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 Platforms in the UK

Updated On: Feb 12, 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
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Best trading platform UK

Contents:

Best Trading Platforms in the UK

Our comparison tables are designed to help you find the best trading platforms in the UK.

Use the filters below to quickly locate the best UK stockbrokers for buying and selling stocks and shares, exchange-traded funds (ETFs), exchange-traded commodities (ETCs), investment trusts (ITs), contracts for difference (CFDs), foreign exchange (forex), options, and other trading products.

Please keep in mind that when you trade, your capital is at risk. The fees below are not exhaustive–other fees apply. ISA, pension, and tax rules also apply.

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

Here are the best trading platforms in the UK:

eToro - Good for beginners who want to copy experienced traders

eToro Logo
Annual Platform Fee
N/A
Dealing Fee
N/A
Regular Investor Fee
N/A
Instruments
4,500+
‍Stocks, Stock CFDs, Index CFDs, ETF CFDs, Forex, and Commodities.

Earn up to 5.3% annual interest on uninvested cash

eToro is a trading platform that offers investing in stocks and cryptoassets, as well as trading CFDs. With eToro, beginners and expert traders in the UK have real-time access to thousands of stocks, ETFs, indices, commodities, forex, cryptocurrencies, and NFTs from top exchanges worldwide. For beginners, specifically, eToro’s real stocks are commission-free, and you can buy them in fractions, which means you can buy a portion of an Apple stock for, say, £50 and pay no dealing fee (other fees may apply). For 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.

If the above is not your style and you’d rather invest in a ready-made investment portfolio, 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. Similarly, 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. 80 - 90% 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 - Good for active traders who want low-cost CFD and FX trading

XTB logo
Annual Platform Fee
£0
Dealing Fee
£0
(+0.5% FX fee on foreign stocks)
Regular Investor Fee
£0
Instruments
5,600+
Stocks, ETFs, Stock CFDs, Index CFDs, ETF CFDs, Forex, and Commodities.

Earn up to 4.9% 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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Interactive Investor - Good for stability, trustworthiness and security

Interactive Investor
Annual Platform Fee
£60 - £240
(£4.99 - £19.99/month)
Dealing Fee
£3.99
Regular Investor Fee
£0
Instruments
40,000+
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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Freetrade - Good for beginners who want to trade fractional shares

Freetrade
Annual Platform Fee
£0
Dealing Fee
£0
(+0.99% FX fee on US stocks)
Regular Investor Fee
£0
Instruments
6,500+
Stocks, ETFs, and Investment Trusts.

Freetrade is a mobile trading app that gives you access to thousands of UK and overseas stocks, ETFs, REITs, and investment trusts covering different sectors and markets worldwide. The Freetrade app can be accessed on iOS, Android and desktop devices and offers a slick and easy-to-use user interface and experience. The app is 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 apply to US stocks at the spot rate + 0.99%. To get the most out of Freetrade, you can choose from three subscription plans. The Basic Plan costs £0.00 per month and allows you to open a General Investment Account (GIA) and trade commission-free. The Standard Plan costs £5.99 per month and allows you to open a Stocks and Shares ISA in addition to your GIA. With the Plus Plan at £11.99 a month, you get a Self-Invested Personal Pension (SIPP) and a Stocks and Shares ISA in addition to your GIA. Dealing on Freetrade is commission-free, irrespective of the subscription plan you choose. Freetrade’s suite of products includes a Stocks and Shares ISA, General Investment Account (GIA) and SIPP.

Special offer: 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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InvestEngine - Good for short or long-term low-cost ETF investing

InvestEngine Logo
Annual Platform Fee
0% - 0.25%
Dealing Fee
£0
Regular Investor Fee
£0
Instruments
500+
ETFs.

InvestEngine is a low-cost ETF investment platform that provides 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 leading global asset managers.

With InvestEngine, you can invest in two ways depending on your tolerance for risk and savviness as an investor: beginner investors or those who prefer 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 are a selection of ETFs based on your preferences and risk tolerance. Once you’ve selected one, you do not have to do anything else besides monitor the performance of your investments. Advanced or more confident investors can choose from 500+ commission-free ETFs and build their portfolios themselves. InvestEngine also offers fractional investing, which allows you to buy bits and pieces of an ETF with as little as £1. This enhances your ability to build a diversified portfolio even if you have a small amount of money to invest. With the DIY Portfolio, there are no platform fees. However, the managed portfolios attract a fee of 0.25% per year. All InvestEngine portfolios are free of set-up fees, dealing fees, ISA subscription fees or withdrawal fees.

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

Capital at risk.

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Pepperstone - Good for traders who prioritise speedy execution

Pepperstone logo
Annual Platform Fee
£0
Dealing Fee
From 0.10% (UK Stock CFDs)
From 0.6 pips (Forex)
Regular Investor Fee
£0
Instruments
1,200+
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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CMC Markets - Good for traders who want to go all in on forex

CMC Markets Logo
Annual Platform Fee
£0
Dealing Fee
£0
Regular Investor Fee
N/A
Instruments
12,000+
Stock CFDs, Index CFDs, ETF CFDs, Forex, 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, 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. 67% 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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AJ Bell - Good if you want a UK-first experience (ISA, LISA, SIPP, etc.)

AJ Bell Logo
Annual Platform Fee
0.25%
(max £3.50 per month)
Dealing Fee (Online)
£9.95 - £4.95
Regular Investor Fee (Online)
£1.50 per deal
Instruments
15,000+
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 £9.95 for shares (reducing to £4.95 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 - Good if you want extensive market research

Hargreaves Lansdown
Annual Platform Fee
£0
‍‍(Fund & Share Account)
Dealing Fee (Online)
£11.95 - £5.95
Regular Investor Fee
£1.50 per deal
Instruments
15,000+
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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Saxo - Good for traders who want access to a diverse product range

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
£0
Instruments
71,000+
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. 64% 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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Bestinvest - Good for long-term focused traders and passive investors

Bestinvest logo
Annual Platform Fee
0.4% - 0% (DIY)
0.2% - 0% (Ready-made)
Dealing Fee (Online)
£4.95
Regular Investor Fee
£0
Instruments
3,000+
Stocks, Bonds, Funds, ETFs, and Investment Trusts.

Bestinvest is a UK low-cost investment platform that allows you to trade or invest in over 3,000 instruments, including shares, funds, ETFs, and investment trusts. With Bestinvest, you can build an investment portfolio in two ways depending on your personal preferences, goals and attitude to risk.

Beginners or those who prefer a ready-made investment can build their portfolio by selecting one of Bestinvest’s ready-made investment portfolios. These off-the-shelf style portfolios are created and managed by the team at Bestinvest and come with a carefully selected and diversified collection of investments. Once you have picked one, you do not need to do anything else. There are three ranges to choose from: Expert, Smart and Direct, depending on whether you want to maximise the returns for the risk you take, focus on cost-efficiency or focus on individual investments. The team at Bestinvest will walk you through the process of selecting a ready-made portfolio. Advanced or more confident investors can choose from a wide range of funds, shares, ETFs and ITs and build their portfolios themselves.

To start building your portfolio with Bestinvest, you can deposit a lump sum or set up a monthly savings plan (which allows you to automatically save or invest a set amount into your investment account every month). There are no set-up fees or fund dealing charges with Bestinvest. Bestinvest charges an annual platform fee ranging from 0.40% to 0% for DIY investing and 0.20% to 0% for ready-made investing. The dealing fee for buying and selling shares online is £4.95 per deal. Bestinvest’s suite of products includes a Stocks and Shares ISA, Junior Stocks and Shares ISA, General Investment Account, SIPP and Junior SIPP.

Capital at risk.

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What Is Trading?

Trading is the buying and selling of shares in publicly listed companies. It is also called share dealing or stock trading.

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.

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.

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

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.

Companies issue shares to raise money to fund their activities. Individuals and institutions trade shares to benefit from the successes of companies they believe in.

Why Trade Stocks and Shares?

When you trade stocks, you may benefit from capital gains, receive dividends, beat inflation, take advantage of compound interest to grow your investments and vote at shareholder meetings.

How Does the Stock Market Work?

A stock market is a marketplace where buyers and sellers come together to trade publicly listed company stocks on stock exchanges such as the London Stock Exchange (LSE), the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDAQ), and the Shanghai Stock Exchange (SSE). The NYSE and Nasdaq are the two largest stock exchanges in the world based on the total market capitalisation of the companies listed on each exchange.

To trade stocks in the UK, you need to open a stock trading account with a trading platform or stockbroker. The best stockbrokers in the UK will allow you to hold your investments in a tax wrapper, such as an Individual Savings Account (ISA), General Investment Account (GIA) or Self-Invested Personal Pension (SIPP).

Types of Stock

There are two main types of stock that companies can issue to raise capital: common stock and preferred stock. A third type of stock also exists, which is a type of common stock called dual-class stock. See below:

  1. Common Stock: Common stock represents ownership in a company, and holders of common stock have the right to vote on company matters and receive dividends. 

  1. Preferred Stock: Preferred stock does not typically carry voting rights, but holders of preferred stocks have a higher claim on assets and earnings than common stockholders. Preferred stockholders also usually have priority to receive dividends over common stockholders.

  1. Dual-Class Stock: Dual-class stock is a type of common stock that gives certain shareholders, often company founders or executives, more voting power than other common shareholders. This structure allows these select shareholders to maintain control of the company while still raising capital through the sale of common stock. You may have noticed some companies with Class A and Class B shares. These kinds of companies have a dual-class structure. Examples of companies with dual-class stock include Alphabet’s Google, Meta, and Ford Motor Company.

Stock Market Indices

A stock market index is simply a list of stocks in any given market. It is used as a benchmark to measure stock market performance.

Examples of stock market indices include:

  1. S&P 500: The S&P 500 index lists the 500 largest publicly traded companies in the US, and it is considered a benchmark for the overall performance of the US stock market.

  2. Dow Jones Industrial Average (DJIA): The Dow Jones Industrial Average (DJIA) or Dow 30 index tracks the performance of 30 large publicly traded companies in the US, primarily blue-chip companies considered leaders in their industries. It is one of the oldest and most widely followed indices in the world.

  3. FTSE 100: The FTSE 100 is a UK index which includes the 100 most highly capitalised companies listed on the London Stock Exchange. The FTSE 100 is seen as a barometer of the UK economy and is often used as a benchmark for UK stock market performance.

Market Capitalisation and Sectors

Market capitalisation, often referred to as “market cap,” is a way to measure the size of a company based on the total value of its outstanding shares of stock. It is calculated by multiplying the number of outstanding shares by the current market price of each share.

When it comes to stock trading, companies are often classified based on their market capitalisation. Small-cap stocks refer to companies with a market cap of less than $2 billion. Mid-cap stocks have a market cap between $2 billion and $10 billion, and large-cap stocks have a market cap of more than $10 billion.

Investing in small-cap stocks can be riskier than investing in mid- or large-cap stocks but can also lead to greater potential returns. Mid-cap stocks tend to have more stability and a moderate level of risk, while large-cap stocks are generally considered less risky but may have lower potential returns.

When trading stocks, you will notice that there is a standard classification of industries and sectors. The Global Industry Classification Standard (GICS) is a system used to classify companies based on their economic characteristics and business operations. The GICS system includes 11 sectors:

  1. Energy
  2. Materials
  3. Industrials
  4. Consumer Discretionary
  5. Consumer Staples
  6. Health Care
  7. Financials
  8. Information Technology
  9. Communication Services
  10. Utilities
  11. Real Estate

Traders make decisions about what companies to invest in based on many factors, including market capitalisation, industry sectors, and geographical location.

How Much Money Can I Make in the Stock Market?

The amount of money you can make in the stock market depends entirely on your choices.

Using the S&P 500 as a benchmark for the stock market’s overall performance, we can see that it enjoyed significant growth in the ten years leading to 2020.

In 2010, the S&P 500 had a closing value of 1,115.10. By the end of 2020, the index had grown to 3,756.07, an increase of 238% over the decade.

The stock market experienced a steady rise in the early part of the decade, with the S&P 500 reaching new all-time highs in 2013 and 2014.

However, the market experienced a significant downturn in late 2015 and early 2016, as concerns over a global economic slowdown and the impact of falling oil prices weighed on investor sentiment.

The market then rebounded in 2016 and continued to grow steadily until 2020, reaching new all-time highs in August 2020, driven by hope in the COVID-19 vaccine and the US stimulus package. However, the market faced a sharp downturn as the pandemic continued to impact the economy, and uncertainty about the outcome of the US Presidential Election in 2020 increased.

Please keep in mind that past performance is not a reliable indicator of future performance.

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 or bonds 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 platform or stockbroker. The best platforms 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 platforms will accept an initial investment of about £25, while others might allow you to start trading with £1. Trading platforms 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 platform 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 open a sell position (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 in the UK

To trade stocks in the UK, you’ll need to:

  1. Create an account with a broker, such as eToro or Interactive Investor. The best way to buy stocks in the UK is to purchase them online from a stockbroker or trading platform, such as eToro or Interactive Investor. Creating an online account with a stockbroker is a straightforward process. It usually involves signing up via a web portal and providing personal information, like your name, email, and home address. You should research various brokers and compare their fees, trading software, and customer support before investing.
  2. Verify your identity and fund your account using a debit card or via bank transfer. After selecting a suitable broker, you’ll need to verify your identity and fund your account. This is also fairly straightforward. You may have to submit a valid ID, such as your passport, driving licence, or National Insurance number, for verification. You may also have to deposit some money, which could be in the local currency, GBP or a foreign currency, such as USD. If the broker accepts only foreign currencies, they will provide a suitable means to convert your GBP to the required currency, usually for a fee, called an FX fee. Take some time to understand the broker’s deposit, withdrawal, and fee policies before proceeding.
  3. Complete a W-8BEN form for tax purposes if you plan to buy US shares. As a UK investor, you’ll need to complete a W-8BEN form, which allows you to claim a reduced rate of withholding tax on any US-sourced income, such as dividends from Apple or Microsoft shares. It is the broker’s responsibility to provide you with this form, so you need not worry too much about it.
  4. Choose a tax wrapper, such as an ISA or SIPP. 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’ve already used up your ISA allowance for the tax year, you can choose to invest in a general investment account (GIA). With the GIA, you are still entitled to some tax benefits, such as the Capital Gains tax-free allowance (see next section).
  5. 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. Before choosing your market, you’ll need to decide whether you want to invest directly (where you buy real stocks and shares) or trade on margin (where you buy products like forex, commodities, and options).
  6. Research stocks, ETFs, and other instruments. Before buying any stock, it is important to carry out thorough research. You’d want to consider factors such as market capitalisation, earnings reports, liquidity, technology and innovation, team, company performance and competition. Most people start with the biggest and most popular companies in the world, as they are usually the safest and most reliable. Such companies could include the likes of Apple, Google, Microsoft, Tesla, Meta (Facebook), and Amazon. If you would rather not pick out individual stocks, it might be sensible to trade ETFs.
  7. Place your first “buy” or “sell” order depending on what direction you think the market will go. 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”. Shorting a stock is usually a leveraged (or margin) trade.
  8. Take necessary steps to manage your risk. Even the most successful traders experience losses, making risk management an essential aspect of stock trading. Techniques to limit potential losses include setting stop-loss orders that automatically close a position once a certain loss level is reached, limiting the percentage of your account balance risked on a single trade, and diversifying your trades across different currency pairs.
  9. 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.

Tax on Stocks and Shares in the UK

The following are the taxes 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 £6,000 (£3,000 for trusts). This means you will not have to pay tax on the first £6,000 profit you make from selling your stocks and shares unless you have already used up your allowance elsewhere, for example, on the profit from the sale of cryptocurrencies.

Additionally, the first £1,000 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 platform to short stocks in the UK?

Here are the best platforms for short-selling stocks in the UK:

  1. XTB - Trade stock and ETF CFDs from 0% commission
  2. eToro - Trade stock and ETF CFDs from 0.15% market spread
  3. Pepperstone - Trade stock and ETF CFDs from 0.10% commission
  4. CMC Markets - Trade stock and ETF CFDs from 1 point market spread
  5. Saxo - Trade stock and ETF CFDs from 0.10% commission

2. Which trading platform is best for beginners in the UK?

The best trading platforms for beginners in the UK are Freetrade, eToro, InvestEngine, and Interactive Investor. All four platforms are easy to use, offer a wide range of trading instruments, and are available to download on iOS and Android devices.

eToro, Freetrade, and InvestEngine offer commission-free trading on some investment products like US stocks and ETFs. Commission-free trading means you pay no trading fee when you buy and sell investments. This can be particularly advantageous for beginners with little money to invest.

These platforms also offer fractional trading, which allows you to buy and sell bits and pieces of a stock or ETF. With fractional trading, you can invest in expensive stocks like Tesla ($TSLA), which typically costs over £150, with as little as £2 because you are buying a fraction of the stock instead of the whole. All platforms also offer a slick and easy-to-use mobile experience available on Android and iOS devices. eToro, InvestEngine, and Interactive Investor are also available on the web for those who prefer to trade on their computers.

Interactive Investor is the second-largest investment platform in the UK. It also has the second-widest range of investments in the industry. These features can benefit beginners who want to learn to trade but do not want to be limited to mobile app-only interfaces or a small number of trading instruments.

Finally, both eToro and Interactive Investor provide a demo account with virtual funds, which can be helpful for beginners who are not yet confident enough to trade with real money.

3. What are the best share dealing accounts in the UK?

The best share dealing accounts in the UK are Hargreaves Lansdown, AJ Bell, and  Interactive Investor. All three are seasoned, highly reputable brokers for trading stocks, ETFs, index funds, and other investment products in the UK.


4. Where can I invest with little money?

An investor with a small amount of money should look to invest for the long term in low-cost global or total-market passive index funds and ETFs via the cheapest trading platforms.

The cheapest trading platforms in the UK for index funds and ETFs are InvestEngine, Bestinvest, and Vanguard. These platforms do not charge a fund dealing fee, so you only ever pay the platform fee and fund manager costs. Other fees may apply.

5. Which is the best online broker in the UK?

Here are the best online brokers in the UK:

  1. eToro - Good for beginners who want to copy experienced traders
  2. XTB - Good for active traders who want low-cost CFD and FX trading
  3. Interactive Investor - Good for stability, trustworthiness and security
  4. Freetrade - Good for beginners who want to trade fractional shares
  5. InvestEngine - Good for short or long-term low-cost ETF investing
  6. AJ Bell - Good if you want a UK-first experience (ISA, LISA, SIPP, etc.)
  7. Hargreaves Lansdown - Good if you want extensive market research

6. What are the best trading apps in the UK?

The best trading apps in the UK are eToroFreetrade, and Interactive Investor. These are easy-to-use, low-cost mobile apps for trading shares, ETFs, REITs, and other investment products.


7. Why do most traders lose money?

Most stock traders lose money because they make impulsive decisions driven by emotions such as fear and greed. They also tend to trade too frequently, increasing the chance of poor trades and incurring high brokerage commissions.

Additionally, they often lack a solid investment strategy and risk management plan, which can lead to significant losses when the market turns against them. For example, a trader who buys a stock based on a hot tip from a friend without doing any research or analysis is more likely to lose money than a trader who carefully studies the company’s financials and industry trends.

Traders who lose money also tend to chase market trends and follow the crowd, encouraging a herd mentality and potentially creating a market bubble.

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  8. How to Invest in Oil
  9. How to Invest in ETFs
  10. How to Invest in Bitcoin

Credits

  1. London Stock Exchange
  2. GOV.UK

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