Please remember that when you trade, your capital is at risk. More than 65% of retail investor accounts lose money when trading CFDs with most of the providers below. You should consider whether you can afford to take the high risk of losing your money before moving forward.

Best Day Trading Platforms

Updated On: Jun 17, 2024
Most of the companies featured here are our partners, who pay us to include them in our articles. These payments influence which companies we write about and where and how they appear on a page. However, they do not influence our opinions. Our product reviews remain honest, independent, and unbiased.
Halimah Omogiafo
Author: Halimah Omogiafo
X (Twitter)
Best Day Trading Platform UK


What comes to mind when you hear the term “day trading”? You probably picture an investor sitting in front of four computer screens covered in charts, frantically buying and selling stocks across three different trading software, fuelled by coffee and Deliveroo, so as not to miss a minute of the market action.

The reality might not be quite as dramatic for many, with the types of investors who pursue a day trading strategy as varied as you’d find across any other kind of investment plan.

Day trading can be an incredibly complex and dynamic way to approach investing, but as with any form of investing strategy, it can be implemented in many different ways. While it takes a solid base of knowledge on the fundamentals of markets, it is possible to make money from day trading for those with the right education and temperament.

The temperament, or mental approach, to day trading is one of the critical aspects. Anyone can learn day trading principles, but only some have the discipline to stick to the plan when the markets throw out curve balls. 

In this article, we are going to break down exactly how day trading works in the UK and everything you need to know to learn day trading. We will also share some of the best day trading platforms in the UK, so you know the best places to start your trading journey.

Best Day Trading Platforms in the UK

We’ve compiled a list of the best day trading platforms in the UK. These are our top day trading apps for buying and selling UK and overseas stocks and shares, exchange-traded funds (ETFs), investment trusts (ITs), contracts for difference (CFDs), foreign exchange (forex), options, and other trading products.

Please remember that when you trade, your capital is at risk. More than 65% of retail investor accounts lose money when trading CFDs with most of the providers below. You should consider whether you can afford to take the high risk of losing your money before moving forward.

The platforms listed below are authorised and regulated by the UK’s financial watchdog, the Financial Conduct Authority (FCA).

Here are the best day trading platforms in the UK:

Pepperstone - Low cost; Speedy execution; 1,200+ Instruments

Pepperstone logo
Annual Platform Fee
Dealing Fee
From 0.10% (UK Stock CFDs)
From 0.6 pips (Forex)
Regular Investor Fee
Stock CFDs, Index CFDs, ETF CFDs, Forex, and Commodities.

Pepperstone is a CFD and forex broker that allows you to trade a wide variety of instruments, including forex, indices, stocks, ETFs, commodities and other assets via contracts for difference (CFDs). The Pepperstone platform boasts low-cost spreads, fast execution speeds and access to over 1,200 trading instruments. The Pepperstone CFD trading accounts allow a minimum trading size of 0.01 lots and a maximum of 100 lots. Retail traders can access leverage up to 30:1 and over 60 currency pairs.

Pepperstone also allows scalping, expert advisors, hedging, and news trading. With Pepperstone, you can trade and enjoy the seamless creation of advanced trading strategies via some of the most popular and powerful trading software in the world, including TradingView, MetaTrader 4 (MT4), MetaTrader 5 (MT5), CTrader, DupliTrade (for social and copy trading), and Capitalise AI (for code-free trading automation). The Pepperstone platform is suitable for both beginners and advanced traders. It is especially suitable for professional traders who want to take advantage of higher leverage. Pepperstone also has a suite of educational materials to help traders at every level.

It is entirely free to open an account with Pepperstone, and all registered users gain access to a free demo account, which you can use to practise CFD trading until you become confident. On Pepperstone, the spreads, which function as trading fees for CFD brokers, start at 0.6 pips for forex CFDs, 0.4 for index CFDs, 0.05 for commodity CFDs, and 0.10% per side for UK share CFDs. Pepperstone also charges a swap rate (overnight fee) for holding CFD positions overnight. Other fees apply. Pepperstone does not offer an ISA or SIPP.

Please note: When you invest, your capital is at risk. Between 74 and 89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and can afford to take the high risk of losing your money.

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eToro - 0% Commission on real stocks; 4,500+ Instruments

eToro Logo
Annual Platform Fee
Dealing Fee
Regular Investor Fee
Stocks, ETFs, Stock CFDs, Index CFDs, ETF CFDs, Forex, and Commodities.

Earn up to 5.3% annual interest on uninvested cash

eToro is a multi-asset trading platform that offers both investing in stocks and cryptoassets, as well as trading CFDs. With eToro, UK traders have real-time access to thousands of stocks, ETFs, indices, commodities, forex, cryptocurrencies, and NFTs from top exchanges worldwide. Catering to beginners and expert traders, eToro provides an impressive range of fundamental and technical analysis tools, including market news, economic data, social media trends, news sentiment trends, and advanced charting tools. ProCharts, a professional-grade technical analysis tool available on eToro, allows users to compare charts from different financial instruments and time frames. eToro also offers risk management tools, such as Stop Loss, Take Profit, and Trailing Stop Loss, to help you better manage your positions and protect your investments. Stop Loss and Take Profit are not guaranteed.

For customers who prefer ready-made investment portfolios, eToro has over 40 fully allocated, balanced investment portfolios, focusing on market segments you can understand and relate to. Some of the portfolios include MetaverseLife, BigTech, GoldWorldWide, Vaccine-Med, BitcoinWorldWide, Diabetes-Med, Driverless, and GigEconomy. These portfolios are a grouping of several assets, such as stocks, cryptocurrencies, ETFs, and even people, bundled together based on a predetermined theme or strategy. eToro also offers Copy Trading, a unique feature that allows everyday investors to copy the trades or investments of top-performing traders on the eToro platform. Anyone can copy trades on eToro; likewise, anyone can give others access to copy their trades. If you are an expert trader approved to participate in eToro’s Popular Investor Program, where others copy your trades, you will be eligible to receive monthly earnings.

It is entirely free to open an account with eToro, and all registered users receive a US$100,000 demo account for free, which you can use to practise trading until you become confident. Trading on eToro occurs in USD, so a currency conversion fee will apply if you deposit or withdraw in a currency other than USD. Withdrawals incur a fee of US$5 (£4), and the minimum withdrawal amount is US$30 (£24). For UK customers, eToro offers an eToro Money app that allows you to convert your GBP to USD free of charge, thereby reducing your foreign exchange costs. eToro does not offer an ISA or SIPP.

Please note: Your capital is at risk. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Additionally, cryptoassets are high-risk investments, and you should not expect to be protected if something goes wrong. Tax on profits may apply. Copy Trading does not amount to investment advice. Other fees apply. For more information, visit eToro.

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XTB - 0% Commission on real stocks and ETFs; 5,600+ Instruments

XTB logo
Annual Platform Fee
Dealing Fee
(+0.5% FX fee on foreign stocks)
Regular Investor Fee
Stocks, ETFs, Stock CFDs, Index CFDs, ETF CFDs, Forex, and Commodities.

Earn up to 5.2% annual interest on uninvested cash

XTB is good for beginners but much better for advanced traders. It is a user-friendly, fully-customisable European trading platform renowned for its extensive CFD and forex trading offerings. XTB provides traders instant access to hundreds of global markets and over 5,600 instruments, including UK and overseas stocks and shares, ETFs, forex, indices, commodities, stock CFDs, and ETF CFDs.

For beginners, XTB offers commission-free fractional stock and ETF investing. This means you pay no dealing fee when you trade or invest in real stocks and ETFs. It also means you can buy tiny fractions of the most expensive American or local stocks with as little as £50. For advanced traders, you’ll enjoy using XTB’s robust in-house trading software, xStation, or popular trading platform, MetaTrader 4 (MT4). xStation by XTB is a powerful trading software available on iOS, Android and desktop devices and suitable for both beginners and advanced traders. The xStation software gives you access to comprehensive charting and risk management tools. With the inbuilt trading calculator, you can easily estimate costs, profits or losses before opening a position, modify stop loss and take profit orders directly on the chart or close all positions with a click of a button. XTB also provides an extensive library of educational materials, including videos, webinars, and courses suitable for both beginners and experienced traders. When you sign up, you will have access to a dedicated account officer who will work with you to help you better understand your needs and how XTB operates.

It is free to open a trading account with XTB, and all users have access to a free demo account with £100,000 of virtual funds that you can use to practise trading and investing until you become confident enough to use real money. Deposits in GBP and EUR are free of charge, but withdrawals below £60 have a £12 processing fee. Real stock and ETF trading is commission-free for monthly turnovers up to €100,000 (£85,000). Transactions above this limit will attract a commission of 0.2% (minimum €10 (£8.50). If you invest in foreign stocks and ETFs, a 0.5% currency conversion fee may apply. Stock and ETF CFD trading are also commission-free. Spreads and margins apply to other products. Inactive accounts attract a monthly fee of €10 (£9). Other fees apply. For more information, visit XTB. XTB does not offer an ISA or SIPP.

Please note: Contracts for Difference (CFDs) are leveraged products and carry a significant risk of loss to your capital, as prices may move rapidly against you, and you may be required to make further payments to keep any trades open. Between 74 and 89% of retail investor accounts lose money when trading CFDs. These products are not suitable for all clients. Therefore, please ensure you fully understand the risks and seek independent advice.

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CMC Markets - 300+ FX pairs; 12,000+ Instruments

CMC Markets Logo
Annual Platform Fee
Dealing Fee
Regular Investor Fee
Stock CFDs, Index CFDs, ETF CFDs, Forex, Options, Commodities, Treasuries, and Spread Bets.

CMC Markets is a CFD, forex, and spread betting platform that gives you access to over 12,000 instruments across a wide range of global financial markets, including forex, options, indices, commodities, shares, ETFs, and treasuries. The platform offers more forex pairs than any other broker listed here. It also offers an enhanced charting experience, allowing users to choose from more than 115 technical indicators and drawing tools, over 70 patterns, and 12 in-built chart types.

Experienced traders and beginners alike will find the platform useful, given its range of tools and resources, including a pattern recognition scanner, advanced order execution, and comprehensive news and analysis from Reuters. These tools are designed to offer quick execution, precise charting, and accurate insights. CMC Markets also offers a premium membership, CMC Alpha, delivering benefits like savings of up to 28% on spreads, a complimentary Financial Times subscription, and interest on uninvested cash. For active traders, a specialised account offering spreads starting from 0.0 pips and fixed low commissions is available.

Opening a live spread betting or CFD account with CMC Markets is completely free, and you can also access numerous tools such as charts, Reuters news, or Morningstar quantitative equity reports at no cost. All registered users receive a demo account with £10,000 of virtual funds, which can be used to practise trading until you are confident to trade with real money. With CMC Markets, the spreads, which function as trading fees for CFD brokers, start as low as 0.7 pips for forex CFDs, 1 point for stock and ETF CFDs (commission fees apply), 0.3 points for commodity CFDs and 0.5 for index CFDs. Holding costs (for trades held overnight, which is essentially a fee for the funds you borrow to cover the leveraged portion of the trade) also apply based on the value and duration of your trade. CMC Markets does not offer an ISA or SIPP.

Please note: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Saxo - Diverse product range; 71,000+ Instruments

Saxo logo
Annual Platform Fee
0.12% - 0.08%
(min €120 (~ £108))
Dealing Fee
0.08% (min. £3) UK Stocks
US$0.015 (min. U$1) US Stocks
Regular Investor Fee
Stocks, Bonds, Funds, ETFs, Investment Trusts, CFDs, Forex, Commodities, Futures, and Options.

Earn up to 3.91% annual interest on uninvested cash

Saxo is the UK division of Saxo Bank, a large European bank that allows you to invest in 71,000+ financial products from stock markets worldwide. With Saxo, you can invest in UK and overseas stocks and shares, bonds, mutual funds, ETFs, forex, CFDs, futures, commodities, and options.

Saxo allows you to invest in one of two ways depending on your investment knowledge: Beginner investors or those who prefer to choose a ready-made portfolio can select from one of the managed portfolios on offer, where Saxo experts navigate the markets and manage your investments on your behalf. The average cost of this managed portfolio is 0.95% per year (including fund costs). Advanced or more confident investors can choose from the range of financial products on offer and build their portfolios themselves. Saxo traders benefit from extensive charting with 50+ technical indicators, integrated trade signals, news feeds and risk-management features via the SaxoTraderGO platform. Advanced traders can access even more sophisticated trading features on SaxoTraderPRO, Saxo Bank’s desktop-only advanced trading platform.

Saxo has different transaction fees grouped into trading tiers. If you plan to trade high volumes, you can upgrade your tier to get lower transaction fees. The Classic tier, which attracts the highest trading fees, costs 0.08% (min. £3) per deal for UK Stocks and US$0.015 (min. US$1) per deal for US Stocks. Other fees apply. Saxo’s suite of products includes a Trading Account, Stocks and Shares ISA and SIPP.

Please note: Capital at risk. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

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Interactive Investor - One free trade per month; 40,000+ Instruments

Interactive Investor
Annual Platform Fee
£60 - £240
(£4.99 - £19.99/month)
Dealing Fee
Regular Investor Fee
Stocks, Bonds, Funds, ETFs, and Investment Trusts.

Earn up to 4.85% annual interest on uninvested cash

Interactive Investor is a subsidiary of wealth management giant Abrdn and the second-largest investment platform in the country. Also well known for its fixed monthly subscription fees (as opposed to annual percentage-based fees like most other investment platforms), Interactive Investor has been providing investment services and financial information to UK customers since 1995.

If you choose to invest with Interactive Investor, you will gain access to over 40,000 investment options, including UK and overseas shares, funds, investment trusts, and ETFs. This is the second-widest choice of UK and international investments offered by an investment platform in the UK. Interactive Investor allows you to build your portfolio in multiple ways depending on your investment goals, attitude to risk and personal preferences. Beginner investors or those who prefer ready-made investments can build their portfolios using Interactive Investor’s Quick-Start Funds, an easy way to start investing where you choose from six low-cost funds prepared by the team of experts at Interactive Investor. Advanced or more confident investors can choose from a wide range of funds and shares and build their portfolios themselves. Interactive Investor gives you access to 17 global stock exchanges, including exchanges in North America, Europe and Asia Pacific. These include markets such as the FTSE 100, FTSE 250, FTSE All-Share, S&P 500, NASDAQ, NYSE, Dow Jones and more. In addition to the above, Interactive Investor offers Japanese, Indian and Chinese shares in the form of American Depositary Receipts (ADRs).

Interactive Investor gives you a free trade every month, which you can use to buy or sell any investment. After that, trades usually cost £3.99. For those investing £50,000 or less, you can sign up for the cheapest plan (Investor Essentials), which costs only £4.99 a month but does not come with the monthly free trade. The platform also offers a free regular investing service that allows you to deposit as little as £25 a month towards your investments without paying a trading fee each time, irrespective of the plan you choose. Interactive Investor also has lots of expert ideas, research and insights, which can be helpful when selecting investments. Interactive Investor’s suite of products includes a Trading Account, Stocks and Shares ISA, SIPP and Junior ISA.

Capital at risk.

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AJ Bell - Low cost; Lots of research; 15,000+ Instruments

AJ Bell Logo
Annual Platform Fee
(max £3.50 per month)
Dealing Fee (Online)
£5 - £3.50
Regular Investor Fee (Online)
£1.50 per deal
Stocks, Bonds, Funds, ETFs, Investment Trusts, and Warrants.

AJ Bell is one of the UK’s largest online investment platforms, and its mission is to make investing as easy as possible for anyone. The platform offers thousands of investment options for the DIY investor, including shares, funds, bonds, investment trusts, ETFs, ETCs, and warrants.

There are multiple ways to get started with AJ Bell, depending on your risk tolerance and investing savviness. Beginner investors or those who prefer to choose a ready-made investment portfolio can get a little, or a lot, of help from AJ Bell’s specialists by selecting one of the investment ideas on offer. Investment ideas are diversified ready-made baskets of investments that you can select based on your personal preference and attitude to risk. There are eight total investment ideas, each built by a specialist team, and you can pick the right one for you depending on whether you are seeking to simply grow your money over time or receive an income whilst still growing your money. Expert investors can take advantage of the stock and fund screeners and complex instruments available on AJ Bell and build their portfolios themselves.

AJ Bell charges an annual platform fee ranging from 0.25% to 0%, depending on the size of your portfolio. Dealing fees for buying and selling investments online are £1.50 for funds and £5 for shares (reducing to £3.50 if there were 10 or more online share deals in the previous month). AJ Bell’s products include a Share Dealing Account, Stocks and Shares ISA, Junior Stocks and Shares ISA, Lifetime ISA, SIPP and Junior SIPP.

Capital at risk.

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Hargreaves Lansdown - Lots of research; 15,000+ Instruments

Hargreaves Lansdown
Annual Platform Fee
‍‍(Fund & Share Account)
Dealing Fee (Online)
£11.95 - £5.95
Regular Investor Fee
£1.50 per deal
Stocks, Bonds, Funds, ETFs, and Investment Trusts.

Hargreaves Lansdown, a FTSE 100 company and the UK’s largest investment platform, is one of the best share dealing accounts in the UK. Although not the cheapest, it compensates with unrivalled stock research and trading tools, prioritising long-term client relationships and financial security. There is almost no stock, fund or investment trust you cannot find on Hargreaves Lansdown, along with detailed information on fund composition, performance data and advanced charting. With Hargreaves Lansdown, you can access over 15,000 instruments, encompassing over 2,500 funds, UK and overseas shares, bonds, ETFs, ETCs, investment trusts and more.

With Hargreaves Lansdown, you can build your investment portfolio in three ways. You can pick your own investments to match your values and goals, select ready-made portfolios, or pay a financial adviser to choose investments for you. The ready-made portfolios can be used as all-in-one investments. Pick one from the different risk levels, and you are good to go. You will still have to monitor your portfolio as with any other investment. If you pay for financial advice, the specialist investment adviser will recommend a suitable portfolio of investments for your goals and ensure that your portfolio is cost-effective, well-balanced, diversified, and ideal for your stage in life. Advanced or more confident investors who want to pick their own investments can choose from a wide range of funds, shares and other investments and build their portfolios themselves.

Hargreaves Lansdown does not charge a platform fee on its Fund and Share Account but charges 0.45% (capped at £45) a year on its ISA and 0.45% (capped at £200) a year on its SIPP. It offers most products, including a Fund and Share Account, Stocks and Shares ISA, Lifetime ISA, Junior ISA, and SIPP. These services are intended for investors who are happy making their own decisions.

Please note: Your capital is at risk. The fees quoted here are not exhaustive. Other charges apply.

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What Is Day Trading?

Day trading involves actively buying and selling securities within the same day, with the goal of profiting from short-term price changes. It is possible to day trade many different assets, but not every type of investment makes it possible to day trade.

The most common types of investment for day traders are the public stocks in companies like Apple, Tesla, BP and HSBC. Other investors will day trade markets such as foreign exchange as well as more complex investments such as options and warrants.

Day Trading Buy/Sell Table
An example of a day trader’s schedule.

The key factor is that day traders do not hold their positions past the close of the day. Regardless of whether they have made gains or lost money, they will cash out all of their holdings by the close of day and move all of their funds back to cash overnight.

Because of this, day traders stick to assets with a high level of liquidity. This means that there are always lots of buyers in the market for the investments, so they can always sell them when needed.

For the purpose of this article, we’re going to focus on day trading stocks, but the concepts are the same for other investments like options and foreign exchange. Some organisations, such as banks and hedge funds, also employ day traders, but we will only be talking about day trading your own money for your own gains.

The aim of day trading is to take advantage of the daily fluctuations in a stock price. By doing this, traders can make gains even if the overall movement of the stock is down over the course of the day.

Day Trading Buy/Sell Chart
A day trader attempting to capitalise on short-term price changes.

How to Become a Day Trader

You are officially a day trader if you buy a stock in the morning and then sell it before the market closes that day. 

While that is technically true, when most people ask about becoming a day trader, they are referring to using it as an ongoing strategy to make gains and potentially even generate a full-time income from the practice.

Becoming a full-time day trader requires a high level of education, experience, focus and mental strength. It can be difficult to generate consistent returns over the long term with this strategy, and it comes with a high amount of risk. That is not to say it is not possible, but it is difficult.

To day trade properly, there are several different steps a would-be Wolf of Wall Street needs to take.

1. Learn the Markets

Simple to say, challenging to do. Day traders need to be able to understand and analyse a huge amount of information in a very short space of time. To be able to do this, they need to have a deep understanding of markets and how they behave.

This can allow traders to identify patterns, focus on important information and dismiss unimportant details. Learning the markets to this extent takes time and practice. 

You can learn day trading in many different ways. Articles like this are a great place to start, as well as reading investing books and watching online videos. You can begin to learn day trading with small amounts of money, too. Some platforms, such as eToro, allow you to trade with virtual money if you’re not yet ready to commit your real money.

2. Decide on Your Trading Strategies

Once you are confident in your abilities, you should start to see which trading strategies work best for you. There are many, many different strategies that can be utilised for day trading.

Some of these will focus purely on technical analysis, which bases investment decisions on the movement of the stock price on a chart. There are well-known patterns that can form through a stock’s price movement, which can give traders clues as to what might happen next.

Other traders focus more on fundamental analysis, keeping a hawk-eye on social media and the news cycle in an attempt to take advantage of news and announcements that could impact a stock price.

Finally, some traders use a combination of these strategies or something else entirely, such as AI-based algorithmic trading. We cover trading strategies in more detail below. 

3. Find Sources for Technical and Fundamental Analysis

To become an excellent day trader, you need to be on top of both the technicals and fundamentals of each stock you are trading.

The best places to find charts for technical analysis are on charting websites such as TradingView, Investors Business Daily, and Nasdaq.

The best places to find data for fundamental analysis and macroeconomic updates include news sites such as CNBC, The Financial Times, and Investors Business Daily.

Twitter accounts such as Watcher.Guru, Unusual Whales, and Market Watch are also very helpful.

Finally, email newsletters such as the daily one by Stocktwits are simply excellent.

4. Choose a Trading Platform

Now that you have the knowledge and the strategy, you need to get the right tools. For day traders, this is all about speed. In order to be able to execute trades in the most efficient way possible, you need a platform that provides the most up-to-date pricing information and one that can process trades very quickly.

Depending on the strategy that you are looking to use, a trader will most likely have additional requirements from their trading platform. For example, the best platform for day trading with a strategy focused on technical analysis will benefit from the ability to create detailed charts with trend lines and other notations.

The best day trading platform for UK day traders will also be different from the best day trading platform for US day traders or those in Europe. It all comes down to the individual trader and what they need, but luckily, there is a wide range of platforms which should provide something for everyone.

5. Stick to the Rules

Once a trader has done all this and has their strategy in place, the key is to stick to it. Investing can be highly emotional at the best of times, and this is particularly true with an intense, high-paced approach such as day trading.

It is important to review the success or failures of the strategy being implemented, but this should be done outside of trading hours when emotions can be somewhat removed from the process.

Best Markets for Day Trading in the UK

You can technically day trade any asset that allows you to buy and sell it on the same day. That rules out investments such as buy-to-let properties, but there is a wide range of other, highly liquid markets to choose from. 

Here are some of the best markets for day trading in the UK:

1. Stock Market

As we have already mentioned, the public stock markets are where the majority of day trading occurs. Particularly for beginners, the stock market is relatively straightforward to understand, and analysing price movement is simpler than other markets, such as the foreign exchange market.

Companies trading on the London Stock Exchange make the most sense from a time perspective, but many UK day traders like to also operate in the US markets. With the time difference, this can make for some pretty unsociable working hours.

You can day trade individual companies, like BP, Tesco or Apple, or you can day trade total indices, such as the FTSE 100 or the S&P 500. This allows traders to make a call on the overall movement of the market rather than a few specific companies.

2. Foreign Exchange (Forex) Market

Forex markets are very liquid and are a common market for advanced traders. The forex markets operate 24 hours a day (five days a week), so they aren’t specifically able to be “day traded”. However, most traders will simply ensure they do not keep any positions open for longer than 24 hours.

Forex Day Trading Chart
USD to GBP currency exchange.

Forex can be very volatile, and analysis can be more complex than the stock market. This is because, in order to predict the movements of a currency, a trader needs to take into account the whole economic picture of a country rather than simply the impact of the economy on a single company.

3. Derivatives Market

These are investments whose prices are ‘derived’ from another asset but do not involve investment in the asset itself. Some of the most common examples are options, futures, and contracts for difference (CFDs).

These are all different contracts which are based on the price of assets such as stocks or commodities. They will move in relation to the underlying asset and often involve some amount of leverage or borrowing. You can also use derivatives to profit when an asset goes down in value, in what is known as ‘shorting’.

Derivatives can be very complicated, and this, combined with the use of borrowing, means that day trading options and CFDs can be a very risky investment. In the right hands, they can also be very lucrative, but trading this form of asset should be reserved for the most advanced day traders.

Below is an example of how a CFD works, which shows how day traders can profit from both long or short positions, depending on what they buy.

Day Trading CFD/Derivatives Chart
How CFDs work.

Day Trading Strategies

There is no right or wrong strategy when it comes to day trading or any other form of investment plan. Different people will have varying levels of success using different strategies, with the important point being to find the best day trading strategy for you.

Here, we explain a number of the most commonly used day trading strategies:

1. News Trading

This is a form of fundamental analysis because it relies on carefully watching the news cycle to see how new announcements might impact a company or a market. Even with the pace of media, it can take several hours between when something happens to when it becomes live on news websites, TV and radio.

It can be possible to react to the news quickly before it spreads mainstream. This requires lightning-fast decision-making, with the most impactful news likely to spread like wildfire.

Seasoned traders may even be able to predict news that is due to be announced. Certain data or details, such as central bank interest rate decisions or company earnings announcements, have a release date which is announced ahead of time. This can give news traders a chance to make a call on what they think the news is going to say.

For example, if Microsoft is expected to announce a quarterly loss, but the news trader has conducted extensive research and believes they will actually report a profit, they can take their position before the news is announced.

News Trading Chart
News trading.

2. Swing Trading

Day traders who use swing trading love market volatility. They aim to buy and sell throughout the day as the stock or index moves up and down. This strategy can allow traders to make profits in any market because prices seldom move only in one direction for the entire day.

Even on the stock markets’ worst days, there are generally short periods of recovery when the prices rebound, even slightly.

Most swing trading is conducted using technical analysis. This type of research does not consider any fundamental information about a company but rather considers typical patterns that an investment price can follow.

A simple example is a stock bouncing off psychological levels, such as £100 a share. If a stock price is rising within the £90 range, it will often meet what is known as ‘resistance’ at the £100 mark. This is because it is a psychological barrier for many investors, who will set their maximum purchase price at £99 or £100. There is no fundamental reason for this other than the fact that humans prefer round numbers.

Swing Trading Chart
Swing trading.

3. Momentum (Trend) Trading

This form of trading looks to ride longer-term trends within a particular stock or index. While the minute-to-minute pricing of an investment can fluctuate very randomly, over longer periods of time, there are definite trends that develop.

Longer periods of time do not necessarily have to mean years, months or even days, with day traders able to ride hour-to-hour trends before closing out their positions at the end of the day.

Technical analysis plays a big part in short-term trend trading, with day traders needing to keep a close eye on the movement to ascertain whether a trend is continuing or reversing. At any time, an upward trend can break downwards, and a downward trend can break upwards.

Momentum (Trend) Trading Chart
Momentum (trend) trading.

4. Money Flow

This trading strategy looks not only at the price action of a particular security but also at the level of volume being traded. Volume is simply the number of shares changing hands, and it can give an indication as to how sustainable a price move might be.

Money flow is a specific formula that takes the average of the high, low and closing prices and then multiplies that by the daily volume.

A positive number can suggest that the stock price has the potential to move higher, with a negative number indicating that prices could fall. Essentially, it distils demand for the stock based on whether more purchases were made as the price rose or more were made as it fell.

This gives some interesting clues on the overall sentiment of the stock or investment. As with all indicators, money flow should not be taken as gospel and is just one tool that can be used to build an overall strategy.

5. Mean Reversion

The mean reversion trading strategy is a form of day trading where stock traders try to capitalise on extreme changes in the pricing of a particular asset, assuming it will revert to its previous state.

It is based on the theory that stock prices or any other measure of value, such as price-to-earnings (P/E) ratio, will always eventually move back toward the historical mean. The goal is to use technical analysis, such as moving averages, to discover assets whose recent performance has deviated significantly from their historical mean. Traders using the mean reversion strategy will then look to profit from the return back to the asset’s normal trajectory.

Mean Reversion Chart
Mean reversion.

Day Trading Terms

To succeed in day trading, you need to understand the terminology. Here are some important day trading terms to get you started:

  1. Day Trading: Buying and selling an investment such as a stock or a CFD and then selling it before the end of the day.
  2. Bullish: Positive sentiment that suggests prices are going up.
  3. Bearish: Negative sentiment which suggests that prices are coming down
  4. Going Long: Buying a stock or investment in order to profit if the price goes up.
  5. Going Short (Shorting): Buying a derivative linked to an investment in order to profit if the price goes down.
  6. Scaling In/Scaling Out: Making a move in or out of a position in tranches rather than all at once. This can help manage risk.
  7. Margin Call: If a trader’s position goes against them and they are using leverage to invest (such as with CFDs), the lender may request further security (extra cash) to shore up the position. If the trader has no cash to meet the margin call, the lender will sell down the investment at a loss.
  8. Short interest: The percentage of short positions against the total shares on issue. If a company has 10 million units of stock on the market, and there are two million stocks shorted, the short interest is 20%.
  9. Bid Price: The current best offer to purchase a security. For example, at a housing auction, the bid is the current best price to purchase the asset.
  10. Ask Price: The current lowest sale price on offer to sell a security. It is also called an Offer Price.
  11. Spread: The difference between the bid price and the ask price. The larger and more liquid a market, the narrower the spread as there are more buyers and sellers.
  12. Market Depth: The typical level of volume for a stock or investment. Small volumes can make buying and selling difficult because there are fewer traders looking to complete the other side of the deal.
  13. Slippage: The difference between the price you place the trade at and the price you actually receive. For example, if you place an ‘At Market’ buy order on a stock at £10, the market price may move as your trade is being completed. The average price you end up getting may be slightly different, such as £10.02. The extra £0.02 you paid is called slippage.
  14. Stop Order: An automatic sell order when a stock hits a specific price. It can help avoid massive losses by automatically closing a position when it is down a certain amount, for example, 10%.
  15. Limit Order: This is a buy order which sets a maximum amount you are prepared to pay. It limits the amount of slippage but may also mean your total order is not filled.

Pros and Cons of Day Trading

As you have probably seen by now, there are some interesting opportunities for profits within a day trading strategy, but they do not come without risks and downsides. Here are some of the key pros and cons of day trading in the UK:

Pros of Day Trading in the UK:

  1. The potential to generate profits in any market, no matter whether it is going up or down.
  2. Small individual returns can add up to sizable profits if traders are making multiple trades each day.
  3. The ability to use personal skills and knowledge to generate returns. 
  4. Day trading is often a fast-paced and exciting way to invest, particularly when compared to pound cost averaging into index funds.
  5. The ability to control your own financial future if you are successful.

Cons of Day Trading in the UK:

  1. Day trading can be a high-risk investment strategy with a significant potential for losses.
  2. Multiple trades a day will require high brokerage costs, which can eat into profits.
  3. Access to the best data is often expensive. Many brokerage platforms will provide data that is delayed, with real-time information requiring additional subscription fees.
  4. Someone classed as a professional trader may have to pay income tax on profits in the UK, not capital gains tax (CGT). Income tax is charged at a higher level than CGT.

Day Trading Costs

Day traders make money by acting quickly on information or trends before the rest of the market has had a chance to catch up. In order to do this properly, they need access to real-time data and pricing information and the ability to make trades instantly.

All of this comes at a cost, which can be significant. The gold standard for professional traders at hedge funds and investment banks is a hardware and software combination known as a Bloomberg Terminal.

A standard licence for a Bloomberg Terminal will cost users over £21,000 per year. Obviously, this is not a requirement in order to day trade, and there are plenty of lower-cost options available that offer a similar level of data and features. TradingView, for example, gives individuals access to similar information at a much lower cost.

Would-be traders should, however, expect to have to pay for some form of data and analytics tools, as free versions are not likely to offer everything a day trader requires for success.

The other major cost involved with day trading is brokerage charges. Every day trading platform in the UK will offer a different fee schedule, though many follow a similar pattern. Generally speaking, day trading platforms will charge a percentage-based fee, which reduces as the volume of the trades grows, with a minimum fee for smaller trades.

Some trading apps or platforms will even offer free trading, but it’s important to understand how those platforms generate revenue. Some will recoup their costs through wider spreads, others will only offer a limited number of stocks or markets, and others will charge different fees for more complex investments like CFDs or forex.

Day traders should take careful note of how these fees will impact their returns and build trading costs into their strategy and trading rules.

Frequently Asked Questions

1. What are the best day trading brokers in the UK?

Here are the best day trading brokers in the UK:

  1. Pepperstone - Low cost; Speedy execution; 1,200+ Instruments
  2. eToro - 0% Commission on real stocks; 4,500+ Instruments
  3. XTB - 0% Commission on real stocks and ETFs; 5,600+ Instruments
  4. CMC Markets - Wide product range; 330+ FX pairs; 12,000+ Instruments
  5. Saxo - Diverse product range; 71,000+ Instruments
  6. Interactive Investor - One free trade per month; 40,000+ Instruments
  7. AJ Bell - Low cost; Lots of research; 15,000+ Instruments

Yes, day trading is legal in the UK, and most UK trading platforms will allow you to trade as frequently as you want. Some of the biggest platforms even reduce their brokerage fees as the volume of your trading increases and provide the tools, support and education you need to become a successful day trader in the UK.

3. What is the best day trading platform for beginners in the UK?

Here are the best day trading platforms for beginners in the UK:

  1. XTB - 0% Commission on real stocks and ETFs; 5,600+ Instruments
  2. eToro - 0% Commission on real stocks; 4,500+ Instruments
  3. Interactive Investor - One free trade per month; 40,000+ Instruments
  4. AJ Bell - Low cost; Lots of research; 15,000+ Instruments
  5. Hargreaves Lansdown - Lots of research; 15,000+ Instruments

4. What software do I need to day trade?

You do not need any particular trading software other than a day trading platform or app. With that said, it is highly recommended to subscribe to a data and analytics platform in order to gain access to real-time news and pricing information. Most elite day traders use a sophisticated software for day trading called Bloomberg Terminal. Others use tools less sophisticated but just as applicable, such as TradingView

5. Can I make money day trading?

Yes, it is possible to make money day trading. However, to become a successful day trader, one must take time to develop the right skills, knowledge and experience.

6. How much money do you need to start day trading?

There is no set minimum amount required to start day trading in the UK. Many platforms will allow you to open an account with less than £100. With that said, day trading takes a significant time commitment, and in order to make a full-time income, you will likely need capital in the hundreds of thousands of pounds.

7. Do day traders pay tax in the UK?

Yes, day traders pay tax in the UK. Depending on whether they are classed as investors or professional traders, they may pay either income tax, capital gains tax, or a combination of both.

8. How difficult is day trading?

It is very difficult to generate consistent, long-term profits from day trading. It requires significant amounts of time, knowledge and expertise, which can take years to build.

9. How many hours a day do day traders work?

The amount of time day traders spend trading on a daily basis will vary widely depending on the strategy being used by a day trader, as well as their target returns and trading volumes. Some traders will work from the minute the market opens to the minute it closes, while others will be able to trade for just 1 or 2 hours a day.

10. Why do most day traders fail?

Day trading is a deceptively difficult task. One of the main reasons day traders fail is that they allow their emotions to get the better of them. For example, it can be very difficult to watch a portfolio lose potentially tens or hundreds of thousands right before your eyes. This can lead day traders to sell, even when their strategy suggests that they should not.

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