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: Mar 17, 2023
Best trading platform UK

Contents:

Best Trading Platforms in the UK

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

Compare the best trading platforms in the UK:


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. With eToro, you have real-time access to thousands of stocks, ETFs, indices, commodities, forex, cryptocurrencies and NFTs from top exchanges worldwide. You also have access to eToro’s impressive range of fundamental and technical analysis tools suitable for both beginners and expert traders. eToro gives you access to market news, economic data, social media and news sentiment trends and advanced charting tools. ProCharts, a professional-grade technical analysis tool available via eToro, enables you to compare charts from different financial instruments and time frames. The software also provides risk management tools, such as Stop Loss, Take Profit and Trailing Stop Loss, which you can use to better manage your positions and protect your investments.

For customers who prefer ready-made investment portfolios, eToro has over 40 fully allocated, balanced investment portfolios, focusing on market segments you can understand and relate to. Some of the portfolios include MetaverseLife, BigTech, GoldWorldWide, Vaccine-Med, BitcoinWorldWide, Diabetes-Med, Driverless, and GigEconomy. These portfolios are a grouping of several assets, such as stocks, cryptocurrencies, ETFs, and even people, bundled together based on a predetermined theme or strategy. eToro also offers Copy Trading, which allows everyday investors to copy the trades or investments of top-performing traders on the eToro platform. Anyone can copy trades on eToro, and, in the same way, 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$50 (£40). For UK customers, eToro offers an eToro Money app which 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 highly volatile and unregulated in the UK. No consumer protection. 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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FinecoBank - Commission-free trading; 20,000+ Instruments

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.

FinecoBank users enjoy advanced tools, interactive charts and automatic orders via the website, mobile apps or PowerDesk platform. PowerDesk is an advanced and fully customisable trading platform with powerful charting, analytics tools, and stock screeners. The large spectrum of indicators and chart analysis available on PowerDesk will satisfy the needs of even the most experienced traders. PowerDesk also offers powerful risk management tools such as Stop Loss, Take Profit, Trailing Stop, Conditional Orders, One-Cancels-the-Other (OCO) and Basket Orders. Users can also access real-time prices across thousands of products, with live P&L updates and economic data. FinecoBank recently launched another robust trading software, FinecoX. It is quite similar to PowerDesk, with the main difference being that FinecoX is directly accessible across various browsers, so there is no need to download the software. In-house training to improve your trading knowledge and acquire specific trading skills for forex, options, CFD, or general trading is also available to all FinecoBank customers. FinecoBank is suitable for both beginners and experts. 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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XTB - Commission-free stock CFD trading; 5,600+ Instruments

XTB logo
Annual Platform Fee
£0
Dealing Charge
£0
Regular Investor Charge
£0

XTB is an easy-to-use, fully customisable European trading platform and one of the largest stock exchange-listed CFD and forex trading brokerages in the world. XTB provides traders instant access to hundreds of global markets and over 5,600 instruments, including forex, indices, commodities, stock CFDs and ETF CFDs. Customers can take advantage of tight spreads from 0.2 pips, 30:1 leverage and zero commission on stock and ETF CFDs.

With XTB, you can trade using the inhouse trading software, xStation, or via 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 trading 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 has 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 works.

It is free to open a trading account with XTB, and all users have access to a free demo account with £100,000 in 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. Stock and ETF CFD trading on XTB are commission free. Spread 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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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 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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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 Moneybox 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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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 monthly subscription fees (as opposed to annual percentage-based fees like most other investment platforms). It 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 £5.99. It 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. The platform 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; 15,000+ Instruments

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 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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Freetrade - Low cost; Commission-free trading; 6,500+ Instruments

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, 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 + 0.45%. 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 £4.99 per month and allows you to open a Stocks and Shares ISA in addition to your GIA. With the Plus Plan at £9.99 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.

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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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 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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Bestinvest - Low cost; Lots of research; 3,000+ Instruments

Bestinvest logo
Annual Platform Fee
0.4% - 0% (DIY)
0.2% - 0% (Ready-made)
Dealing Charge (Online)
£4.95
Regular Investor Charge
£0

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

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 largest 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 15,000 instruments, including 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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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 and trading app that allows you to trade 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, US stocks cost €0.50 + $0.004 per share, and Irish stocks are €4 + 0.05% per deal. To make sense of the charges, visit DEGIRO. DEGIRO does not offer an ISA or SIPP.

DEGIRO 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 currently has over two million customers across 18 countries.

Capital at risk.

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Saxo Markets - Diverse product range; 60,000+ Instruments

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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Plum - Low cost; Round Ups; 3,000+ Instruments

Plum Logo
Annual Platform Fee
£36 - £120
(£2.99 - £9.99/month)
Dealing Charge
£0
(+0.45% FX fee)
Regular Investor Charge
£0

Plum is a UK money management and investment app that helps you manage your money and build an investment portfolio. With Plum, you can invest in up to 21 funds and over 3,000 UK and overseas stocks. Plum also offers ethical or ESG investment options for those who want to invest in line with their values.

The Plum app 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 £1.20 on a snack, Plum will invest 80p for you. The app also calculates how much you can afford to set aside and invests it automatically once a week.

You can start investing with Plum with as little as £1. Plum charges a monthly subscription fee ranging from £2.99 to £9.99 per month; you get the first month free. Stock trading on Plum is commission-free (other charges may apply). FX rates also apply to US stocks at the spot rate + 0.45%. The average annual fund management fee across all funds offered is 0.39%. Plum’s suite of products includes a Stocks and Shares ISA, General Investment Account and Personal Pension.

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 ISAs. 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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Compare the Best Online Brokers for ISAs

The table below lists the best online brokers for Investment ISAs in the UK and representative examples of their fees.

Typically, the annual fees on your trading portfolio depend on whether you hold funds or shares in your Stocks and Shares ISA. Here, we assume you only plan to invest in individual stocks and shares.

If you plan to invest in funds or managed portfolios, use our dedicated investment fees comparison tool for funds or robo-advisors.

The table shows the annual charges (platform and dealing charges only) for holding individual stocks and shares in a Do-It-Yourself or Self-Select ISA.

A Do-It-Yourself ISA is a type of Stocks and Shares ISA that gives you the freedom to choose the specific investments that make up your trading portfolio.

With a Do-It-Yourself ISA, you can build a portfolio of stocks, bonds, funds, exchange-traded funds (ETFs), investment trusts (ITs) and more and manage it yourself. The best online stockbrokers in the UK will also allow you to choose from a range of managed and ready-made portfolios if you are not comfortable with stock selection and portfolio building.

Do-It-Yourself ISAs are usually best for people who are happy making their own investment decisions and want the freedom to use their tax-free ISA allowance however they please.

To make the best use of the table below, click on the column headers to sort from the most expensive to the cheapest trading platform in the UK and vice versa.

To make the best use of the table below, click on the column headers to sort from the most expensive to the cheapest trading platform in the UK and vice versa.


For example, if you want to see the cheapest online stockbroker for a lump sum investment of £20,000, click once on the £20,000 lump sum header. To see the most expensive broker for a lump sum investment of £100,000, click twice on the £100,000 lump sum header.

Continue this exercise on all the headers until you find what you are looking for. Then scroll down to read our assumptions and to learn more about Do-It-Yourself ISAs and online stockbrokers.

We have not included any calculations for regular investing, but we note the regular investor charges in the second column. 

The third column shows the share dealing charges for ad hoc investments. 

The fourth and fifth columns show the annual charges for lump sum investments of £20,000 and £100,000, respectively.

Please keep in mind that when you trade, your capital is at risk. ISA and tax rules also apply. Other charges apply.

Here are the best online brokers for Investment ISAs in the UK:


Platform Regular
Investor Charge
Dealing
Charge
£20,000 £100,000 Learn More
AJ Bell1.509.95161161DETAILS
Barclays1.006.00120172DETAILS
Bestinvest4.95139459DETAILS
Charles Stanley11.50208378DETAILS
Close Brothers8.95157357DETAILS
EQI1.5010.99192407DETAILS
FinecoBank2.957171DETAILS
Freetrade0.006060DETAILS
Halifax Share Dealing2.009.50150150DETAILS
Hargreaves Lansdown1.5011.95188188DETAILS
iDealing9.90139139DETAILS
Interactive Investor (Investor)5.99120120DETAILS
Interactive Investor (Super Investor)5.99240240DETAILS
InvestEngine0.0000DETAILS
iWeb5.00160160DETAILS
Strawberry7.50160340DETAILS
Willis Owen1.507.50170440DETAILS
X-O5.957171DETAILS
Primary Data Source: The Lang Cat

Assumptions

The calculations above are based on the following scenarios:

  1. £20,000 lump sum (a year’s ISA allowance)
  2. £100,000 lump sum (if you have some ISAs from previous years and are transferring in)

We also assume you will make 12 ad hoc deals in the same year.

A deal is either one of buying or selling an investment. It is also called a trade. 

We use the colours green, amber, and red to indicate how expensive or cheap a stock trading platform is compared to the others. The cheapest stock trading platforms are coloured green, the more expensive ones red, and the others amber.

Keep in mind that a platform showing up as green does not make it the best trading platform for you, as cheap does not always equal good. Depending on what you are looking for, some of the more expensive trading platforms could have a wider variety of stocks, bonds, funds, ETFs, and more.

If you are investing small amounts and choose to go with the cheapest trading platform for that amount, note that some of the more expensive platforms become cheaper as your pot increases. Consider Interactive Investor, for example.

Additionally, we show the costs which apply to the first year only. It is important to mention this because, with trading platforms like iWeb, your charges reduce after the first year. Whereas with platforms like EQi, your charges might increase after the first year.

Finally, for each online stockbroker listed in our comparison table above, your money is protected by the Financial Services Compensation Scheme (FSCS) or the equivalent European scheme up to a maximum of £85,000 per person.


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 trading platforms in the UK will allow you to trade shares via 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 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 trading 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 Pick Stocks

Deciding what shares to buy can be intimidating for the first-time investor or trader, but it does not 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 utilities 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 and trading 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 announcements, 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 platforms 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 into 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.

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 macroeconomic and microeconomic news, 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 for a stock portfolio.

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.

You might like: Best ETFs and Best Index Funds.

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.

Types of Traders

In the stock market, there are many different types of traders who employ various strategies to make trades. Here are a few of the most common types of traders:

  1. Scalpers: Scalpers make a large number of trades in a short period of time, usually holding onto each position for just a few minutes. They aim to make small profits on each trade and rely heavily on technical analysis.

  2. Day Traders: Day traders make trades that are opened and closed within the same trading day. They also rely heavily on technical analysis but may hold positions for a bit longer than scalpers.

  3. Momentum Traders: Momentum traders look for stocks experiencing a strong upward or downward trend and try to ride that trend for a profit. They also rely heavily on technical analysis.

  4. Swing Traders: Swing traders hold positions for a bit longer, usually for a few days to a few weeks. They aim to profit from short-term price movements and also use technical analysis.

  5. Technical Traders: Technical traders use charts and other technical indicators to make trades. They pay attention to the historical performance of a stock and make trades based on patterns they observe.

  6. Fundamental Traders: Fundamental traders focus on the underlying financial and economic conditions of a company as well as the macroeconomic environment. They follow the news, study financial statements and use macroeconomic and company-specific data to make decisions about trades.

  7. Position Traders: Position traders hold positions for a more extended period of time, usually weeks or months. They focus on a company’s long-term prospects and make trades based on its fundamentals.

Each type of trader has a different approach, time frame and trading strategy. Scalpers and day traders focus on short-term price movements, while swing and position traders focus on medium- to long-term price movements. Technical traders focus on charts and indicators, while fundamental traders focus on the underlying financial and economic conditions of a company as well as the macroeconomic environment. The best trading platforms in the UK provide the tools and support for each type of trader.

How to Become a Trader

To become a trader in the UK, you need to open a brokerage account and start trading stocks with online brokers such as eToroAJ Bell, and Interactive Investor.

Trading stocks can be a profitable or unrewarding experience depending on your level of trading knowledge and savviness as an investor, 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 (or brokerage commission), foreign exchange fee, stamp duty, spread, overnight fee, transfer-out fee and inactivity fee. The specifics of the fee you get charged will depend on the trading platform you choose. Here is a detailed breakdown of stock trading fees.

  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 platforms 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 platforms 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 platforms 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.

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 £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.

Stock Trading Terms and Financial Ratios

To succeed in stock trading, one must understand the terminologies and financial ratios used in stock analysis. Here are some important trading terms and ratios to get you started:

Stock Trading Terms

  1. Bid Price: The bid price is the highest price a buyer is willing to pay for a security.

  2. Ask Price: The ask price, also called the offer price, is the lowest price a seller is willing to accept for a security.

  3. Bid-Ask Spread: The bid-ask spread is the difference between the bid price and the ask price. It is a measure of the liquidity of a security. The narrower the spread, the more liquid the security.

  4. Fundamental Analysis: Fundamental analysis is a method of evaluating a security by analysing its underlying financial and economic fundamentals, such as a company’s revenue, earnings, and management team.

  5. Technical Analysis: Technical analysis is a method of evaluating a security by analysing its past price and volume data to identify patterns that can indicate future price movements.

  6. Price-Volume Action: Price-volume action refers to the relationship between the price and volume of the security being traded. It is used in technical analysis to identify patterns in the market that can indicate future price movements.

  7. Bear Market: A bear market refers to a prolonged period of falling stock prices, usually indicated by a decline of 20% or more.

  8. Bull Market: A bull market refers to a prolonged period of rising stock prices, usually indicated by a rise of 20% or more.

  9. Lot Size: Lot size refers to the number of shares in a trade or investment.

  10. Leverage: Leverage refers to the use of borrowed money to increase the potential return on an investment. For example, if an investor uses leverage to buy a stock, they can potentially make a larger profit if the stock price goes up but also stand to lose more if the stock price goes down. Your online stockbroker or trading platform typically provides the loan used in leveraged trading.

  11. Margin: Margin refers to the amount of money an investor must deposit in order to trade on margin. With margin trading, you can borrow money from a broker to trade a larger position than you would normally be able to with the money you have on hand. You can think of margin as collateral for leveraged trading.

  12. Spot: Spot refers to the current market price for a security or commodity.
  13. Going Long: Going long refers to a trading strategy in which an investor buys a security with the expectation that the price will rise.
  14. Going Short:  Going short refers to a trading strategy in which an investor sells a security that they do not own, with the expectation that the price will fall.
  15. Arbitrage: Arbitrage refers to the practice of taking advantage of differences in price between two or more markets to make a profit. For example, an investor might buy a stock on one market and then sell it on another at a higher price.

Financial Ratios for Stock Analysis

  1. Earnings per Share (EPS): Earnings per share (EPS) is a financial ratio that calculates the amount of profit a company generates per share of stock. The EPS is calculated by dividing the company’s net income by the number of outstanding shares. EPS is used to determine a company’s profitability and is an essential factor in valuing a company’s stock.

  2. Price-to-Earnings Ratio (P/E Ratio): Price-to-earnings ratio (P/E ratio) is a financial ratio that compares a company’s stock price to its earnings per share. The P/E ratio is calculated by dividing the stock price by the EPS. A high P/E ratio indicates that the stock is overvalued, while a low P/E ratio indicates that the stock is undervalued. The P/E ratio can also be inverted to calculate an earnings yield.

  3. Return on Equity (ROE): Return on equity (ROE) is a financial ratio that measures how well a company is generating profits relative to the amount of shareholder equity. The ROE is calculated by dividing the company’s net income by shareholder equity. A high ROE indicates that a company is generating a high return on the shareholders’ investment.

  4. Debt-to-Capital Ratio (D/C Ratio): Debt-to-capital ratio (D/C ratio) is a financial ratio that compares a company’s total debt to its total capital. The D/C ratio is calculated by dividing the company’s total debt by its total capital. A high D/C ratio indicates that a company has a high level of debt relative to its capital and may be at risk of default depending on the type of company.

  5. Interest Coverage Ratio (ICR): An interest coverage ratio (ICR) is a financial ratio that measures a company’s ability to meet its interest payments. The ICR is calculated by dividing the company’s earnings before interest and taxes (EBIT) by its interest expense. A low ICR indicates that a company may have difficulty meeting its interest payments.

  6. Enterprise Value to EBIT (EV/EBIT): Enterprise value to EBIT (EV/EBIT) is a financial ratio used to evaluate a company’s financial performance by taking into account the company’s debt and cash. It is calculated by dividing a company’s enterprise value by its EBIT. A low EV/EBIT ratio suggests that a company’s stock may be undervalued.

  7. Gross Margin: Gross margin is a financial ratio that measures a company’s profitability by calculating the percentage of revenue that remains after accounting for the cost of goods sold (COGS). It is calculated by dividing a company’s revenue minus COGS by its revenue. A higher gross margin indicates a higher level of profitability and a stronger ability to generate profits from sales. It is used as an indicator of a company’s pricing strategy, cost control measures, and overall financial health and stability.

  8. Operating Margin: Operating margin is a financial ratio that measures the profitability of a company by comparing its operating income to its revenue. The operating margin is calculated by dividing the company’s operating income by its revenue. A high operating margin indicates that a company is generating a high level of profit from its operations.

  9. Working Capital Ratio: Working capital ratio is a financial ratio that measures a company’s liquidity by comparing its current assets to its current liabilities. The working capital ratio is calculated by dividing a company’s current assets by its current liabilities. A high working capital ratio indicates that a company has a high level of liquidity.

  10. ​​Quick Ratio: Quick ratio, also called acid-test ratio, is another measure of liquidity. It is a financial ratio that measures a company’s ability to pay its short-term obligations with assets that can be easily converted to cash. The quick ratio is calculated by dividing a company’s current assets minus inventory and prepaid expenses by its current liabilities. A high quick ratio indicates that a company has a high level of liquidity.


Frequently Asked Questions

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

The best trading platforms for beginners in the UK are eToro, Freetrade, InvestEngine, Moneybox and Interactive Investor.

eToro, Freetrade, InvestEngine and Moneybox 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 and InvestEngine are 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 market. 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.


2. 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 Vanguard, InvestEngine, and Bestinvest. 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.

3. What is a brokerage account?

A brokerage account is a taxable investment account used to buy and sell stocks, shares, bonds, funds and other investments. In the UK, a brokerage account is the same as a general investment account (GIA), trading account, or share dealing account.

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

Like a standard bank account, you can transfer money in and out of your GIA or brokerage account whenever you want. Other types of accounts which you can use to buy and sell investments include Stocks and Shares ISAs, Lifetime ISAs, Junior ISAs (for children) and Self-Invested Personal Pensions (SIPPs).

ISAs or individual savings accounts are tax-free accounts, so you never pay taxes on the gains from any investments held in them. The best places to buy stocks in the UK often offer most or all types of accounts listed above.


4. How do I open a brokerage account in the UK?

To open a brokerage account in the UK, visit an online broker’s website and request to open a general investment account (GIA). It is also possible to open a GIA by telephone or post with some stockbrokers.

With the GIA, you can buy, sell and hold any investment of your choice, including stocks and bonds. The best online brokers in the UK offer a brokerage or share trading account in the form of a GIA.


5. What types of assets can be held in a brokerage account?

When you open a brokerage account with an online trading platform, you can invest in a range of assets, including:

  1. Stocks and shares
  2. Funds
  3. Gilts
  4. Bonds
  5. Investment Trusts (ITs)
  6. Unit trusts
  7. Open-Ended Investment Companies (OEICs)
  8. Exchange-Traded Funds (ETFs)
  9. Exchange-Traded Commodities (ETCs)
  10. Structured products
  11. Leveraged products

6. How do I open an online stock trading account?

To open an online stock trading account in the UK, you need to do the following:

  1. Compare fees and features and decide on the best trading platform for you.
  2. Visit the platform’s website or download the app to apply for an account.
  3. Fund your account with GBP or the required currency.
  4. Research stocks, bonds, ETFs and other investment types.
  5. Choose your investments and start building your portfolio.

If you need help choosing investments, some trading platforms in the table above offer ready-made portfolios and financial advice. Financial advice typically comes at an extra cost.


7. What are the advantages of an online stock trading account?

Here are some advantages of an online stock trading account:

  1. You have the freedom to choose the specific investments that make up your portfolio.
  2. You get greater control over the design and management of your portfolio.
  3. If your trading account is an investment ISA, your entire portfolio and its dividends will be free of capital gains and additional income tax.
  4. You pay no advice fee.

8. What are the disadvantages of an online stock trading account?

Here are some disadvantages of an online stock trading account

  1. Online stock trading accounts can be quite risky for inexperienced investors.
  2. You need to keep up to date with the markets, which can be tedious and time-consuming.
  3. Some of these accounts do not offer a telephone trading service, so you always need to access the internet to trade.

If you are unsure about choosing an online stock trading account, it might be worth seeking independent financial advice from a suitably qualified financial adviser.

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

Here are the best online brokers in the UK:

  1. eToro - 0% Commission on real stocks; 3,000+ Instruments
  2. FinecoBank - Commission-free trading; 20,000+ Instruments
  3. XTB - Commission-free stock CFD trading; 5,600+ Instruments
  4. InvestEngine - Low cost; 500+ Commission-free ETFs
  5. Freetrade - Low cost; Commission-free trading; 6,500+ Instruments
  6. Pepperstone - Low cost; Speedy execution; 1,200+ Instruments
  7. Interactive Investor - One free trade per month; 40,000+ Instruments
  8. Bestinvest - Low cost; Lots of research; 3,000+ Instruments
  9. AJ Bell - Cheap if you make 10+ trades a month; 15,000+ Instruments
  10. Hargreaves Lansdown - Lots of research; 15,000+ Instruments


10. 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.

You might also like 🤓

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  5. Best Platforms for Index Funds
  6. Best Stocks and Shares ISA
  7. Best Trading Apps
  8. Best Robo Advisors
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Credits

  1. The Lang Cat
  2. Gov.uk

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