Best Forex (FX) Trading Platforms

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Contents:

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We’ve compiled a list of the best forex trading platforms in the UK. These are our top five forex brokers for buying and selling national currency pairs using leverage.
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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.
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The platforms listed below are authorised and regulated by the UK’s financial watchdog, the Financial Conduct Authority (FCA).
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Here are the best forex trading platforms in the UK:

Forex (foreign exchange or FX) trading involves the speculative buying and selling of national currencies with the goal of making a profit.

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If you’ve ever travelled out of the country, received or paid someone in a currency other than your local currency or visited a post office, bank, or bureau de change to buy travel money, you have already participated in the foreign exchange market. 

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But unlike buying and selling foreign currencies in a bureau de change or bank for personal or even commercial use, when you trade forex, you do not actually receive the foreign currency in your bank account or the cash in your hand. Instead, you are participating in a contract that specifies that if the currency you purchase increases in value, you take the profit, and in the same way, if it drops in value, you accept the loss. This is called “over the counter” or OTC trading, which means there is no physical exchange of the actual currency.

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People and institutions use forex to hedge currency and interest rate risk, speculate on geopolitical events, diversify portfolios, or simply make a quick financial gain.

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Because countries need to trade with one another to thrive, the foreign exchange market tends to be the largest and most liquid asset market in the world. According to a 2022 triennial (three-year) report from the Bank for International Settlements (a global bank for national central banks), trading in OTC FX markets reached $7.5 trillion per day in April 2022, up 14% from $6.6 trillion three years earlier.

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Forex literally translates to foreign exchange, which refers to trading or exchanging one currency for another. “Forex” is a portmanteau of the words “foreign” and “exchange”.

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People and institutions trade forex for a variety of reasons, including hedging currency and interest rate risk, speculating on geopolitical events and diversifying portfolios.

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1. Forex for Hedging: When you buy or sell goods and services in a foreign country, you are at risk of losing money due to fluctuations in the values of international currencies. Institutions that trade globally on a large scale are at an even bigger risk of losing significant amounts of money due to currency fluctuations.
   
   To mitigate this risk, foreign exchange markets provide a way to hedge currency risk by fixing a rate at which the transaction will be completed. This is accomplished by buying or selling currencies in the forward or swap markets in advance, which locks in an exchange rate.
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2. Forex for Speculation: Many factors affect the supply and demand for currencies, such as international trade, interest rates, tourism, geopolitical events, and economic strength.
   
   As a result, there is an opportunity to profit from changes in the value of one currency compared to another. If, for example, a forex trader expects the price of the USD to increase against the GBP. The trader can buy the GBP/USD pair on the forex market and sell it for a profit when the price rises.
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3. Forex for Diversification: Traditionally, before the advent of cryptocurrencies, people who wanted to diversify their investment portfolios with exchange-traded securities that go beyond stocks, ETFs and bonds used forex.
   
   Forex can be a good addition to your portfolio, provided you are not overleveraged and understand how the forex markets work.

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The best forex trading platforms in the UK provide the tools and support to empower everyday traders to trade forex for hedging, speculation and diversification.

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Currencies are traded on the forex markets and are usually traded in pairs. This is because when you buy one currency, you simultaneously sell the other. Each currency has a three-letter symbol similar to the ticker symbols you find on stock exchanges (for example, AAPL represents Apple Inc. on the NASDAQ Stock Market in the US).

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In the forex market, we use GBP for the British pound sterling, EUR for the euro, USD for the United States dollar and so on. Currency pairs are quotations of two different currencies, with the value of one currency being quoted against the other. For example, GBP/USD. 

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Each currency pair comprises two elements: the first is known as the “base currency”, and the second is the “quote currency”. The base currency is always equal to 1, while the quote currency is the value of the second currency. For example, if GBP/USD = 1.3, this means that £1 = US$1.3. Alternatively, you could say it would cost US$1.3 to buy £1. An easy way to think of this is - any time you look at the value of a currency pair, you are looking at the value of the second currency.

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Currency pairs on the forex markets typically have two prices: the “Bid” price, which is the price you buy a currency pair and the “Ask (or Offer)” price, which is the price you sell a currency pair. 

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It is relatively easy to enter and participate in the forex markets. The markets are open 24 hours a day, five days a week, starting each day in Australia and ending in New York, and anyone with a smartphone and internet connection can access them. The easiest way to participate in the forex market is by signing up with a forex trading app or broker. Additionally, participating in the FX markets requires very little of your own money to start, as most forex brokers provide the opportunity to use leverage (credit) to increase the size of your portfolio.

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Finally, since trading foreign exchange is a macroeconomic endeavour, one need not bother with understanding the nuances of microeconomic factors.

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Beginners can start trading forex in the UK by following the steps below:

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1. Learn Forex Terms: FX trading in the UK requires specialised knowledge of the terms and an understanding of how the markets work.
   
   To succeed as an FX trader, one must understand forex terms such as ask and bid prices, leverage ratios, contracts for difference (CFDs), types of forex accounts, bear and bull markets, lot sizes, margins, pip, pipette, spread, sniping and hunting, spots, forwards and futures markets, among others. Scroll down to see our short definitions of some of these terms.
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2. Understand Leverage Ratios: Leveraged trading is when you use borrowed money to increase the size of your position. The FX broker typically provides this loan, and you can usually access it with just a click of a button.
   
   Leverage ratios in forex differ significantly from what you find in equities markets. The leverage ratio in forex markets can go as high as 400:1. A 400:1 ratio, for example, means that the broker will multiply your current capital by 400, thereby increasing the size of your portfolio and, as a result, the size of your profits or losses. While this may sound scary, it is important to note that the highest leverage ratio available to a retail forex trader in the UK is 30:1.
   
   Additionally, the financial watchdog, the Financial Conduct Authority (FCA), ensures that the best forex brokers in the UK provide protections that guarantee a client cannot lose more than the total funds in their CFD account.
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3. Open a Forex Trading Account: Once you are comfortable with leverage and know a few terminologies, it is time to set up a forex trading account. This is the easy part. Visit any of the brokers listed above, enter a few personal details, verify your personal information, add a payment method and fund your account.
   
   You should always check that the provider you sign up with is regulated by the Financial Conduct Authority (FCA). All the FX brokers listed on Koody are regulated by the FCA.
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4. Research Currency Pairs: Currency pairs are quotations of two different currencies, with the value of one currency being quoted against the other, for example, GBP/USD.
   
   Currency pairs are divided into two main categories: majors and minors. The currencies that trade the most volume against the USD are called majors. Such currencies include EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CAD and USD/CHF. The EUR/GBP is also a major currency pair.
   
   All other currency pairs are called minors, exotic pairs or crosses. The major currency pairs tend to have the most liquid markets and trade 24 hours a day, Monday through Friday.
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5. Understand Market Drivers: The drivers for currency price movements are different from those for equity markets. Market drivers include macroeconomic factors such as interest rates, inflation rates, geopolitical events, economic policies, international trade and balance of payments.
   
   A good understanding of FX market drivers can help you make decisions about what currency pairs to buy or sell and when.
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6. Develop an FX Trading Strategy: To become a successful forex trader, you need a trading strategy that incorporates sound fundamental and technical analysis. You must also avoid impulsive behaviour and only trade currency pairs that you have researched thoroughly.
   
   Additionally, you must apply a bit of common sense to know when to exit a losing position, even if you have already lost a significant amount of your initial capital. Lost money can always be recovered in future trades if you maintain composure and create and stick to strict buy-and-sell rules.
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7. Pay Attention to Fees: As we have stressed in this article, trading forex typically involves leverage, which is the same as taking a loan from a financial institution. Loans are usually associated with all sorts of fees: overnight fees, spreads, etc. It is important to keep on top of them so as to avoid unwelcome surprises.
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8. Start Trading Forex: Once you’ve built enough confidence to enter the forex markets, hit the trade button and start trading.

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The forex market is open 24 hours a day, five days a week, starting each day in Australia and ending in New York.

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Unlike individual stock exchanges, such as the New York, London or Frankfurt stock exchanges, which work to specific opening hours and hence have a stop-start nature, forex markets work non-stop five days a week from 9 pm GMT on Sunday until 8 pm GMT on Friday. 

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The ability of the forex markets to trade over 24 hours is due in part to different international time zones. The forex market has four main trading hubs, each working across different time zones: Sydney, London, Tokyo and New York. When FX trading stops in one location, it continues in another. Forex is also traded in Zurich, Frankfurt, Paris, Hong Kong and Singapore.

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There are four main types of forex traders: scalper, day trader, swing trader and position trader.

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1. Scalper: A scalper is a trader who looks to make quick profits from small price changes in the market. A scalp trader holds their positions for seconds or minutes at most with the goal of making many small profits that add up to a decent amount at the end of the day.
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2. Day Trader: A day trader is a short-term trader who closes their positions on the same day they are opened. The duration of a day trade can be hours or minutes, but each trade is always liquidated on the same day. Like scalp trading, the goal here is to make many small profits that add up to a decent amount at the end of the day.
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3. Swing Trader: A swing trader is a trader who holds their position for longer than a day but never more than a few weeks or months. Swing trades can be useful during major announcements by governments or times of economic tumult.
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4. Position Trader: A position trader holds their position for an extended period of time, usually many months or even years.

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

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1. Forex Account: A forex account is a trading account for buying and selling currency pairs. There are three main types of forex accounts based on lot sizes: micro (trade up to 1,000 units of a currency pair in one lot), mini (trade up to 10,000 units in one lot) and standard (trade up to 100,000 units in one lot).
   
   You should not be intimidated by the lot sizes, as each lot includes leverage. So if a forex broker offered you a 20:1 leverage ratio, for example, you only need US$50 of your own money to open a micro forex account.
   
   
2. Lot Size: Currencies are traded in sizes called lots. There are four main lot sizes: nano (consists of 100 units of a currency), micro (consists of 1,000 units), mini (consists of 10,000 units) and standard (consists of 100,000 units). Naturally, the larger the lot size, the higher the profits (or losses) you stand to make from your trades.
   
   
3. Leverage: Leveraged trading is when you use borrowed money to increase the size of your position. The FX broker typically provides this loan, and you can usually access it with just a click of a button.
   
   Leverage ratios in forex differ significantly from what you find in equities markets. The leverage ratio in forex markets can go as high as 400:1. A 400:1 ratio, for example, means that the broker will multiply your current capital by 400, thereby increasing the size of your portfolio and, as a result, the size of your profits or losses. While this may sound scary, it is important to note that the highest leverage ratio available to a retail forex trader in the UK is 30:1.
   
   Additionally, the financial watchdog, the Financial Conduct Authority (FCA), ensures that the best forex brokers in the UK provide protections that guarantee a client cannot lose more than the total funds in their CFD account.
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4. Contract for Difference (CFD): A contract for difference is a trading product that enables you to buy and sell currency pairs in the forex market without owning the underlying asset. CFDs are based on agreements with the broker and rely on heavy use of leverage.
   
   You should carefully assess the risks associated with CFDs or other leveraged products before committing to them, as the resulting losses can often be greater than initially expected.

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5. Margin: Margin in forex trading refers to the amount of your own money used to open a position. If you open a position with US$500 at a 5:1 leverage ratio, for example, your total exposure (or the total amount of money in that trade) would be US$2,500. Since only US$500 of the money came from your pocket, that US$500 is the margin, and the remaining US$2,000 is leverage.
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6. Bid Price: The bid price is the price at which a trader is willing to buy a currency pair.
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7. Ask Price: The ask (or offer) price is the price at which a trader is willing to sell a currency pair.
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8. Spread: A spread is the difference between the bid and ask prices in a foreign currency trade. Since FX brokers do not charge commissions for trades, one of the ways they make money is through spreads.
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9. Bear Market: A bear market in forex trading is a period of continuous decline in currency prices, usually about a 20% drop from recent highs. Bear markets are typically caused by depressing economic fundamentals, investor fear, uncertainty, natural disasters, pandemics such as COVID-19, etc.
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10. ‍Bull Market: A bull market in forex trading is a period of continuous rise in currency prices, usually a 20% rise from the lows reached in a bear market. Bull markets are usually characterised by low unemployment, positive economic news, increased consumer confidence and strong economic growth.
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11. Long: When a trader takes a long position, it simply means that the trader has purchased the underlying asset, in this case, the currency pair. Anytime you buy an asset on an exchange, you are going long. Market participants go long when they anticipate that the price of an asset will increase in value and they can profit from it.
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12. Short: A trader shorts a currency pair when they believe the price will drop in future. Shorting is when a trader borrows a currency pair from a broker, sells it at the current price, and waits for the price to decrease. Once the price drops, the trader repurchases it at a lower price in order to make a profit.
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13. Pip: A pip is a “percentage in point” or “price interest point”. It represents a one-digit movement in the fourth decimal place of a currency pair. For example, if the GBP/USD moves from US$1.28032 to US$1.28042, then it has moved by one pip. A pip is used to measure the change in the price of one currency in relation to another.
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14. ‍Pipette: In forex trading, a pipette is a one-digit movement in the fifth decimal place of a currency pair.

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Here are the best forex trading apps for beginners:

1. eToro - Market spread from 1 pip; 40+ currency pairs
2. XTB - Market spread from 0.1 pips; 40+ currency pairs
3. CMC Markets - Market spread from 0.7 pips; 300+ currency pairs
4. Saxo - Market spread from 0.4 pips; 180+ currency pairs
5. ‍Pepperstone - Market spread from 0.6 pips; 90+ currency pairs

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Yes, forex trading is subject to tax in the UK. The tax treatment depends on whether you are trading forex via Contracts for Difference (CFDs) or Spread Bets. If forex trading is performed through a spread betting account, the income from your trades will be exempt from tax under UK tax law. If you trade forex via CFDs, you are liable to pay Capital Gains Tax (CGT) on the profits from your trades above the capital gains allowance. 

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It is important to keep accurate records of all your forex trading activities to ensure you pay the correct amount of tax to HMRC. You may also wish to consult a tax adviser to ensure you fully understand your tax obligations.

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Professional forex traders typically use a range of software, such as MetaTrader 4 (MT4), MetaTrader 5 (MT5), TradingView and cTrader, to help them make informed trading decisions about the markets.

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Below, you’ll find short explanations of how each of these software works:

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1. MetaTrader 4: MetaTrader 4 is a popular trading software for forex and CFD trading, offering advanced charting tools, technical indicators, and automated trading options.
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2. MetaTrader 5: MetaTrader 5 is a newer version of the MetaTrader software with added features such as more advanced technical analysis tools and a wider range of asset classes.
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3. TradingView: TradingView is a web-based trading software that provides real-time market data, customisable charting tools, and social networking features for traders and investors.
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4. cTrader: cTrader is a trading software that offers ECN trading and advanced charting features with a focus on transparency and speed of execution.

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The best forex trading platforms in the UK provide access to some of these platforms. Others offer their own in-house software, which is just as powerful.

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In addition to trading platforms, professional traders may also use analytical software tools to help them analyse market trends and develop trading strategies. These tools may include data analysis tools like Excel, Google Sheets or Python, as well as backtesting software that allows traders to test their trading strategies using historical market data.

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Here are the best forex brokers in the UK:

1. XTB - Market spread from 0.1 pips; 40+ currency pairs
2. eToro - Market spread from 1 pip; 40+ currency pairs
3. CMC Markets - Market spread from 0.7 pips; 300+ currency pairs
4. Saxo - Market spread from 0.4 pips; 180+ currency pairs
5. ‍Pepperstone - Market spread from 0.6 pips; 90+ currency pairs

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To start trading forex in the UK, you need to:

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1. Learn the basics of forex trading: Forex trading involves buying and selling currencies to make a profit. Start by learning about currency pairs, trading strategies, and risk management techniques.
   
   
2. Choose a reliable broker: A reputable broker is essential for a successful and enjoyable trading experience. Look for brokers regulated by the Financial Conduct Authority (FCA), which ensures they follow strict guidelines to protect traders.
   
   
3. Open a demo account: Before risking your money, practice trading with a demo account. This allows you to test your trading strategies and get familiar with the platform’s features without risking real money.
   
   
4. Develop a trading plan: A trading plan outlines your trading goals, strategies, desired profit, acceptable loss, and risk management techniques. It helps you stay disciplined and avoid emotional trading decisions.
   
   
5. Start trading: Once you feel comfortable trading with a demo account, you can start trading with real money. Start with a small amount and gradually increase your position size as you gain experience.
   
   
6. Stay informed: Keep up to date with economic events and news that could impact the currency markets. This helps you make informed trading decisions and adjust your trading plan as needed.
   
   
7. Manage your risk: Forex trading involves risk, so it is crucial to manage your risk carefully. This includes setting stop-loss orders, using proper position sizing, and avoiding overtrading.

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You can start forex trading with as little as £100 in the UK. However, forex trading requires 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.

The best forex trading platforms for beginners in the UK are eToro, XTB, and CMC Markets. These platforms are easy to use and accessible on desktop, iOS and Android devices. They also provide a host of educational resources, including courses, webinars, and video tutorials to help beginners learn forex trading. XTB is also relatively cheap compared to other forex brokers.

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Whether forex trading is worth it depends on various factors such as risk tolerance, investment goals, and market conditions.

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For instance, if an individual has a high-risk tolerance and is willing to put in the effort to research and analyse market trends, they may be able to profit from forex trading. On the other hand, if someone is risk-averse and lacks market knowledge, they may end up losing money.

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Additionally, the forex market is highly affected by global events and economic factors, such as political instability, inflation, and interest rates. This means that traders need to stay up-to-date on these factors and be able to make informed decisions based on market trends.

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Forex trading can be worth it for experienced traders who are willing to take risks and invest time in learning the market. However, it is not a guaranteed way to make money and can be risky for beginners or those unwilling to invest the necessary time and effort.

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Yes, it is possible to make a living with forex trading, but it requires a lot of dedication, discipline, and experience. Forex traders who are successful make consistent profits over a long period by managing their risks and using a variety of trading strategies. For example, traders may use technical analysis to identify trends and support/resistance levels or fundamental analysis to analyse economic indicators and news events.

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With that said, forex trading involves a high degree of risk, and traders should always be aware of the potential for losses. It is essential to have a solid understanding of the markets and to continuously learn and adapt to new market conditions if you hope to become a successful forex trader.

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Yes, forex markets are regulated. The Financial Conduct Authority (FCA) regulates forex trading in the UK.

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