Online Trading UK – Learn to Trade Online

Want to learn to trade online but not sure where to start?

In a time not so long ago, trading assets like stocks, gold, and oil was something reserved primarily for large-scale institutions. Fast forward to 2020. Virtually anyone with an internet connection can buy and sell financial instruments at the click of a button.

You simply need to open an online trading account with an FCA-regulated platform, deposit some funds, and that’s it – you can start trading straight away.  But, online trading can be a high-risk endeavour if you don’t know what you’re doing. After all, you will be risking your own capital with the view of making consistent profits.

With this in mind, this guide will discuss everything you need to know about online trading in the UK. We show you how to trade, the risks of trading, and the best online trading platforms available in 2020.

Online Trading Resources

If you’re looking to learn more about different types of online trading, check out the expert guides below:

What is Trading?

In a nutshell, online trading is the process of buying and selling assets with the view of making a profit. For example, an equity trader would seek to predict whether the value of a stock is likely to increase or decrease. If the trader in question predicts correctly, they make money.

If not, they lose money. It is important to note that online trading is not reserved just for stocks and shares. On the contrary, there are tens of thousands of financial markets across dozens of asset classes.

Whether it’s commodities like gold and silver, oil, indices, bonds, or cryptocurrencies – you can trade from the comfort of your home at the click of a button. In order to access these markets, you will need to open an account with an online broker. The process is simple and can be executed by UK traders of all shapes and sizes.

Irrespective of which online trading platform you sign up with, the process typically looks like the following:

  • You open an account with an online broker by providing some personal details
  • Then you deposit some funds with your preferred payment method (debit card, Paypal, bank transfer, etc.)
  • Next, you choose an asset to trade, such as stocks or gold
  • FInally, you enter a buy or sell position – depending on which way you think the markets will go

As you can see from the above, the process of getting started with an online trading account is super-easy. In terms of making money from your online trading endeavours, you will achieve this goal by speculating correctly on whether an asset will go up or down in value.

For example, if you think that the value of Apple shares will increase, and they do, you will make a profit. We will go into the process of making money further down in this beginners guide.

Types of Trading

Put simply, if an asset has value and a marketplace exists – you can trade it online. With that said, there are several types of UK trading accounts that you can access as a retail trader, which we consider in more detail later.

CFD Trading

In the vast majority of cases, you will be trading contracts-for-differences (CFDs). In its most basic form, CFDs allow you to buy speculate on the future value of an asset without ever taking ownership of the underlying asset. This is because the CFD instrument is merely tasked with tracking the real-world market price of an asset. In doing so, this allows you to trade the asset in question at the click of a button.

For example, let’s suppose that you are interested in trading oil. By taking direct ownership, you would need to find a way to purchase and store physical barrels of the asset.

It goes without saying that this would be nothing short of a logistical and financial nightmare. But, by trading oil CFDs, there is no need for you to own or store the commodity. Instead, the financial instrument simply tracks the value oil and thus – you can take a position on where you think its future value will be with ease.

Let’s look at a quick example of how this would work in practice when trading online in the UK.

  • Your chosen online trading site is offering a price of $42.15 per barrel of oil
  • The financial market is represented via CFDs
  • The CFD obtains its real-time price movements from the Brent Crude Oil Benchmark
  • You think the value of oil will go down, so you place a ‘sell’ order
  • A few hours later, the Brent Crude Oil Benchmark quotes a price of $39.50
  • As such, your chosen UK online trading site also offers a price of $39.50
  • You decide to lock-in your profits by closing the position – making a 6.28% profit along the way

As you can see from the above example, the real-world market price of oil went from $42.15 to $39.50. With this in mind, the oil CFD position that you opened at your chosen broker replicated the same pricing swing.

It is important to remember that when trading CFDs, you have no legal right over the asset in question. This is because the CFD is not backed by anything tangible, as it is merely a contractual agreement between you and your broker.

As we cover in much more detail later in this guide, CFDs give you much more in the way of flexibility in comparison to traditional stocks and shares.

This is because:

  • You can apply leverage, meaning that you can trade with more money than you have in your brokerage account
  • You can choose from a buy or sell order, meaning that you can profit from a market irrespective of which way it moves
  • In most cases, you will benefit from commission-free trading online
  • Spreads are usually very competitive

Futures Trading

If you have a bit of online trading experience under your belt, you might want to consider futures. For those unaware, futures allow you to speculate on the future value of an asset without you immediately taking ownership. In this sense, futures are somewhat similar to CFDs.

This is because futures contracts can be traded with leverage, and you have the option of going long and short on the asset. With that being said, the difference between the two is that futures contracts also have an expiry date. CFDs never expire, so in theory, you can keep your trading position open for as long as you wish.

  • Futures contracts typically have a time-frame of 3 months. Upon expiry, the contract is settled at the ‘strike price’
  • The ‘strike price’ is the price that the holder of the futures contract will need to pay when they expire. This will be predecided.
  • For example, let’s suppose that a 3-month gold futures contract has a strike price of £1,400
  • You buy 10 contracts, taking your total stake to £14,000
  • When the futures contracts expire in 3 months time, the value of gold is £1,800
  • This means that you get to sell each contract at a price £400 higher than the strike price (£1,800 – £1,400)
  • With 10 contracts in hand, you made a total profit of £4,000 (10 x £400)

Much like CFDs, futures contracts can be bought and sold on virtually any asset class. With that being said, they are more suited to institutional investors, as futures are typically listed on derivatives exchanges such as the Chicago Mercantile Exchange (CME). They also demand much larger minimum investment amounts. As such, you are best advised to trade CFDs as opposed to futures if you are a UK retail client.

Options Trading

There is often a misconception that futures and options are the same. Although there are a lot of similarities, the key difference is as follows:

  • Those holding a futures contract on the expiry date have an obligation to buy or sell the asset
  • Those holding an options contract on the expiry have the right, but not the obligation, to buy or sell the asset

As we explain shortly, options allow you to access a financial market without having to invest the full amount. Instead, you will need to contribute something known as a ‘premium’, which is like an upfront security deposit. The most you can lose from an options trade is the premium that you initially paid. This means that you can trade in a low-risk, high-reward environment.

Options trading is actually something best left to those that have experience in the space. It’s a lot more complex than simply buying or selling an asset. Nevertheless, we’ll run you through a few quick examples to help clear the mist.

  • Let’s suppose that you want to access an options contract on Nike shares
  • The current share price of Nike is $85
  • The options contract has a 1-month expiry, with a strike price of $90
  • Your job as a trader is to speculate whether you think the price of Nike shares will be higher or lower in 1-month
  • If you think the price will be above $90, you will be purchasing a ‘call’ option
  • If you think the price will be below $90, you will be purchasing a ‘put’ option

But, in order to access the above market, you will need to pay a premium. As noted above, this is like a non-refundable security deposit. There is no hard-and-fast rule as to how much you will pay via the premium, however, this often averages 5%-10%.

  • Let’s say you decide to purchase call options on Nike as you believe the stock price will increase
  • You pay a premium of $4.50 per contract to access the market
  • Next, you decide to buy 100 contracts, which takes your total stake to $450
  • When the options contracts expire in 1-month, Nike shares are priced at $100
  • This is $10 above the strike price of $90 – this means you make $10 for each contract held
  • You also need to subtract the premium that you paid, which is $4.50
  • That leaves you with a net profit of $5.50 per contract
  • You have 100 call contracts in total, this takes your overall profit to $550

As you can see from the above, there is much to take into account when engaging with options trading in the UK. The good news is that once you get your head around how things work, options allow you to target large gains without risking too much capital.

What Assets Can You Trade in the UK?

So now that we have explained how CFD, futures, and options trading work, we are going to discuss some of the many asset classes that you can trade online.

Stock Trading

stock tradingAs the name suggests, online stock trading is the process of buying and selling shares. Before we go any further, it is important to understand that there is a clear difference between trading stocks and investing in shares.

  • The traditional process of investing in shares means that you own the underlying asset. In most cases, you will hold onto the shares for a number of years, collecting dividends along the way. You will remain a stockholder until you sell the shares back to cash.
  • On the other hand, stock trading is a short-term trading strategy. The shares are backed by CFDs, meaning that you do not own the underlying asset. Instead, you will be speculating on the future price of the stocks, looking to profit off of short-term price movements.

With that in mind, stock traders might place dozens of buy and sell positions throughout the trading week. Instead of targetting double-digit gains over several years, they will look to make ultra-small margins. Crucially, a stock trader might hold on to a position for a number of minutes, hours, or days – but rarely more than a week.

In terms of what stocks you can trade, the possibilities are virtually endless. After all, you will be trading stocks via CFDs. As we explained earlier, CFDs are merely tasked with tracking the value of an asset – which in this case is the current market price of the stock. With this in mind, online stock trading gives you access to dozens of domestic and international marketplaces.

To name a few, these include:

  • London Stock Exchange (UK)
  • NASDAQ (US)
  • New York Stock Exchange (US)
  • Tokyo Stock Exchange (Japan)
  • Frankfurt Stock Exchange (Germany)
  • Sydney Stock Exchange (Australia)
  • Johannesburg Stock Exchange (South Africa)
  • And many more!

As always, it’s best to check whether or not your stock broker supports the stock exchange that you want to trade, before opening an account.

Note: Some CFD providers allow you to earn dividends when you trade stocks. You will need to be ‘long’ on the stock, meaning that you are speculating on the value going up. When the respective company distributes the dividend, your CFD account balance will be positively adjusted. In turn, those that are short on the stock will have their account negatively adjusted. 

Indices Trading

Indices tradingIndices (more commonly referred to as ‘indexes’ in the UK) allow you to speculate on the future value of a wider stock market. For example, let’s suppose that you want to speculate on the value of the UK stocks market going down in value.

In order to do this, you could place a short-sell order on the FTSE 100 – which is the leading UK index. Over in the US, you have indices such as the S&P 500, Dow Jones 30, and NASDAQ 100.

Either way, indices will contain dozens – if not hundreds of individual stocks. The stocks are then weighted to reflect the market capitalisation of each company. For example, the FTSE 100 contains the 100 largest stocks operating on the London Stock Exchange.

By trading the FTSE 100 via an index, you are speculating on whether you think the wider markets will increase or decrease in value. This offers a more risk-averse way of trading the stock markets, as you are never over-exposed to a single company.

Forex Trading

The foreign exchange (more commonly referred to as ‘forex’ or ‘FX’) market is the largest financial arena in the world. The marketplace place sees traders of all shapes and sizes buy and sell currency ‘pairs’.

For example, if you wanted to trade the British pound against the Euro, the respective pair would be GBP/EUR. The two currencies within the pair will always have an exchange rate, which changes on a second-by-second basis.

  • For example, let’s suppose that GBP/EUR has a current market price of 1.12
  • If you think that the exchange rate will increase in the short-term, you will need to place a buy order
  • If you think that the exchange rate will decrease in the short-term, you will need to place a sell order

In total, there are more than 100 forex pairs that you can trade, and from the comfort of your home, though the availability of these depends on your chosen forex broker. These pairs are typically split into three main categories – majors, minors, and exotics.

  • Major Pairs: Major pairs will always contain the US dollar alongside a major currency like the British pound, Japanese yen, or Swiss franc. These pairs are the most traded globally, meaning that you will benefit from tight spreads and high liquidity levels.
  • Minor Pairs: Minor pairs will contain two strong currencies, but never the US dollar. Much like their major pair counterparts, they also benefit from tight spreads and high liquidity levels.
  • Exotic Pairs: Exotic pairs will contain one strong currency (like the Euro) and one emerging currency (for example; the Turkish lira). Because emerging currencies are much more volatile, your profits and losses are likely to be much larger in comparison to majors and minors. As such, newbie traders are advised to avoid exotic pairs.

One of the most appealing aspects of forex trading is that the markets operate 24/5. There is also trading activity over the weekend, albeit, volumes are much smaller.

Commodity Trading

Much like the forex space, trillions of pounds worth of commodities change hands each and every day. For those unaware, commodities are typically hard assets that have intrinsic value. This value is determined by supply and demand, which shifts on a second-by-second basis. As such, commodities are highly conducive for online trading in the UK.

Online brokerage firms will typically split their commodity trading arena into three segments – hard metals, energies, and agricultural products.

  • Hard Metals: Gold, Silver, Platinum, etc.
  • Energies: Oil, Natural Gas
  • Agricultural Products: Wheat, Corn, Sugar, Orange Juice, etc.

Once again, commodity trading is made possible to retail investors through CFDs. After all, how else would you buy and sell gold on the go?

Let’s look at a quick example of how a commodity trade would work in practice:

  • Let’s say at $50 per barrel, you think that oil is overpriced
  • You access the market via a CFD broker
  • You place a £500 sell order on oil because you think the price is going to decrease
  • A few hours later, the price of oil goes down to $45 per barrel
  • This represents a loss of 10%
  • But, as you went short on the market, you actually made 10%
  • On a stake of £500, you made a profit of £50

As you can see from the above example, it doesn’t matter what the base currency is when you are trading commodities. On the contrary, the best CFD brokers active in the space allow you to access thousands of financial markets – irrespective of what currency you are depositing in.

Note: Commodity ‘trading’ is best suited for short-term trading. As we explain in more detail later on, this is because CFDs attract overnight financing fees. This means that you will pay a fee for each day that you keep your position open. With that said, if you want to invest the long-term value of a commodity like gold or oil, you are best advised to invest in an ETF.

Cryptocurrency Trading

Bitcoin tradingBitcoin, the world’s first and most valuable cryptocurrency, was launched in 2009. It is now the driving force behind a multi-billion pound crypto marketplace.

Put simply, the cryptocurrency trading space works much the same way as forex, except for the difference that you will be taking a view on the future value of a cryptocurrency pair.

Much like traditional currencies, the value of a cryptocurrency will change on a second-by-second basis, in-line with demand and supply.

You typically have two options when it comes to trading cryptocurrencies; crypto-to-fiat pairs and crypto-cross pairs.

Crypto-to-Fiat Pairs

Here you will be trading a cryptocurrency against the value of a ‘fiat’ currency (real-world money such as the British pound or US dollar).

  • Let’s suppose that you wish to trade Bitcoin against the US dollar. The pair in question is BTC/USD
  • The pair is priced at $10,000 and you think it’s undervalued
  • As such, you place a £500 buy order
  • A few days later, BTC/USD increase to $11,000 – representing a 10% upswing
  • You’ll be happy with your profits and can cash out your gains by placing a sell order
  • On a stake of £500, you made £50

The vast majority of crypto-to-fiat pairs are priced in the US dollar. This is much the same as commodities like gold, silver, and oil.

Crypto-Cross Pairs

Crypto-cross pairs will contain two competing cryptocurrencies. For example, by trading BTC/ETH, you are speculating on the exchange rate between Bitcoin and Ethereum.

  • If BTC/ETH is priced at 25.50, this means that you are getting 25.50 Ethereum for every 1 Bitcoin
  • The investment process works much the same as crypto-to-fiat pairs
  • This is because you need to decide whether you think the crypto-cross pair will go up or down in value

Crypto-cross pairs are somewhat complex to trade, as you don’t have a real-world currency like the US dollar to quantify gains and losses. After all, you will at some point need to convert your cryptocurrency back to fiat money when it comes to making a withdrawal. As such, if you like the sound of cryptocurrency trading online, you are best advised to stick with crypto-to-fiat pairs.

Crucially, many of the best online trading platforms in the UK will now allow customers to trade cryptocurrencies via CFDs. This is much more beneficial than using a cryptocurrency exchange, as you will benefit from the regulatory protections of a fully-licensed broker. You may benefit from commission-free trades and tighter spreads too.

Binary Trading

If you have a much larger appetite for risk, you might want to consider binary trading.  The idea is somewhat similar to traditional CFD trading, insofar that you need to determine whether you think the asset will increase or decrease in value.

However, binary trading is arguably more aligned with gambling, because you either make a profit or lose your entire stake. Each binary trading market will have a time-frame attached to it. This might be days, hours, or even minutes.

  • For example, you might want to take a position on whether the price of Apple shares will be above or below $400 in the next 2 hours.
  • Each market will offer fixed-odds on the outcome.
  • For example, you might win 80% of your stake if you predict correctly.
  • So, if you stake £200 on Apple shares increasing, and you are correct, you would win £160.
  • If your prediction is incorrect, then you will lose your entire £200 stake.

With this mind, binary trading is super high-risk, even though the space is huge in terms of volume.

How to Make Money from Online Trading in the UK

Make money from online tradingIt goes without saying that the overarching objective when trading online is to make money. After all, you will be risking your own capital.

As we have discussed throughout our guide, the way that you can achieve this goal is by correctly speculating on the future value of an asset.

There is much to learn when it comes to UK trading. The majority of online brokers will provide their clients with a range of order types to choose from. We’ve compiled a list of the key orders, with a brief explanation.

  • Buy/Sell Order: Irrespective of the asset class, you will always need to decide between a buy or sell order. The only exception to this rule is when engaging in options trading. In this case, you will have to select from a put or call. Nevertheless, if you think that the asset value will increase, you’ll be placing a buy order. If you think the opposite, it’s a sell order.
  • Limit/Market Order: You then need to select from a limit or market order. A limit order allows you to set the exact price you want your trade to be executed at. For example, if IBM shares are priced at $100 but you want to enter the market at $102, you will need a limit order. If you want to enter the buy/sell position at the current price, you’ll need to select a market order.
  • Stop-Loss/Take-Profit Order: Setting up a stop-loss order allows you to mitigate your losses. For example, you might want to exit your IBM position when the order is at a 5% loss. When the respective price is triggered, the order will be closed by the broker automatically. Take-profit orders work in the same way but seek to lock-in profits as opposed to losses.

Once you have set up the above orders, your trade will be executed. By setting up stop-loss and take-profit orders, there is nothing more to do. This is because your position will be closed automatically when one of the aforementioned orders is triggered.

Calculating Profits and Losses

When it comes to calculating your profits and losses, there are several ways of doing this. In our view, the easiest way is to calculate the price movement in percentage terms, and then multiply that against your total stake.

For example:

  • Let’s suppose that you place a £1,000 buy order on GBP/USD. If the pair increases by 5%, you have made a profit of £50 (£1,000 x 5%)
  • Similarly, if the pair decreased by 10%, then you’ve lost £100 (£1,000 x 10%).

It doesn’t matter what asset class you are trading, as the process of calculating profits and losses in this manner remains constant.

For example:

  • Let’s suppose that you place a £500 sell order on the S&P 500. If the index goes down by 2%, then you’ve made a profit of £10.
  • If you were to place a £400 buy order on Apple stocks, and the stocks increase by 10%, you would make a profit of £40.

Leverage

Whether you’re looking to trade stocks, indices, commodities, forex, or any asset class for that matter, you will be targeting small margins. This is because online traders will rarely keep a position open for more than a day. For example, if the trader finishes the day 1% in the green, this would be viewed as a successful day in the office.

  • On the flip side, such small margins can make online trading unviable, especially if you don’t have a significant amount of capital at your disposal.
  • For example, it’s all good and well finishing the trading day with a 1% profit. But if you only have £1,000 in capital, this means that you have made just £10.

This isn’t going to be enough to cover a part-time salary, let alone your day-to-day expenses. With this in mind, online traders will typically make use of leverage. This means that you are able to trade with more money than you have in your account: you are borrowing from the broker.

  • Leverage is usually displayed as a ratio, such as 1:2, 1:5, 1:10, and so on.
  • In simple terms, if you applied leverage of 1:10 on a trade, this means that your profits and losses will be multiplied by a factor of 10x.
  • As such, a profit of £10 would be amplified to £100.

You do, however, need to tread with caution when using leverage. After all, your losses will also be amplified by your chosen multiple.

Trading Strategies

If you want to maximise your chance of getting rich by trading forex or any other form of trading, it’s vital to have a sound strategy.

Successfully speculating on the future value of an asset is no easy feat. If it was, we would all be doing it. As such, it is important that you learn and deploy a trading strategy that works for you. There are many trading strategies in this respect. One of the most commonly used is that of day trading.

This is where you will be placing several ‘buy’ and ‘sell’ positions throughout the day, with the view of making small, but frequent gains. In most cases, day traders will close a position before the respective trading session closes. This ensures that they avoid overnight financing costs – which can eat into trading profits.

day trading strategy

As day trading involves keeping positions open for a short period of time, the main focus will be on the technical analysis. That is to say, the trader will perform advanced chart analysis to find pricing trends. These trends will then influence the trader’s decision-making process.

As you might have guessed, being able to read charts is a skill that can take many years to master. This is why it is worth considering a signal service. This is where a provider will send you trading suggestions. The underlying technology generating the data is typically backed by AI and machine learning. The software can scan the markets 24/7.

Other trading strategies that are popular with seasoned investors are as follows:

  • Swing Trading: Swing trading allows the trader to keep the position open for a number of days or weeks.
  • Breakout Trading: When an asset ‘breaks out’, it means that it has broken through a key support or resistance line. In doing so, the asset will typically move up or down in a parabolic manner.
  • Scalping Trading: Scalping is the process of targetting ultra-small gains when an asset is trading in a tight range.

There are many other strategies that can help you become a better trader. As such, spend some researching a strategy that best meets your long-term investing goals.

Trading Fees

UK online trading platforms will always charge a fee of some sort. After all, they are in the business of making money. There are many fees that you need to be aware of when trading online, which we outline in more detail below.

Commission

Some online trading sites will charge you a commission when you enter a buy or sell position. This will normally be a percentage fee, multiplied against your order size.

  • For example, if you stake £500 and the broker charges 1%, you will pay a commission of £5.
  • You will need to pay this when the order is initially placed, and again when you exit the position.

With that being said, the best online trading platforms allow you to buy and sell assets on a commission-free basis. This is especially the case when trading CFDs, not least because the underlying asset does not exist.

Spreads

Even commission-free trading platforms charge an indirect fee known as the ‘spread’. This is simply the difference between the buy and sell price of an asset. For example, if the buy price of Facebook stocks is $350 and the sell price is $348, the spread is 2. On UK platforms the spread will usually be expressed as the bid-offer (buy-sell prices) spread. In the US the convention is ‘bid-ask’ but means exactly the same thing.

It’s best to view the spread in percentage terms, as this lets you know exactly what you are paying. If the spread was 0.5%, for example, then you would need to make at least 0.5% in gains to break even. As such, the wider the spread, the more you will need to meet to get your position out of the red.

When trading forex and CFDs, brokers typically display their headline spreads in ‘pips’. For example, if the buy price on GBP/USD is 1.2108 and the sell price is 1.2109, then spread is 1 pip.

Overnight Financing

As we briefly mentioned, CFD instruments will usually attract overnight financing fees. This is like an interest fee that is charged by the broker, not least because CFDs are leveraged products.

This is why seasoned day traders prefer to close a position before the trading session ends, as it ensures they avoid overnight financing. The fee itself is based on an annual percentage rate, which is then charged on a day-to-day basis.

The Best Trading Platforms of 2020

If you want to trade assets online, you will need to find the platform that best meets your needs. There are hundreds of platforms active in the online space – some good, some bad, and some outright ugly.

Some of the most important factors that you need to look out for when choosing a UK trading platform are:

  • Regulation: If you’re based in the UK, you’ll want to ensure that your chosen trading platform is licensed by the FCA.
  • Tradable Assets: You need to ensure that the platform offers your preferred asset class – such as stocks or forex.
  • Payments: Explore what deposit and withdrawal methods the broker supports.
  • Commissions and Spreads: You’ll want to keep your trading costs to a minimum, so check what commissions and spreads are charged.
  • User-Friendliness: If you’re a newbie trader, you’re better off using a platform that is suitable for first-timers.

It can be very time-consuming to research a broker, so we’ve put together a small selection of platforms that are popular with UK traders.

1. eToro – Overall Best Trading Platform in the UK

eToro is a hugely popular online broker that offers most of the asset classes discussed on this page. This includes stocks, indices, commodities, cryptocurrencies, and forex. eToro is often the go-to trading platform for newbies, as it’s relatively simple to use.

All you need to do is open an account, deposit some funds, and determine which asset you wish to trade. Everything is laid out clearly so that inexperienced traders do not feel overwhelmed. Irrespective of which asset you decide to trade, eToro does not charge any commissions. Spreads are competitive too, and there are no monthly fees to contend with.

eToro also allows you to apply leverage, which is capped at 1:30 for UK retail clients. The specific amount that you get will depend on the asset you are trading. eToro also offers a feature that allows you to mirror the buy and sell positions of an expert trader. For example, if you want to trade forex, but you don’t know where to start, you can simply copy an experienced currency trader. This allows you to access your desired marketplace in a passive manner.

All eToro markets can be traded via the main desktop website, or through a dedicated investment app. In terms of the specifics, eToro accounts take just minutes to open. You will need to meet a $200 minimum deposit, which you can do with a UK debit/credit card, e-wallet, or bank account.  All GBP deposits come with a 0.5% conversion fee, and withdrawals cost $5. eToro is licensed by the FCA, CySEC, and ASIC. UK traders will also benefit from the protection of the Financial Services Compensation Scheme (FSCS) of up to £85,000 if the investment platform fails.

eToro fees:

Commission0%
Deposit FeeFree
Withdrawal fee$5
Inactivity fees$10 a month after 12 months inactivity

 

Pros:

  • Super user-friendly online trading platform
  • Buy stocks without paying any commission or share dealing charges
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • 800+ stocks listed on the UK and international markets
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Ability to copy the trades of other users
  • FCA and FSCS protections

Cons:

  • Not suitable for advanced traders that like to perform technical analysis

75% of retail investors lose money trading CFDs at this site

2. Plus500 – Commission-Free CFD Trading Platform

Plus500 is a CFD specialist – with thousands of financial markets on offer. Whether you want to trade stocks, hard metals, bonds, interest rates, or cryptocurrencies – the platform has you covered. All markets at Plus500 can be accessed commission-free, and spreads are competitive.

The platform offers leverage on all CFD asset classes, which again, is capped at 1:30 for UK retail clients. Higher limits are available for professional traders. There are no fees to deposit or withdraw funds, and account minimums start at £100. Supported payment methods include debit/credit cards, bank transfers, and Paypal.

When accessing non-GBP markets, you will pay a small conversion fee of up to 0.5%. Plus500 enable you to trade via its main website, or through a native mobile app. The latter is available to download free of charge on Android and iOS devices. Plus500UK Ltd is authorised & regulated by the FCA (#509909). Its parent company is listed on the UK stock market.

Plus500 fees:

Commission0%
Deposit FeeFree
Withdrawal feeFree
Inactivity fees$10 per quarter after 3 months inactivity

 

Pros:

  • Commission-free CFD platform – only pay the spread
  • Thousands of financial instruments across heaps of markets
  • Retail clients can trade stock CFDs with leverage of up to 1:5
  • You can short-sell a stock CFD if you think its value will go down
  • It takes just minutes to open an account and deposit funds

Cons:

  • More suitable for experienced traders

80.5% of retail investors lose money trading CFDs at this site

 

3. Capital.com – Great Trading Platform for Beginners

Capital.com logoCapital.com is a UK-based online trading platform that is regulated by the FCA. You will have access to thousands of financial instruments across popular asset classes – including but not limited to forex, stocks, indices, and cryptocurrencies.

Fees are very competitive at this trading platform. Not only will you benefit from free deposits and withdrawals, as well as tight spreads. But there are no commissions to pay on any asset class. We like the fact that Capital.com has created a user-friendly trading arena for desktop and mobile that can be used by investors of all skill levels.

The minimum deposit on the platform is currently £20.  You can deposit using various methods such as debit/credit card or e-wallet. Bank transfers, on the other hand, require a minimum deposit of £250.

The AI feature at Capital.com has also proven popular with traders. This will scan the financial markets each morning and suggest potential trading ideas based on your risk profile. Finally, Capital.com offers lots of educational materials on its platform. Once again, this is great for those of you that are looking to learn to trade.

Capital.com fees:

Commission0%
Deposit FeeFree
Withdrawal feeFree
Inactivity fees$10 a month after 12 months inactivity

 

Pros:

  • Trading on hundreds of US and UK shares
  • Educational app to learn how to trade
  • AI assistant identifies your weak points
  • Trade ideas generated daily
  • Excellent charting and analysis interface
  • 100% commission free trading

Cons:

  • Cannot build custom trading strategies

72.6% of retail investors lose money trading CFDs at this site.

4. IG – Trusted UK Trading Platform With 17,000+ Markets

While some trading platforms specialise in one or two asset classes, IG covers virtually every marketplace imaginable. In fact, its every-growing CFD arena now hosts more than 17,000 financial instruments. This includes everything from stocks, commodities and forex, to bonds and hard metals.

Each and every asset can be traded with leverage, with standard UK retail limits in place. Best of all, you will not pay any trading commissions at IG unless you wish to access stock CFDs. If you do, the commission will depend on what stock exchange you are looking to trade on. For example, UK stocks can be traded at a commission of 0.1%, with a minimum fee of £10.

U.S. stocks are priced at $0.02 per share, with a minimum fee of $15. IG offers two platforms for you to choose from. This includes popular third-party provider MetaTrader 4. MT4 is suitable for seasoned online traders that want access to heaps of technical indicators and the ability to install forex robots.

Alternatively, you can also trade on IG’s proprietary platform. IG also allows you to trade via its mobile app, which is available on iOS and Android devices. In terms of safety, IG was launched way back in 1974. Its holds multiple regulatory licenses, including that of the FCA. IG’s parent company is listed on the London Strock Excghage with a multi-billion pound valuation.

IG fees:

Commission0% commission on all CFD instruments apart from shares. Fees vary depending on the exchange.
Deposit FeeFree (0.5%-1% fee on credit cards)
Withdrawal feeFree
Inactivity fees£12 a month after 2 years inactivity

 

Pros:

  • Trusted UK broker with a long-standing reputation
  • Good value share dealing services
  • Leverage and short-selling also available
  • Spread betting and CFD products
  • Access to the UK and international markets
  • Great research department

Cons:

  • A minimum deposit of £250
  • US stocks have a $15 minimum commission

 

How to Trade Online Today

So now that you are armed with all of the required tools to succeed in the world of online trading, we are going to show you how to get started with a brokerage account. The steps outlined below are based on FCA-regulated trading platform eToro, a platform which gives you access to thousands of assets on a commission-free basis.

Step 1: Open an Online Trading Account

Head over to the eToro website and open an account. You will need to provide some personal information and contact details. You’ll also need to verify your mobile number and email address at this stage.

eToro sign up

As eToro is regulated by the FCA (alongside various other tier-one licensing bodies), you will need to verify your account. You can do this by quickly uploading a copy of your passport/driver’s license and a proof of address.

Step 2: Deposit Funds

You will now be asked to make a deposit. Supported payment methods include:

  • Debit Card
  • Credit Card
  • Bank Transfer
  • Paypal
  • Skrill
  • Neteller

You’ll need to meet a minimum deposit of $200 – which is about £160. All deposits will incur a 0.5% currency conversion fee.

Step 3: Select Asset to Trade

eToro hosts thousands of assets on its platform, so have a browse to find a market that interests you. This covers stocks, cryptocurrencies, indices, ETFs, forex, and commodities.

If you know which asset you wish to trade, enter it into the search box at the top of the screen.

Step 4: Set Up a Trading Order

Once you have found an asset that you wish to trade, you will need to set up an order.

How to trade on eToro

As we covered earlier, this includes a:

  • Buy/Sell Order
  • Market/Limit Order
  • Stake
  • Leverage
  • Stop-Loss Order
  • Take-Profit Order

Once you have filled in the necessary trading conditions, confirm the order. Your position will remain active until you manually close it, or your take-profit/stop-loss order is triggered.

Conclusion

Online trading in the UK is no longer reserved for large-scale investors and big banks. On the contrary, anyone with an internet connection can now buy and sell assets from the comfort of their home.

In fact, you can even trade via your mobile phone. With that said, it can take many months before you are comfortable trading online with real-world money. As such, it might be a good idea for you to start off with a demo account.

eToro – our top-rated FCA broker, offers all UK traders a $100,000 paper money balance that gives you access to live market conditions. The platform offers thousands of instruments and charges no trading commissions whatsoever. Best of all, you can get started with an account in just minutes by clicking on the link below!

eToro – Best Trading Platform in the UK

75% of retail investor accounts lose money when trading CFDs with this provider.

 

FAQs

How much do you need to trade online?

This depends on your choice of broker. Platforms like Capital.com allow you to get started with a deposit of just £20, which is great for those that are new to trading.

How do you make money from online trading?

The overarching objective is to speculate on whether the price of an asset will increase or decrease in value. If you speculate correctly, you make money. The amount you make is dependent on several factors - such as the size of your stake and what percentage the asset increased or decreased by.

Are online trading platforms regulated in the UK?

Online trading platforms that accept UK traders are required to hold a license with the FCA. If it doesn't, avoid it. Most platforms are also partnered with the FSCS, meaning that your funds are protected up to the first £85,000.

What assets can you trade online?

You can now trade thousands of assets from the comfort of your home. This includes everything from stocks, gold, oil, Bitcoin, and more!

How do you add funds to an online trading platform?

Online trading platforms offer a variety of deposit methods. This often includes debit/credit cards, e-wallets, and a bank transfer.

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All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Kane Pepi

About Kane Pepi

Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Academically, Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and he is currently engaged in a Doctorate Degree researching the money laundering threats of the blockchain economy. Kane is also behind peer-reviewed publications - which includes an in-depth study into the relationship between money laundering and UK bookmakers. You will also find Kane’s material at websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi, Learnbonds, and the Malta Association of Compliance Officers.