Always remember that investments can go down as well as up in value, so you could get back less than you put in. A rule of thumb is to hang on to your investments for at least five years to give them the best chance of providing the returns you want.

Best Trading Apps in the UK

Updated On: Jan 29, 2023
Best Trading App UK

Contents:

Best Trading Apps in the UK

We’ve compiled a list of some of the best trading apps in the UK. These are the best stock trading websites, apps, brokerages and platforms that allow you to buy, sell and gift UK and overseas stocks, shares, bonds, exchange-traded funds (ETFs), investment trusts (ITs), contracts for difference (CFDs), and other trading products.

Please remember that when you trade, your capital is at risk. ISA, pension and tax rules also apply.

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

Here are the best trading apps in the UK:


Freetrade - Low cost; Commission-free trading; Good for beginners

Freetrade
Annual Platform Fee
£0
Dealing Charge
£0
(+ 0.45% FX fee on US stocks)
Regular Investor Charge
£0

Freetrade is a UK mobile trading app that gives you access to thousands of UK and overseas stocks, ETFs and investment trusts covering different sectors and markets worldwide. The Freetrade app can be accessed on iOS and Android and offers a slick and easy-to-use user interface and experience. The app is also a great choice for both beginners and experienced investors. With Freetrade, you can invest in fractional shares of even the most expensive US shares with as little as £2. Depositing, trading and withdrawing on Freetrade are commission-free (other charges may apply). FX rates also apply for US stocks at the spot rate + 0.45%. Freetrade’s products include a Stocks and Shares ISA, General Investment Account and SIPP.

Promo: Get a free share worth £10 when you join Freetrade and fund your account with at least £50.

Please note: When you invest, your capital is at risk. The value of your investments can go down as well as up, and you may get back less than you invest. ISA rules apply. SIPP eligibility and tax rules apply. Free share terms and conditions apply.

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eToro - 0% Commission on real stocks; 3,000+ Instruments

eToro Logo
Annual Platform Fee
£0
Dealing Charge
£0
Regular Investor Charge
£0

eToro is a multi-asset platform that offers both investing in stocks and cryptoassets, as well as trading CFDs. 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 practice trading until you become confident. eToro gives you real-time access to thousands of stocks, ETFs and cryptocurrencies from top exchanges worldwide. If you prefer to select a ready-made portfolio, eToro has over 40 fully allocated, balanced investment portfolios, focusing on market segments you can understand and to which you can relate. Some of the portfolios include MetaverseLife, BigTech, GoldWorldWide, Vaccine-Med, BitcoinWorldWide, Diabetes-Med, Driverless, GigEconomy, and many more. 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. Withdrawals incur a fee of US$5, and FX rates apply to non-USD deposits and withdrawals. eToro does not offer an ISA or SIPP.

Please note: When you invest, your capital is at risk. 81% 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 highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.

Your capital is at risk. Other fees apply. For more information, visit eToro.

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InvestEngine - Low cost; 500+ Commission-free ETFs

InvestEngine Logo
Annual Platform Fee
0% - 0.25%
Dealing Charge
£0
Regular Investor Charge
£0

InvestEngine is a UK low-cost investment platform providing a choice of managed portfolios tailored to you and commission-free DIY investing to help you build long-term wealth. Users can invest in over 500 exchange-traded funds (ETFs) from iShares, Vanguard and other leading brands. With InvestEngine, you can invest in two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can select from one of the Managed Portfolios on offer, where the team of experts at InvestEngine will take care of the day-to-day investment decisions for you. These portfolios attract a platform fee of 0.25% per year. Advanced or more confident investors can choose from 500+ commission-free ETFs and build their portfolios themselves. With the DIY Portfolio, there are no platform fees. All InvestEngine portfolios are free of setup fees, dealing fees, ISA fees or withdrawal fees.

InvestEngine stands out amongst its competitors as one of the cheapest investment platforms in the UK because it charges no platform or management fees on its DIY Portfolio and just 0.25% a year for the Managed Portfolio. You can start investing with InvestEngine with as little as £100. InvestEngine’s suite of products includes a Stocks and Shares ISA, Personal Account or Business Account.

Capital at risk.

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Moneybox - 0% Commission on US stocks; Good for beginners

Moneybox
Annual Platform Fee
0.45%
(Plus £1 per month subscription fee
(first three months free))
Dealing Charge
£0
(+ 0.45% FX fee on US Stocks)

Regular Investor Charge
£0

Moneybox is a UK investment app that allows you to invest in a range of tracker funds, exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and US stocks. Moneybox offers two forms of investing depending on your investing savviness, investing strategy and attitude to risk. Beginner investors or those who prefer a ready-made portfolio can choose from the three ready-made portfolios on offer - Cautious (lower risk), Balanced (medium risk) and Adventurous (higher risk). Advanced or more confident investors can pick from the range of tracker funds, ETFs, ETCs and US stocks available and build their portfolios themselves. The app also empowers you to invest your spare change by rounding up your card transactions to the nearest pound and investing the difference on your behalf. For example, if you spend £2.30 on a snack, Moneybox will invest 70p for you. You can also instruct the app to make weekly or one-off deposits into your investment portfolio as it rounds up your spare change.

You can start investing with Moneybox with as little as £1. Moneybox offers commission-free trading on US stocks. However, fund management fees apply to other types of investments ranging from 0.12% to 0.61% per annum. A currency conversion fee of 0.45% also applies to US stocks. Moneybox’s suite of products includes a Stocks and Shares ISA, Lifetime ISA, Junior ISA, Personal Pension, and General Investment Account.

Capital at risk.

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Wealthyhood - Low cost; 50+ Commission-free ETFs

Wealthyhood logo
Annual Platform Fee
£12
Dealing Charge
£0
(+0.40% FX fee)
Regular Investor Charge
£0

Wealthyhood is a UK mobile trading app that gives you access to 50+ thematic ETFs, real-time guidance, insights and more than 120,000 personalised portfolio templates. With Wealthyhood, you can buy as little as £1 of your favourite ETFs with fractional shares.

The Wealthyhood Beginner plan costs £1 per month and allows you to invest in ETFs without commissions or limits. However, an FX spread of 0.4% applies to all international ETFs. The ISA plan (coming soon) costs £3 per month and offers everything included in the Beginner plan, plus ISA accounts. The Pro plan (also coming soon) costs £7 per month and gives you access to individual stocks, premium tools, analytics and insights.

Promo: Get a free share worth up to £200 when you join Wealthyhood and fund your account.

Capital at risk.

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FinecoBank - Commission-free trading up to £500; 20,000+ Assets

FinecoBank Logo
Annual Platform Fee
£0
Dealing Charge
£2.95
Regular Investor Charge
£0

FinecoBank is one of Europe's largest banks, with 20+ years of leadership history in brokerage and over 30 million orders processed every year. Its core mission is to make online trading simple by providing direct access to the markets in just one click. With Fineco, you can access 26 global markets and trade over 20,000 financial instruments worldwide on a single account, including UK and overseas shares, ETFs, funds, bonds, CFDs, forex, commodities and options. Users can also invest and trade directly in GBP, EUR, USD, CHF and 20+ currencies. When you open a trading account with FinecoBank, you will have the option to navigate the market through PowerDesk, an advanced trading platform accessible on the web that offers intuitive chart trading, personalised dashboards, personalised listings and technical analyses, all on one screen. In-house training to improve your trading knowledge and acquire specific trading skills for forex, options, CFDs, or general trading is also available to all FinecoBank customers. FinecoBank's products include a Trading Account and Stocks and Shares ISA.

Promo: Apply with the link below by the 30th of June 2023 and trade commission-free up to a maximum commission amount of £500. Terms apply.

Please note: When you invest, your capital is at risk. 65.11% of retail investors 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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Pepperstone - Low cost; Speedy execution; 1,200+ Instruments

Pepperstone logo
Annual Platform Fee
£0
Dealing Charge
From 0.10% (UK Stock CFDs)
From 0.6 pips (Forex)
Regular Investor Charge
£0

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

Interactive Investor
Annual Platform Fee
£120 - £240
Dealing Charge
£5.99
Regular Investor Charge
£0

Interactive Investor, recently acquired by wealth management giant abrdn, is the second-largest investment platform in the UK. Interactive Investor is well known for its fixed charges (as opposed to percentage-based fees like most other investment platforms), and it has been providing investment services and financial information since 1995. If you choose to invest with Interactive Investor, you’ll gain access to over 40,000 investment options, including UK and overseas shares, funds, investment trusts, and ETFs. This is the widest choice of UK and international investments offered by any investment platform in the UK. You will also be able to access 17 global exchanges, including exchanges in North America, Europe and Asia Pacific. These include markets such as the FTSE 100, FTSE 250, FTSE All-Share, NASDAQ, Dow Jones and more. In addition to the exchanges above, Interactive Investor offers Japanese, Indian and Chinese shares in the form of ADRs (American Depositary Receipts).

Interactive Investor gives you a free trade every month, which you can use to buy or sell any investment. After that, trades usually cost £5.99. Interactive Investor also offers a free regular investing service that allows you to invest regularly without paying a trading fee each time. The site also has lots of expert ideas, research and insights, which can be helpful when choosing investments. Interactive Investor’s services include a Trading Account, Stocks and Shares ISA, SIPP and Junior ISA.

Capital at risk.

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AJ Bell - Cheap if you make 10+ trades a month; Wide product range

AJ Bell Logo
Annual Platform Fee
0.25%
(max £3.50 per month)
Dealing Charge (Online)
£9.95 - £4.95
Regular Investor Charge (Online)
£1.50 per deal

AJ Bell is one of the UK’s largest online investment platforms, and it is on a mission to make investing as easy as possible for you. The platform offers a wide range of investment options for the DIY investor, including shares, funds, investment trusts and ETFs. 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. There are eight total fund ideas, each built by a specialist team, and you can pick the right one for you depending on your attitude to risk and whether you’re seeking to simply grow your money over time or receive an income whilst still growing your money.

AJ Bell charges an annual platform fee ranging from 0.25% to 0%. Dealing fees for buying and selling investments online are £1.50 for funds and £9.95 for shares (reducing to £4.95 if there were 10 or more online share deals in the previous month). AJ Bell’s services include a Share Dealing Account, Stocks and Shares ISA, Lifetime ISA, Junior ISA, SIPP and Junior SIPP.

Capital at risk.

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Hargreaves Lansdown - Lots of investment options, research and tips

Hargreaves Lansdown
Annual Platform Fee
£0
‍‍(Fund & Share Account)
Dealing Charge (Online)
£11.95 - £5.95
Regular Investor Charge
£1.50 per deal

Hargreaves Lansdown is a FTSE 100 company and the biggest investment platform in the UK. Its core mission is to build long-term client relationships by becoming a trusted partner and financial champion, ultimately helping you increase your financial security for the future. If you choose to invest with Hargreaves Lansdown, you will gain access to over 2,500 funds, UK and overseas shares, ETFs, ETCs, investment trusts and more. With Hargreaves Lansdown, you can build your investment portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their portfolios by choosing from a range of ready-made options where the team of experts at Hargreaves Lansdown will take care of the day-to-day investment decisions for you. Advanced or more confident investors 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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DEGIRO - Cheap share dealing; 200 Commission-free ETFs

DEGIRO logo
Annual Platform Fee
£0
Dealing Charge
£1.75 + 0.014% (UK Stocks)
Regular Investor Charge
£0

DEGIRO is an award-winning investment broker that allows you to trade in stocks, bonds, ETFs, options, futures, warrants, certificates and more across 50 international exchanges. It offers tens of thousands of regulated financial instruments that enable investors to diversify their portfolios worldwide. With DEGIRO, you can invest in up to 200 commission-free ETFs. This means you may not have to pay a dealing charge when you invest in just ETFs (terms apply). Dealing in UK stocks costs £1.75 + 0.014% per deal, while US stocks cost €0.5 + $0.004 per share and Irish stocks are €4 + 0.05% per deal. To make sense of the charges, visit DEGIRO. DEGIRO currently has over 1 million customers across 18 countries. It is suitable for both beginners and advanced investors, and you can access the platform on any device via the web portal or mobile app. DEGIRO does not offer an ISA or SIPP.

Capital at risk.

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Saxo Markets - 60,000+ Investment options; Diverse product range

Saxo logo
Annual Platform Fee
0.12% - 0.08%
(min €120 (~ £108))
Dealing Charge
0.10% (min. £8) UK Stocks
US$0.02 (min. U$10) US Stocks
Regular Investor Charge
£0

Saxo Markets is the UK division of Saxo Bank, a large European bank that allows you to invest in 60,000+ financial products from stock markets worldwide. With Saxo Markets, you can invest in UK and overseas stocks and shares, bonds, ETFs, forex, CFDs, futures, commodities and options. Saxo Markets allows you to invest in one of two ways depending on your investing savviness: 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 Markets 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 Markets 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 0.10% (min. £8) per deal for UK Stocks and US$0.02 (min. US$10) per deal for US Stocks. Other fees apply. Saxo Markets’ suite of products includes a Trading Account, Stocks and Shares ISA and SIPP.

Please note: Capital at risk. 73% 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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IG - 0% Commission on US stocks; 13,000+ Instruments

IG Smart Portfolios
Annual Platform Fee
£96 - £0
Dealing Charge
£0 - £3
(+ 0.50% FX fee on US stocks)
Regular Investor Charge
£0

IG is a large trading platform that allows you to invest in 13,000+ global shares and ETFs and trade over 18,000 markets, including forex, options, futures, indices and commodities. With IG, you can trade confidently and deal seamlessly wherever you are, using IG’s native trading platform or connecting to a range of third-party platforms. IG’s own platform is accessible via web, iOS or android devices. The platform gives you an instant overview of market prices, spreads, and margins in a simple and clean design. You can also access risk management tools such as stops and limits and trade in your preferred currency to keep conversion charges down. Third-party trading platforms available via IG include MetaTrader 4 (for algorithmic trading), ProRealTime (for charting and trading automation) and L2 Dealer (for direct interaction with the order books of major exchanges). The online IG Academy is also a great place for both beginners and advanced investors to brush up on relevant trading skills.

It is entirely free to open an account with IG, and all registered users gain access to a free demo account which you can use to practise online trading until you become confident. On IG, trading US shares is commission free while UK shares cost £3 per share. A foreign exchange fee of 0.5% applies to all US stock trades. Spreads for CFD trades are charged differently. Other fees apply. IG’s suite of products includes a Trading Account, Stocks and Shares ISA and SIPP.

‍Please note: When you invest, your capital is at risk. 76% of retail investor accounts lose money when trading CFDs and spread bets with this provider. You should consider whether you understand how CFDs and spread bets work and can afford to take the high risk of losing your money.

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What Is a Share?

A share is a unit of ownership in a public company. When you buy a share, you own a small unit of a public company.

Unit of ownership in a public company
Unit of ownership in a public company

For example, if you buy a share in Apple Inc., you will become a part-owner of Apple. If Apple performs well, you will benefit from its success. If it does not, you may lose some money.

Companies issue shares to raise money to fund their activities. People invest in shares to benefit from the successes of companies they believe in.

You may also come across the word stock or equity. In most situations, stocks, equities and shares refer to the same thing. Stocks could also mean all your shares in one or more companies.

Why Invest in Stocks and Shares?

People invest in stocks and shares because they can be a great way to grow money over time and can offer higher long-term returns than leaving your money in a savings or current account.

There are five keys ways you could benefit from investing in stocks and shares:

  1. Make a Profit: If the company you invest in performs well and the value of your shares rises, you’ll make a nice little profit if you choose to sell your shares at the new price. This profit is called a capital gain. Here’s an example: Suppose you bought 100 shares in a company at £10 per share. The total value of your investment will be £1,000. If the price of your shares rises to £12 and you decide to sell your entire shareholding, you’ll sell it for £1,200, making a capital gain of £200.

  2. Receive Dividend Payments: You might also receive regular income from the companies you invest in when they make profits. This income is called a dividend. A dividend is your share of a company’s profit. Suppose the company in the example above paid you a 5% dividend before you sold your holding. You would have received an income of £50. This will bring your total gain (dividend and capital gain) to £250.

  3. Benefit From Compounding: Albert Einstein famously referred to compound interest as the eighth wonder of the world. He then went on to say that those who understand it earn it, while those who do not pay it. Compound interest is a simple concept that involves earning interest on interest. For example, if you invest £10,000 in a share or fund growing at an interest rate of 10%, at the end of the first year, you would have made £11,000 (£10,000 initial investment + £1,000 interest). If you do not withdraw the money and leave the interest and capital to accumulate interest for another year, at the end of the second year, you would have made £12,100 (£10,000 initial investment + £2,100 interest), meaning you earned interest on the £1,000 interest you made the previous year. If you continue to leave the investment and interest to grow, at the end of 10 years, you will have made £25,937 (£10,000 initial investment + £15,937 interest). At the end of 20 years, you would have made £67,275 (£10,000 initial investment + £57,275 interest), and at the end of 30 years, your initial investment of £10,000 would have grown to £174,494.

  4. Beat Inflation: One of the best ways to beat inflation is to invest in assets with returns that outpace the rate of inflation. When you hold on to cash in times of rising inflation, the value of your money reduces, thereby reducing your purchasing power. For example, say you have £100, and the price of coke is £1 per can. You can buy 100 cans of it. Next year, if inflation is 9%, that same can of coke will cost you £1.09. Now, you can only buy 91 cans of coke. If the same rate kept up for four years, you would only be able to buy 70 cans of coke. Investing is the only way you have the chance to outpace inflation, though, of course, it comes with its own set of risks and downsides.
  5. Vote at Shareholder Meetings: As a company shareholder, you will have many opportunities to attend and vote on important company decisions at shareholder meetings. You might also receive shareholder perks such as discounts on the company’s products or services or exclusive invitations to beta test and provide feedback on new products.

What Is Stock Trading?

Stock trading or share dealing refers to buying and selling shares in publicly listed companies.

Publicly listed companies are companies listed on a stock exchange, such as the London Stock Exchange or the New York Stock Exchange.

To trade shares in the UK, you need to open a stock trading account with a trading app or stockbroker. You can also use an Individual Savings Account (ISA), General Investment Account (GIA) or Self-Invested Personal Pension (SIPP) to trade shares.


Ways to Trade Stocks in the UK

There are two ways to trade stocks in the UK. You can either trade stocks directly (called direct investment) or use leverage (called margin or leveraged trading).

1. Direct Investment

Direct investment involves buying stocks directly from a stockbroker or as part of a mutual fund.

Buying shares directly from a stockbroker
Buying shares directly from a stockbroker

You can buy individual company shares directly through a stockbroker. Investing in stocks in this way means that you are taking direct ownership of a company’s shares, making you eligible to vote at shareholder meetings and receive dividend payments. Investing in individual stocks and shares is one of the most common ways to invest in the stock market.

The first opportunity you will have to invest in shares is when the shares are created and offered to the public for the first time. This is called an Initial Public Offering (IPO) or ‘Going Public.’ Companies go public to raise money to fund their activities.‍

Once shares are created, they can be bought or sold on the stock exchange. This is called the secondary market because it comes after the IPO. The price of shares at IPO is typically determined by the underwriter of the IPO, usually a large bank. After the IPO, the share price is determined by changes in supply and demand.

You can participate in IPOs or join the secondary market via an online stock trading app or stockbroker. The best trading apps in the UK will allow you to invest in stocks via the secondary market with as little or as much as you feel comfortable with. Most apps will accept an initial investment of less than £25, while others might allow you to start trading with £1. Trading apps or stockbrokers that give you direct access to an IPO might require a higher initial deposit. Stockbrokers offer three types of services: execution-only, advisory and discretionary.

Another way to invest directly in stocks and shares is through mutual funds. A fund is a diverse basket of shares, bonds or other assets representing a country, industry, index or theme. Examples of funds include index funds, active funds and exchange-traded funds (ETFs). Funds save you the trouble of buying shares in multiple companies or worrying about building a diversified portfolio. They are also safer and cheaper than buying individual stocks since you share the risks and costs with other investors. Most people, including experienced investors, use funds when investing.

2. Margin Trading

Margin trading is the use of borrowed money to buy stocks, forex, commodities, indices and other markets. It is also called leveraged trading. When trading on margin, the trading app or stockbroker will loan you the total value of the trade, requiring only a small deposit as collateral. This deposit is called a margin.

Margin trading
Margin trading

Because of the loan given to you by the broker, your profits can be magnified when trading on margin, as you can trade much larger amounts than you would with your own money. However, in the same way that your profits can be magnified, your losses can also be magnified, and you could lose all you invested.

Leveraged products allow you to take a long or short position in a financial market. If you believe the price of an asset will go up, you buy (or go ‘long’). Similarly, if you think the price of an asset will go down, you sell (or go ‘short’).

There are several ways to trade on margin in the UK, including via contracts for difference (CFDs), forex, options, spread bets, and futures.

  1. Contract for Difference: A Contract for Difference, or CFD, is a financial contract that allows you to speculate on the movement of the price of an asset. It is a bet on whether an asset’s price will increase or decrease. A CFD is not an asset on its own, but you can purchase it based on a large number of other assets such as shares, ETFs, indices, forex, options, or even commodities like gold and oil. CFD trading is the buying and selling of contracts for difference (CFDs).

  2. Foreign Exchange: Foreign exchange (Forex or FX) trading involves the speculative buying and selling of national currencies with the goal of making a profit. When you trade forex, you do not actually receive the foreign currency in your bank account. Instead, you participate 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. People and institutions use forex to hedge currency and interest rate risks, speculate on geopolitical events, diversify portfolios or make a quick financial gain.

  3. Options: An Option is a contract that gives the holder the right but not the obligation to buy or sell an asset in the future. There are many different types of options, and investors will buy them for a wide variety of reasons. Some use them as an insurance policy to protect against price movement on assets they already hold, and others use them as an investment in and of themselves. Options trading is the process of buying and selling various types of options.

  4. Spread Bet: A Spread Bet is a derivative product that you can use to speculate on financial markets such as shares, forex, or indices. When trading with spread bets, you do not take ownership of the underlying asset but instead place a bet on whether you think the price will rise or fall.

  5. Futures: Futures are financial contracts that enable two parties to agree on a price for an asset in the present to be exchanged at a future date. Futures give the buyer the obligation to buy the underlying market and the seller the obligation to sell at or before the contract’s expiry. Futures trading is the act of buying and selling futures.

How to Trade Stocks for Beginners

Beginners can trade stocks in the UK with trading apps such as eToro, Freetrade, Interactive Investor and IG

Trading stocks can be a profitable or unrewarding experience depending on your level of trading knowledge and investing savviness, so it is vital that you understand how it works, including the potential risks and rewards, before venturing into it.

Follow the steps below to learn how to trade stocks:

  1. Learn Trading Terminologies: Trading in the UK requires specialised knowledge of terminologies and an understanding of how the markets work. To succeed as a trader, one must understand trading terminologies, including ask and bid prices, leverage ratios, price-volume action, fundamental analysis, technical analysis, bear and bull markets, lot sizes, margins, spots, forwards and futures markets, day trading, swing trading, scalping, going short, going long, among others.

  2. Decide on Your Trading Strategies: Many different strategies can be utilised when trading the stock markets. Some of these will focus purely on technical analysis, which bases investment decisions on the movement of the stock price on a chart. Others will focus more on fundamental analysis, keeping an eye on the company’s website, social media and news cycles in an attempt to take advantage of news and announcements that could impact a stock price. Most traders use a combination of both strategies, while others use something else entirely, such as AI-based algorithmic trading.

  3. Create a Trading Plan: Before you start trading, it might help to create a trading plan. A good trading plan defines your ideal trade, desired profit, acceptable loss and risk management strategies.

  4. Consider Trading Fees Carefully: There are many different costs associated with trading in the UK. The main ones are the annual platform fee, dealing fee, foreign exchange fee, transfer-out fee and inactivity fee. The specifics of the fee you get charged will depend on the trading app you choose. We go into detail about trading fees below.

  5. Choose a Tax Wrapper: A tax wrapper reduces the taxes you pay on the gains from your savings and investments. Examples of tax wrappers in the UK are individual savings accounts (ISAs) and pensions. If you do not want to use a tax wrapper, perhaps because you have already used up your ISA allowance for the tax year, you can choose to invest in a general investment account (GIA). A GIA also comes with some tax benefits. We go into detail on taxes and tax allowances below.

  6. Open a Trading Account: Once you have created a trading plan, developed a strategy and learnt a few terminologies, it is time to set up a trading account. This is the easy part. Visit any of the trading apps 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 Financial Conduct Authority (FCA) regulates the app you sign up with. All the trading apps listed on Koody are regulated by the FCA.

  7. Choose Your Trading Software: There is a wide range of trading software to choose from. Many of the best trading apps in the UK offer their own in-house software, which can be quite powerful and may cater to all your trading needs. Examples include eToro, PowerDesk by FinecoBank, xStation 5 by XTB and SaxoTraderGO by Saxo Markets. Others, such as Pepperstone, will give you the option to choose from a range of popular third-party trading software depending on your trading needs and skills. Examples of such trading software include MetaTrader 4 (MT4), MetaTrader 5 (MT5), CTrader, TradingView, DupliTrade (for social and copy trading), and Capitalise (for code-free trading automation). The trading software you choose will be connected to your trading account.

  8. Choose Your Market: There are several markets to trade on, including shares, ETFs, bonds, indices, forex, commodities, options, thematic and more. You can trade on one market or as many as you want.

  9. Open a Position: If you think the price of a stock will go up, you can open a buy position, called “going long”. Similarly, if you believe the price of a stock will go down, you can open a sell position, called “going short”.
  10. Monitor Your Trades and Close Your Position: Trading differs from long-term investing in an index fund or ready-made portfolio. You need to constantly monitor your trades and apply relevant risk management strategies to help limit your losses. When you are happy with your profits, close your position to limit losses and avoid fees such as overnight fees or stop loss premiums.

How to Pick Stocks

Deciding what shares to buy can be intimidating for the first-time investor or trader, but it doesn’t have to be. Below, we’ve summarised our top ten stock-picking methods for newbie traders.

Follow the steps below to learn how to pick stocks:

  1. Set Your Goals
  2. Find Sources for Technical and Fundamental Analysis
  3. Understand Market Drivers
  4. Learn How to Read Charts
  5. ‍Study Economic Cycles
  6. Become Comfortable Predicting the Future 
  7. Look for Leading Companies With Healthy Financials
  8. Do not Obsess Over Analyst Recommendations or Predictions
  9. Build a Diversified Portfolio
  10. Avoid Emotions and Stick to Your Rules

1. Set Your Goals

The first step to picking stocks is to determine and set clear goals for your portfolio. You need to ask yourself why you are trading stocks and state clearly what you hope to achieve.

There are three key goals to consider, and you can focus on just one, two or a combination of all three. When picking stocks, you need to ask yourself if you are in it to:

  1. Generate a regular income, 
  2. Preserve existing wealth, or
  3. Amass wealth. 

Your goal determines your eventual investment strategy. For example, if your trading goal is to generate a regular income, you might be interested in dividend stocks, such as low-growth company stocks in the utility sector. You might also consider bonds and real estate investment trusts (REITs).

A trader whose goal is wealth preservation is naturally risk averse and might prefer to invest in stable blue-chip company stocks. These include stocks on indices such as the Dow 30, S&P 500 or the FTSE 100.

Similarly, traders looking to grow wealth might focus on small to mid-cap stocks in their early growth years with promising financials and technicals. These types of stocks are usually riskier than their large-cap counterparts as they tend to be less liquid.

2. Find Sources for Technical and Fundamental Analysis

To become an excellent trader, you must constantly research the markets and keep on top of 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’s MarketSmith, Nasdaq and the London Stock Exchange.

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

Twitter accounts and popular trading blogs such as @WatcherGuru, @unusual_whales, and @MarketWatch are also very helpful. 

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

Finally, at Koody, we recommend reading William J. O’Neil’s How to Make Money in Stocks before you start trading.

3. Understand Market Drivers

Once a company completes its IPO, the share price will be determined by factors such as supply and demand. There are a variety of factors that affect the supply and demand for a company’s stock over time, including:

  1. Macroeconomic Data: The global economy and the economy where a company operates can affect its growth. Data releases such as gross domestic product (GDP), interest rates, inflation data, jobs reports, and currency fluctuations can all affect a company’s performance and, subsequently, its share price. Positive macroeconomic data can cause the share price to rise, while negative or weak data can cause it to drop. You can find these kinds of data on government-owned statistics websites or financial news websites.

  2. Company-Specific Data: Quarterly and yearly earnings reports, news on leadership changes, new product development, corporate press releases and investor presentations can all affect the price of a company’s share. Reports and investor presentations typically contain forward-looking information on the expected direction of the company and its industry which can affect the company’s share price. You can find this kind of information on the company’s website.

  3. Market Sentiment: How the public feels about the company’s products, policies, and general direction can also affect the company’s share price.

  4. Institutional Sponsorship: This refers to the number of big funds and institutional investors buying the company’s stock. Stocks with high institutional sponsorship tend to be more liquid than those without substantial institutional support.

  5. Market Direction: A bull or bear market will affect share prices and general market direction. During a bull run, stocks tend to perform well. The opposite is the case in a bear market.

4. Learn How to Read Charts

When you study stock price-volume charts, you discover patterns that help you predict price movements. According to William J. O’Neil, “it is the unique combination of finding stocks with big increases in sales, earnings and return on equity plus strong chart patterns revealing institutional buying that together will materially improve your stock selection and timing. The best professionals use charts”.

When reading charts, you want to focus on the daily, weekly and yearly price-volume action. There is a wide range of technical indicators and oscillators you can use when working with stock charts, including moving averages, stochastic oscillators, moving average convergence divergence (MACD), standard deviation, Bollinger bands, relative strength index (RSI), Fibonacci retracement, among others.

5. Study Economic Cycles

The global economy will grow and shrink over time. When the economy is growing, most sectors tend to do well. But when the economy is shrinking and things are not as rosy, only certain sectors continue to do well.

Industries that produce or sell everyday essentials such as food, beverages and pharmaceuticals tend to do well in every economic climate. In comparison, industries such as retailing and aerospace that provide non-essential products or services tend to mirror the health of the economy. Understanding these cycles can help you decide what shares to buy and when.

6. Become Comfortable Predicting the Future

If you can predict how the world will change in the next 10 to 20 years and what industries and companies are poised to benefit from this change, you can begin to invest in stocks and shares accordingly.

For example, how will climate change affect energy companies and automobile manufacturers in the next 10 to 20 years? What changes do you anticipate in online retailing, financial services and healthcare? Who stands to benefit most from changing consumption patterns? Indian universities currently produce some of the best technical talents in the world–what does this mean for the future of technology? What about China?

This type of analysis should form the basis behind every stock you choose to invest in. A thoughtful investor has a “story” that explains every decision behind a stock pick.

7. Look for Leading Companies With Healthy Financials

When picking stocks, it is crucial to look for leading companies with solid financials. Leading companies are not necessarily popular brands or household names but companies that are the number one in their industry or sector from a fundamental and technical analysis standpoint.

Leading companies are the best-performing stocks according to highest quarterly and annual earnings growth, highest return on equity, widest profit margins, strongest sales growth and excellent price-to-earnings (P/E) ratios.

To identify companies with healthy financials, you might need a stock screener to filter based on specific criteria such as earnings per share (EPS) growth, revenue growth, market capitalisation, P/E ratio, sector, dividend yield and other metrics. The best trading apps in the UK will offer stock screeners as part of their in-house trading software or allow you to connect to advanced third-party trading software with stock screeners.

It might also be worth looking at and researching some of your favourite brands, i.e. brands you know, love and use often. It is no secret that the world’s biggest, most popular and most loved brands tend to be the most profitable.

You might like: Best ETFs, Best Index Funds and Best Shares to Buy Now.

8. Do not Obsess Over Analyst Recommendations or Predictions

When you start researching the markets, you will quickly come to see how much analyst forecasts and recommendations affect short-term share price movements.

While it is important to pay attention to analyst forecasts and commentary, you should not obsess over them but instead, try to form your own opinions.

Spend time reading macro and company-specific news, trading blogs and opinion pieces to better understand the markets. This, in addition to fundamental and technical analysis of a stock, should help you form your own opinion, create your “story”, and make a sensible purchase.

9. Build a Diversified Portfolio

When picking shares, it is risky to invest in just one company. If the company gets into difficulty, you could lose all you invested. It is better to build a diversified portfolio. 

Building a diversified portfolio means you should consider investing in multiple companies, across different industries and in various geographies. A combination of blue-chip stocks, high-growth companies and dividend stocks across a variety of industry sectors and geographies provide the ultimate diversification.

A simple and easy way to diversify your portfolio is to invest in mutual funds and ETFs. Funds save you the trouble of buying shares in multiple companies or worrying about building a diversified portfolio. They are also safer and cheaper than buying individual stocks since you share the risks and costs with other investors. Most people, including experienced investors, use funds when investing.

10. Avoid Emotions and Stick to Your Rules

Once a trader has done all of the above 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 margin 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.

Stock Trading Fees

The best stock trading apps in the UK charge several fees for using their services. The main ones are the annual platform fee, dealing fee, foreign exchange fee, transfer out fee, and inactivity fee.

  1. Platform Fee: The platform fee, also known as a custody fee, is charged by the stock trading app to provide a platform for you to buy and sell shares. It can be a flat fee or a percentage-based fee.

  2. Dealing Fee: The dealing fee, also known as a trading fee or commission, is the fee for buying and selling shares or other investments on the trading app. Discounts are usually available for regular investors. Additionally, some of the best trading apps in the UK offer commission-free share dealing, which means you do not have to pay a dealing fee when you trade.

  3. Foreign Exchange (FX) Fee: The FX fee, also called a currency conversion fee, is the fee for buying and selling overseas investments denominated in a foreign currency, such as US shares. It is usually charged as a percentage of your trade value, typically below 1%.

  4. Stamp Duty: When you purchase UK shares electronically, you will pay a 0.5% Stamp Duty Reserve Tax (SDRT). If you purchase UK shares using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000. Stamp Duty on Irish registered stocks is 1%. You do not pay Stamp Duty on AIM stocks or Exchange-Traded Funds (ETFs).

  5. Spread: The spread is typically applied to leveraged trades and represents the difference between the market price and the buy or sell price of a leveraged product, such as a CFD. For example, if you take a long position in a given CFD trading at a wholesale price of £1, the CFD trading platform may charge you £1.01. The difference of 0.01 is the spread. The same applies to the reverse transaction. If you take a short position in the CFD, the platform might charge you slightly below the market price to cover the spread.

  6. Overnight Fee: An overnight fee in margin trading is a daily interest fee charged by a CFD or Spread Bet broker if you hold a position overnight. The fee varies according to the value and direction of your position and is deducted from your available balance.

  7. Transfer-Out Fee: ‍The transfer-out fee, also known as an exit fee, is the fee you pay for moving your investments from one stockbroker or trading app to another. Not all brokers charge an exit fee, but those that do typically charge per fund or holding.

  8. Inactivity Fee: Most trading apps do not charge this, but those that do usually charge you for making less than a certain number of trades within a specified period.

  9. Other Fees: Many brokers and trading apps charge additional fees for features such as stop losses, order limits or take profit orders. Other trading costs to consider include the cost of the trading software if you use a third-party software and the subscription fees for stock research websites. 

Tax on Stocks and Shares

The following are the tax on stocks and shares in the UK:

1. Tax When You Buy UK Shares: Stamp Duty Reserve Tax (SDRT)

When you buy UK shares electronically, you will pay a 0.5% Stamp Duty Reserve Tax (SDRT) to the government.

If you purchase UK shares using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000.

Stamp Duty on Irish registered stocks is 1%.

You do not pay Stamp Duty on AIM stocks or Exchange-Traded Funds (ETFs).

2. Tax When You Sell All Shares: Capital Gains Tax (CGT)

When you sell shares or other investments, irrespective of the country where the shares are registered or the currency the shares are denominated in, you may have to pay Capital Gains Tax if you make a profit.

‍You may have to pay tax on the following:

  • Shares that are not in an ISA or PEP.
  • Units in a unit trust.
  • Certain bonds (not including premium bonds and qualifying corporate bonds).

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance.

This tax year, the Capital Gains tax-free allowance is £12,300 (£6,150 for trusts). This means you will not have to pay tax on the first £12,300 profit you make from selling your stocks and shares.

‍Additionally, the first £2,000 you receive in dividend payments is tax-free. Visit GOV.UK for more information on the tax on dividends and the dividend allowance.

You may also be able to reduce your tax bill by deducting losses or claiming reliefs - this depends on the asset. Another way to limit your tax bill is by trading certain kinds of leveraged products. Please speak to your tax adviser for more information. Also, visit GOV.UK for more on Capital Gains Tax allowances.


Frequently Asked Questions

1. What is the best stock trading app for beginners in the UK?

Here are the best stock trading apps for beginners in the UK:

  1. Freetrade - Low cost; commission-free trading; beginner friendly
  2. eToro - 0% Commission on real stocks; 3,000+ instruments
  3. InvestEngine - Low cost; 500+ commission-free ETFs
  4. Interactive Investor - One free trade per month; 40,000+ instruments
  5. DEGIRO - Cheap share dealing; 200 commission-free ETFs
  6. IG - 0% Commission on US stocks; 13,000+ instruments
  7. Wealthyhood - Low cost; 50+ commission-free ETFs

2. How do I get into stock trading in the UK?

The easiest way to get into stock trading in the UK is to download a stock trading app, research the stocks you want to invest in, deposit some funds into the trading app, and start trading. Today, the best trading apps will allow you to start trading with as little as £1. Some apps, like eToro, give you access to a demo account with US$100,000, which you can use to practise stock trading until you become confident enough to invest real money.


3. What should a beginner invest in?

Beginners can invest in the following:

  1. Individual stocks and shares
  2. Index tracker funds
  3. Exchange-traded funds (ETFs)
  4. Exchange-traded commodities (ETCs)
  5. Government bonds and gilts
  6. Corporate bonds
  7. Treasury bills

4. What is the best trading app in the UK?

Here are the best trading apps in the UK:

  1. eToro - 0% Commission on real stocks; 3,000+ instruments
  2. Freetrade - Low cost; commission-free trading; beginner friendly
  3. InvestEngine - Low cost; 500+ commission-free ETFs
  4. FinecoBank - Commission-free trading up to £500; 20,000+ instruments
  5. Interactive Investor - One free trade per month; 40,000+ instruments
  6. Hargreaves Lansdown - Lots of research, insights and tips
  7. DEGIRO - Cheap share dealing; 200 commission-free ETFs
  8. Wealthyhood - Low cost; 50+ commission-free ETFs

5. How much should I invest per month?

You should only invest as much or as little as you feel comfortable with every month. At Koody, we recommend using the 50-30-20 budget calculator to divide your monthly net income into three categories: needs (50%), wants (30%), and savings and investments (20%). If you allocate 20% of your income to savings and investments, you can reasonably decide how much of that 20% you want to invest monthly. Budget by Koody is an excellent tool for sorting out your finances, categorising your spending and making plans for your future.


6. Can you make a living trading in the UK?

Yes, you can make a living trading stocks in the UK. Traders make money by identifying big wins and closing positions early enough to make a sizable profit. The amount of money a trader can make from trading depends on their initial capital, trading strategies, investing savviness and risk management plan.


7. Can you self-learn trading?

Self-learning to trade is arguably one of the best ways to learn how to trade. There is an abundance of free and paid resources available online to help you become an excellent trader. Peter Hargreaves, the co-founder of the largest investment platform in the UK, Hargreaves Lansdown, famously started the company trading from a bedroom in 1981. He originally trained as an accountant and worked as a computer salesman. To teach yourself to become a stock trader, invest in books and quality online courses.


8. How much tax do traders pay in the UK?

When you buy UK shares electronically, you will pay a 0.5% Stamp Duty Reserve Tax (SDRT) to the government. If you purchase UK shares using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000. Stamp Duty on Irish registered stocks is 1%. You may also pay Capital Gain Tax and Income Tax on the gains and dividends from your trades, respectively.

9. Why do most traders lose money?

One of the main reasons traders lose money 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 traders to sell, even when their strategy suggests that they should not. Other reasons traders lose money include not carrying out sufficient research, averaging down positions, lack of diversification and overtrading.

10. Why is stock picking difficult?

Stock picking is notoriously difficult for the average trader because markets tend to be efficient, especially over long periods. The efficient-market hypothesis (EMH) states that asset prices reflect all available information. Hence, it is impossible to “beat the market” consistently on a risk-adjusted basis since market prices should only react to new information. This is the primary thesis behind investing in passive index tracker funds.

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