverage than this are unregulated and potentially scammers.
- Ban On Excessively Volatile Instruments – In 2020, the FCA banned the sale of crypto-derivatives. Their volatile nature was deemed to cause excessive risk to retail traders. Similarly, following the European Securities and Markets Authority’s (ESMA) temporary ban in 2018, the FCA permanently restricted the sale of binary options in 2019.
- Segregated Funds – If your brokerage fails, you’ll want to know that your trading funds are protected and will be returned to you. The FCA makes it mandatory for online brokers to keep customer funds in a separate account from those used by business operations. This means if their finances are lacking, they can’t use yours to top them up.
- Bonuses – Traders looking for online trading brokers with the best welcome bonuses should be cautious. The FCA has banned all types of cash bonuses from UK-based online trading brokers, since they entice traders to deposit funds for all the wrong reasons. Sometimes they even have unfair terms and conditions attached to them, like those that restrict profit withdrawal.
Final Word On Online Brokers In The UK
Since online brokers in the UK must be regulated, many will have similar policies. This includes a broker’s leverage limits, provision of negative balance protection and even restricts their instrument list. However, there are a few factors that will vary between firms. Look for online brokers that provide you with an intuitive trading platform with all the functionality you need. Plus, assess their fee structure, educational tools and customer support before taking the plunge.
What Are The Best Online Brokers For UK Expats?
Expats can still use online brokers that are registered in the UK as long as the company offers the service to their current jurisdiction. However, be aware that regulatory protections may not apply to your location. Therefore, the best online brokers in the UK can usually be used by expats too, but the tax obligations will vary.
Do Online Brokers In The UK Need To Be Regulated?
Yes. It is mandatory for companies providing financial services in the UK to be regulated by the FCA. Before Brexit, it was sufficient for a broker to be registered with an ESMA approved European authority. This made regulators such as CySEC (Cyprus Securities and Exchange Commission) a commonly referenced industry figurehead. However, since leaving the EU, this no longer applies and online brokers must be regulated by the FCA.
How Can I Find The Best Online Brokers In The UK?
We’ve compiled a list of the top ten online brokers in the UK with a review of each and every one. Check out our list and read the article to find the key factors to look for in a broker. This will help you choose the right service for you.
What Are The Best Online Trading Brokers For Beginners?
Beginners should ensure they select a broker that offers a trading platform that is intuitive and easy to use. Many of the charts, graphs and limit orders can be difficult to grasp initially. Before you try and grapple with this, start with the basics. Secondly, online brokers should always offer the opportunity to trial the platform through a demo or practice account. This is vital for newbies who are learning the ropes.
How Do You Start To Buy Stocks Through An Online Broker?
First and foremost, consider which broker offers you the stock you need for a sensible fee. Then, consider how you’ll be trading. For example, if you’re looking to buy stocks for long term investment, a platform isn’t required. However, if you want to make a profit from trading, you’ll need one that provides all the functionality you need. Once you’ve selected your top choice, sign up and follow the broker’s instructions to purchase.
Compare Online Brokers
In the list of UK Online Brokers above, a few key factors are displayed for each firm. But if you are looking for a much more detailed broker comparison we have dedicated pages for that. You can also compare a firm with other online brokers in the individual reviews. Below are some of the most popular comparisons.
- FXPro vs Plus500
- Plus500 vs Avatrade
- Plus500 vs CMC Markets
- Plus500 vs Degiro
- Plus500 vs eToro
- Plus500 vs FBS
- Plus500 vs IG
- Plus500 vs IQ Option
- Plus500 vs Saxo Bank
- Plus500 vs Trading212
- Plus500 vs XM
- eToro vs Coinbase
- eToro vs Degiro
- Trading212 vs eToro