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Complete Guide to Online Trading in the UK

Last Updated November 12th 2020

Online Trading UK – Learn to Trade Online

Want to learn to trade online but not sure where to start?

Online Trading is more common than it ever has been before. For the most part, this is due to the popularisation of the internet over the last twenty years. Consequently, trading assets such as forex, natural gas, precious metals and stocks are no longer earmarked for huge organizations.

These days, just about anyone with a valid ID and enough money for a deposit can trade via an online broker. It has never been easier to buy and sell financial instruments from home or on the go.

If this sounds like something you are interested in, all you need to do is open a trading account with a reputable UK broker - and start trading. Sounds super easy, right? The problem of course is that with so many online brokers jostling for the top UK trading site title - it can be hard to see the wood for the trees.

With this in mind, this article will discuss everything you need to know about online trading in the UK.

In our complete guide to online trading in the UK, we are going to detail tradable assets and how they work, trading signals, and strategies. Not only that but all of the important metrics you need to look out for when searching for the best UK trading platform - and how to sign up today!

Online Trading Resources in the UK

If you’re looking to learn more about different types of online trading in the UK, check out the contents below:

What is Online Trading UK?

What Financial Assets can I Trade Online in the UK?

  1. Online Trading Contracts for difference (CFDs)
  2. Trading Forex Online in the UK
  3. Trading Cryptocurrencies Online in the UK
  4. Stocks and Shares Trading
  5. Commodity Trading
  6. Futures
  7. Options
  8. Indices/Indexes Trading

Trading Online in the UK: Tips for Making Money

Popular UK Trading Strategies

UK Online Trading Fees

How to Select a UK Trading Platform

How to open a UK Trading Account Today

Online Trading in the UK - Summary

Trading Online in the UK - FAQs

What is Online Trading UK?

Fundamentally, trading is the procedure of buying and selling assets - with the view of making a profit.

To give you an example, say you are interested in trading Facebook stocks. Your task will be to forecast whether or not the value of Facebook stocks will rise or fall. If you predict the market accurately, you will make a profit.

Irrelevant to whether you are interested in stocks, gold, bonds, indices, oil, cryptocurrencies or forex, once you have found a broker - you can trade from anywhere. It is imperative that you trade via a broker to enable you to gain access to these various global markets and execute orders for you.

If you’ve never traded a day in your life, do not worry. There are various options available to help you on your way. We are going to cover automated trading bots, trading tips, and asset options in detail throughout this page.

No matter which broker you choose, you will generally go through the basic procedure outlined below.

  • Find a broker you like
  • Sign up and provide personal information identifying who you are
  • Deposit the minimum amount into your new account
  • Choose an asset, such as oil or forex etc
  • Create a trade order

All in all the process is simple enough for traders of any level of expertise. Later on, we will delve into the signup process in a little more detail.

First, let’s explore the different types of assets you will have access to when trading online as a UK client.

What Financial Assets can I Trade Online in the UK?

In a nutshell, if there is a marketplace, value and demand for an asset - you can trade it in the online space. 

Here’s a list of assets available through many, but not all, UK trading platforms.

Online Trading Contracts for difference (CFDs)

For those unaware, CFDs are one of the most popular ways to trade in a short-term manner. Put simply, the principle idea is for you to predict what the value an asset will be in the future. Crucially - you will never need to own the actual asset.

However, not owning the asset isn’t a disadvantage. Imagine you decide to focus on ‘Light Sweet Crude Oil’. For you to physically take ownership of humongous oil tankers of crude oil would be beyond the realms of possibility. Not only would it be difficult and costly to organise the delivery of such an asset, but where on earth would your average Joe store a 10,000-ton oil tanker? 

With that in mind, and using the example above - your light sweet crude oil CFD will simply monitor the real-time fluctuations of the price of the asset. Because the CFD tracks the asset - all you need to do is decide what position to take.

Moreover, thanks to the internet, you are able to trade CFDs in a fast and easy manner - via your trading platform of choice. The same goes for any instrument traded via CFDs, insofar you do not need to worry about taking delivery of a tangible asset.

Here is a representation of how CFDs work :

  • You are trading oil
  • Let’s say that your trading platform of choice is quoting a price of $35.20 per barrel
  • The market is depicted via CFDs
  • The CFD uses the ‘light sweet crude oil benchmark’ (traded on Chicago Mercantile Exchange) to track real-time price shifts
  • You place a ‘sell’ order because you have a feeling that the value of the oil will fall
  • Let’s say that 4 hours later the light sweet crude oil benchmark quotes a price of $32.50
  • Consequently, the online CFD trading platform offers you a price of $32.50
  • You decide to close the position to lock in your gains
  • You’ve made a 7.67% profit

It’s clear to see from our hypothetical demonstration above, the real-world price of this asset shifted from $35.20 to $32.50. As such, the light sweet crude oil CFD via your broker mirrored the price shift of the previously mentioned benchmark (the real-world price).

An important thing to always be aware of when trading CFDs is that you have zero rights over the asset, in legal terms. The reason for this is that the CFD is not supported by a physical asset. As we mentioned earlier you won’t own a bar of gold or a tanker of oil. The CFD is simply a contract between yourself and the broker company you have an account with.

As you might have noticed by now, CFDs are a lot more malleable than conventional stocks and shares.

The reasons CFDs are considered to be super flexible are as follows:

  • Trading CFDs enables you to buy or sell - hence, you can profit irrespective of which way the markets are moving
  • You can usually get your hands on super competitive spreads
  • You are able to trade with more than your account permits - thanks to leverage
  • The vast majority of online trading platforms in the UK offer commission-free CFD trading

Ready to get started trading CFDs on eToro?

Forex Trading

forex market

Even those who have never traded so much as a bag of sugar will have heard of the foreign exchange. This is known as forex or FX in the online trading space. Put simply, you will be trading one currency against another - by buying and selling currency pairs.

The forex market is, globally, one of the most liquid markets there is. There are around 10 million active forex traders in the world today.

Let's hypothesise that you want to trade the British pound against the Australian dollar. The pair would be depicted as ‘GBP/AUD’. GBP and AUD will have an exchange rate at all times - and this rate will fluctuate by the second.

To give you an example:

  • Let's imagine the market price for GBP/AUD at this time is 1.82
  • In the short-term, you suspect the exchange rate will rise so place a ‘buy’ order
  • If on the other hand, you thought the exchange rate would fall you would have placed a ‘sell’ order

At the time of writing, there are well over 120 FX pairs that can be traded online. Much the same as with any asset, what’s available for you to trade will depend on the specific trading platform you join. For those who are new to forex trading, they are generally separated into three different types.

The three categories are exotic pairs, major pairs, and minor pairs - and we have included a brief explanation below.

  • Exotic FX Pairs: Exotic currency pairs will always include one developing currency such as the South African rand or Turkish lira. The other currency in the exotic pair will be a strong currency such as the euro or US dollar. Currencies like the Turkish lira are likely to be significantly more volatile. As such, your gains and your losses are potentially on a much bigger scale than minors and majors.
  • Major FX Pairs: When it comes to major pairs, they invariably include the mega strong US dollar. The other currency will always be an alternative major currency such as the Swiss franc, the British pound or the Japanese yen - to name a few. Major forex pairs are the most frequently traded currency pairs in the world. Moreover, trading majors enable you to get your hands on much tighter spreads.
  • Minor Pairs: In terms of minor pairs, despite the name, both currencies will be strong - but crucially will never include the US dollar. Minor pairs always come with competitive spreads and good liquidity.

The forex markets are open for business 24 hours a day 5 days a week. There are even trading opportunities over the weekends, although at much lower volumes.

Are you ready to trade Forex Online?

Further Reading:

Forex Trading Pairs - Top 10 Forex Pairs To Trade

How To Trade Forex In The UK

Forex Volatility - What Are The Most Volatile Currency Pairs?

Best Time To Trade Forex In The UK

Forex Trading for Beginners in the UK

Cryptocurrencies

cryptocurrency market

It’s quite possible that every man and his dog has heard of Bitcoin by now. Launched in 2009, it was the first cryptocurrency the world had ever seen.

Fast forward to 2020 - it’s approximated that there are now nearly 7,000 cryptocurrencies, with an estimated market cap sitting at just shy of $451 billion at the time of writing.

Cryptocurrency markets are comparable to the foreign exchange scene. The main similarity is that you are aiming to correctly predict the value of a pair in the future. As is the nature of trading generally, the value of the cryptocurrency asset will change throughout the day - in congruence with supply and demand.

In terms of actual cryptocurrency trading in the UK, there are generally 2 choices - which we discuss below.

Crypto-Cross Pairs

Crypto-Cross pairs are made up of two rival cryptocurrencies. To give you an example, if you are trading pairs BTC/XLM (Bitcoin/Stellar) - you are hypothesising what the exchange rate will be between Bitcoin and Stellar.

  • Let’s say for example that BTC/XLM is quoted at 15.40
  • You will get 15.40 Stellar for each singular Bitcoin.
  • Much like crypto/fiat pairs (which we cover next) you need to choose whether the value of the pair will rise or fall.

Crypto-cross trading could be considered quite convoluted. The reason it’s not as simple as trading other pairs is that it can be difficult to calculate profit and losses, due to the lack of real currency (for instance the US dollar).

Later down the line, in order for you to withdraw any profits, your crypto needs to be converted into fiat money. For those unaware, fiat money is essentially a currency which has been issued by the government - and it will never be backed by a commodity (like gold, for example). The most demanded fiat currency globally is without a doubt the US dollar.

Crypto-to-Fiat

Given that this type of trading is more complex, we advise starting with crypto-to-fiat pairs. Trading crypto-to-fiat pairs is very similar to trading commodities like crude oil, gold and platinum. That is to say, they are usually priced in USD.

You can also try crypto-to-fiat pairs through CFDs at your chosen trading platform. This way, you could potentially take advantage of tight spreads, protection from a regulatory body, and in some cases (such as eToro) commission-free trading.

Let’s give you a clearer idea of how trading crypto-to-fiat works. 

  • Imagine that you want to trade Bitcoin and go against the British pound
  • As such, you would be trading BTC/GBP
  • Let’s suppose the pair has a quoted price of £9,800
  • You think that it has been under-evaluated - so you place a ‘buy’ order worth £1,000
  • 3 days pass and the value of BTC/GBP has risen to £10,780
  • The value of BTC/GBP went from £9,800 to £10,780 which is a 9.99% increase
  • Pleased with your gains, you cash out on your profit and place a ‘sell’ order
  • From your £1,000 stake, you made a profit of £99.90 (£1,000 + 9.99%)

We’ve used GBP in our above example, but the lion’s share of crypto-fiat pairs will be quoted in USD. Other pairs like this include BTC/JPY (Bitcoin/Japanese yen) and ETH/USD (Ethereum/US dollar).

Read More:

5 Popular Cryptocurrencies To Buy And Sell In British Pounds

How Much Will Bitcoin Be Worth In 2021 And Beyond?

What Top 10 Cryptocurrencies To Invest In 2021?

What Are The 10 Most Popular Cryptocurrencies In The UK?

How Much Will Ripple Be Worth In 2021 And Beyond?

Would you consider buying cryptos?

Stocks Trading

stock market

Most people are familiar with stock trading, with the first exchange being founded way back in 1602. These days of course it’s mostly done online. You can very easily partake in the buying and selling of shares, but in order to access the market, you need to go through a trading platform.

Let’s start by explaining the contrast between investing in shares, and trading stocks.

  • Stock trading is considered a short-term strategy. Trading this way, you will not be the owner of the underlying asset. Instead, your shares will be backed by CFDs. Short-term stock trading consists of trying to predict the value of stocks further down the line. The goal being, to make gains from short-term price shifts.
  • The clue is in the name, but to clarify, by investing in shares - you are the owner of the underlying asset. This is a long term investment strategy which tends to mean holding onto shares for years at a time. Until you decide to sell your shares you will be a ‘stockholder’.

Stock traders tend to place multiple buy and sell orders at different points during a trading week. Rather than aiming to make huge profits over a long period of time - this type of trading invites smaller profits. You might hold onto the position for a week, but generally speaking, these positions will be closed within hours, or even a matter of minutes.

Chances are you are wondering what stock you will be able to trade? As we mentioned, trading stocks as CFDs simply means the CFD is monitoring an asset’s market value, in real-time.

There are over 60 stock exchanges around the world, all of which vary when it comes to trading volume and size. With that in mind, let's delve into some of the global marketplaces you will have access to online, as a UK investor.

  • London Stock Exchange
  • Deutsche Boerse
  • Euronext
  • Frankfurt Stock Exchange
  • Hong Kong Stock Exchange
  • Johannesburg Stock Exchange 
  • NASDAQ
  • New York Stock Exchange
  • Shanghai Stock Exchange
  • Shenzhen Stock Exchange
  • Sydney Stock Exchange
  • Tokyo Stock Exchange
  • Toronto Stock Exchange
  • And heaps more.

Before you get your heart set on a particular stock exchange - it’s always advisable to make sure your broker offers it, before signing up.

Please note that there will be some CFD brokers who will enable you to collect dividends when trading stocks.

To give you an example:

  • You think the value of Anglo American stock will rise
  • As a result, you elect to go ‘long’
  • Anglo American distributes its dividends
  • Your CFD account will reflect this with a new balance
  • Anyone who went ‘short’ will see a negative reflection on their own CFD account.

Would you consider trading stocks online?

Related: Best Shares to Buy NOW

Commodity Trading

commodity market

In a nutshell, commodities are raw materials which are often used to produce or power other goods.

The thing that most commodities have in common is that they tend to be tangible assets - insofar their intrinsic value is established by supply and demand. As we’ve touched on throughout this page, the value fluctuates on a second-by-second basis.

Some of the most traded commodities in the world are energies such as Brent crude oil, and industrial and precious metals like steel and copper. Then there are also agricultural commodities like soybeans and coffee.

When it comes to tradable commodities, the list goes on. That said, let us split the commodities up into 3 different categories to give you an idea of what you will be able to trade.

  • Energies: Natural gas, uranium, and fossil fuels such as coal. Various types of oil such as Brent crude oil and sweet crude oil. Interestingly, the latter is believed to be better quality than Brent crude, however, the two are often very close in price.
  • Industrial and precious metals: Gold, silver, platinum, aluminium, palladium, copper, lead, ferrous scrap, steel, nickel, cobalt etc.
  • Agricultural products: Orange juice, wheat, butter, corn, maize, fresh pork bellies, sugar, oats, rice,  live cattle, soybeans, beef, eggs, cocoa, and more.

If you aren’t a professional trader, you can easily trade commodities via CFDs. As we said, it’s the easiest way to trade oil or gold etc on the move.

Now we are going to illustrate what a commodity trade looks like when using a UK CFD trading site:

  • Let’s just imagine that you are looking to trade coal.
  • At $57 per ton, you think that coal is overpriced
  • You join a CFD broker in order to access the market
  • Next, you place a sell order for £1,000 as you have a feeling the price is going to fall
  • A couple of hours later the price drops to $50 per ton
  • This illustrates a drop of 12.2%
  • However, because you decided to go ‘short’ - you made 12.2%
  • Bearing in mind your stake was £1,000 - your profit is a very respectable £122

It’s clear to see from the above example that the base currency is irrelevant when you are trading commodities. The best trading platforms will enable you to access hundreds or thousands of markets - no matter what currency you use to deposit into your account.

Please note that due to various factors, such as overnight financing fees, commodity trading is not advised for long-term trading. Should you wish to invest in commodities in the long-term, then an ETF could be your best option.

Gold Trading Guide UK - Learn How to Trade Gold Online

Futures

This type of trading is considered to be more suitable for seasoned traders, simply because it’s not the simplest of markets to master.

Nevertheless, we are going to try and clear the mist of what futures trading entails. Even if you are a newbie trader now, later down the line you might want to contemplate this type of contract.

Futures are comparable to CFDs, in the sense that they enable you to predict the value of an asset at a later date - without having to own it. The disparity between futures and CFDs is that futures contracts always come with a contract expiry date - whereas CFDs do not.

Find below a simple outline of the main components of a futures contract:

  • In terms of timeframe, the average futures contract usually expires after 3 months
  • The moment the contract expires it will be fixed at what’s known as a ‘strike price’
  • To clarify, the ‘strike price’ is the price you have to pay at the point the contract expires

Now to give you an idea of what a futures trade would look like at an online UK broker - using platinum as an example:

  • Imagine that your 3-month platinum futures contract has a strike price of £750 per contract
  • You decide to buy 15 contracts, which takes your total stake from £750 to £11,250 (15 x £750)
  • 3 months pass and all of your contracts have expired
  • The value of platinum at this time is £900
  • In this scenario, you are able to sell your contract for £150 above the aforementioned strike price (£900-£750)
  • Considering that you have 15 platinum futures contracts - that equates to £2,250 profit

Futures contracts, like CFDs, can be applied to the majority of asset classes via a top-rated UK trading platform. Futures contracts are often used by organisations and companies such as mutual funds and pensions - meaning the firm is investing on someone else's behalf. 

Either way, this marketplace is often only accessible to institutional investors or brokers. This is largely due to the fact that futures are usually only found on global derivatives marketplaces such as the CME (Chicago Mercantile Exchange).

Crucially, these contracts tend to require a higher minimum investment, so if you are a UK retail client (i.e not a ‘professional trader’), then you will be better suited to CFDs. After all, you never need to worry about expiry dates or strike prices when trading CFDs - and minimum stakes are often just a few pounds!

Options

There’s often a common misapprehension that options and futures are the same.

Let us further explain the dissimilarities between the two, starting with a futures contract:

Scenario 1: Futures Contract

  • You hold a futures contract
  • Your expiration date comes around
  • You are now obligated to either sell or buy the asset in question

Scenario 2: Options contract

  • You hold an options contract
  • Your expiration date comes around
  • You hold the right but are not obligated to buy or sell the asset in question

When it comes to options, it is thought to be a more complicated type of trading and therefore better for traders with a fair amount of experience.

However, in the interest of our complete guide to UK trading online, we are going to go into a little more detail on how this investment space functions. After all, once you get to grips of how options actually work, they do offer a low-risk way to trade your favourite asset class. 

First thing’s first, you will need to pay a ‘premium’ in order to purchase an options contract. This premium is essentially like paying a predetermined deposit upfront. If your trade is unsuccessful all that you stand to lose is that initial premium.

To further explain, we have put together a few examples which should hopefully make options trading easier to grasp.

  • Let’s say you wish to buy an options contract on Royal Mail shares
  • Let’s say the price of 100 Royal Mail shares sits at £210
  • In this case, the options contract expires in 1 month
  • The strike price of these 100 shares is £235
  • You need to decide whether you believe the price of Royal Mail shares is going to rise above or fall below that strike price
  • Should you believe the price will rise above £235 - you buy a ‘call’ option’
  • If, on the other hand, you think the price will drop below £235 - you buy a ‘put’ option

Regardless of whether or not you predict correctly, you will have to pay the previously mentioned premium. No two UK trading sites are the same, but to give you an idea, you can usually expect to pay a premium of between 5% and 10% of the total contract value.

  • Let’s suppose you want to buy ‘call’ options on Royal Mail
  • As such, you envisage the price of the stock rising
  • Now you pay a £10.50 premium
  • Each contract is worth 100 Royal Mail shares, so your total outlay on the premium is £1,050  
  • The 1-month expiration date comes around and Royal Mail shares are now £250
  • This is £15 higher than the strike price of £235 (in our earlier example)
  • Your profit equates to £15 per share
  • After you subtract the £10.50 premium - your net gains amount to £4.50 for each share
  • As your put options contract is worth 100 Royal Mail shares, your total profit stands at £450 (£4.50 x 100)

As is apparent from our above examples, there are various aspects to consider before embarking on an options trading journey in the UK. With that said, once traders have a firm understanding of how options work - it is entirely possible to take advantage of this high reward, low-risk manner of trading. After all, the most you can lose from your trade is the initially premium!  

Indices/Indexes

indexes market

When it comes to indices, you are able to try and predict the wider value of the stock markets - in the future.

For example, let's hypothesise that you think the UK stock market is going to fall in value. In this scenario, you can place a ‘short’ order on the top UK index (which is FTSE 100).

Some other notable global indices are the Dow Jones Industrial Average (DJI), S&P 500 (SPX), Nasdaq Composite (IXIC), and NASDAQ 100. There are heaps more.

Let's assume you are trading the FTSE 100. This means that you will be predicting the rise or fall when it comes to the value of the top 100 companies listed on the London Stock Exchange. In other words, because you are able to speculate either way - this makes it a much less risky way to trade due to not being overly exposed to just one company.

Trading Online in the UK: Tips for Making Money

The main point of trading online is to make a profit. Of course, in taking that chance your money is at risk. Throughout this guide, we have covered the importance of correctly predicting the value of an asset - in the future.

The art of trading isn’t learned overnight, as traders spend years honing in on their skills. In the next part of our complete guide to trading online in the UK, we are going to run through the types of orders you can expect to choose between, information on gains and losses, and how to apply leverage.

Tip 1: Understanding Orders

Below you will find a simple explanation of the most commonly used orders when trading online in the UK.

  • Buy Order and Sell Order: No matter which asset takes your fancy, you always need to choose from a sell order or a buy order. Should you believe the asset will fall in value you place a ‘sell’ order. If you think the value of the asset will rise - place a ‘buy’ order.

    Of course, as with most rules, there are exceptions. In this case, the exception is options trading. In that case, as we explained earlier you would place either a ‘put’ order or a ‘call’ order.

  • Market Order and Limit Order: Next up, you might need to choose between a ‘market’ order and a ‘limit’ order. Put simply, a market order is useful when you wish to sell or buy at the price currently quoted. A limit order comes in when you wish to predetermine the price at which your trade will be executed. As an example, say Apple shares are £90, however, you wish to enter the market at £87. This is when you would use a limit order.
  • Take-Profit Order and Stop-Loss Order: Using a ‘stop-loss’ order can help you lessen your losses. For instance, let's say you are looking to exit your Apple position as soon as the order is at a 4% loss. As soon as that price has been instigated, your broker is going to close your order.

When it comes to ‘take- profit’ orders, you are following the same principle, but locking in your gains.

As soon as any of the aforementioned orders have been activated - you can count on your trade being executed. Due to the fact you’ve set up your take-profit and stop-loss orders - you can relax. Either way, your orders will be executed when the relevant price-point has been triggered.

Tip 2: Leverage Ratios

Irrelevant to the asset of your choosing, i.e indices, forex, stocks etc -  the overarching goal of day trading to make small, but regular gains. The obvious reason for this is that when trading in the online space most traders keep their positions open for less than a day.

For instance, if you were to finish a day even 1% in the green - you could consider that a prosperous trading day. On the contrary, a small scale margin like this might make trading a bit difficult. The reason being that ideally, you need to have enough capital behind you.

To give you an example, we said 1% in the green is a good trading day. But, if you only have £2,000 in capital that only equates to £20. 

£20 isn’t exactly going to lead you to a life of luxury yachts, let alone pay your electricity bill.  As a result, a large number of online traders in the UK take advantage of leverage. Think of it as a loan from your broker, enabling you to trade with more funds than you have in your trading account. Leverage is illustrated as a ratio - such as 1:20 or 1:5.

To explain further:

  • Let's suppose you apply leverage of 1:20 on your trade
  • You now have 20 x the amount you had to start with
  • This means that what would have been a profit of £100 will instead be £2,000

We do not recommend for inexperienced traders to use high levels of leverage. What can amplify your gains, can also magnify your losses. This option is not to be taken lightly. Traders who abuse leverage can be liquidated by the broker if they do not have enough account funds.

Tip 3: Calculate Your Profits

There are actually a few ways in which you can work out your profits and potential losses yourself. We think that the simplest way to do it is to work out the price shift in percentages. This would then be multiplied against your trade stake.

To give you an example of that calculation:

  • Let's imagine that you place a buy order with a value of £500 on EUR/USD.
  • The value of the pair rises by 6%
  • In this situation, you have made gains of £30 (£500 x 6%)
  • Now let's say the same pair has fallen by 12%
  • In this case, you have lost £60 (£500 x 12%)

This calculation is going to be very useful to you moving forward. This is because no matter what asset you decide on - the profit and losses calculation is the same.

Please find below another example:

  • Let's say you place a £1,000 sell order on the Dow Jones Industrial Average
  • Should the index fall by 3% - you would have made gains totalling £30
  • Next, imagine you place a buy order of £500 on Microsoft stocks
  • Microsoft stocks increase by 12% - your gains are £60

Popular UK Trading Strategies

There is no crystal ball, and no ‘get rich quick’ magic formula. Any seasoned trader will tell you that the trick is to learn the ropes, have a strategy and educate yourself on technical analysis and price charts. Not to mention of course keeping abreast of the latest financial and economic news.

So, If you want to maximise your chance of getting rich by trading forex or any other trading assets, it’s vital to have a solid strategy.

A commonly used strategy amongst traders is day trading. This is the art of placing multiple buy and sell orders throughout the trading day. The main objective being to make modest profits on a regular basis. By closing positions before the end of the trading day, you are able to fully avoid overnight financing fees - sometimes called swap-fees.

Day trading, in particular, is a type of trading that requires the studying of technical analysis. By performing chart analysis like this you are able to spot pricing trends - which can be helpful when it comes to deciding which way the market will go in the near future.

Learning to read technical analysis and price charts can take years upon years to fully comprehend. It is for this reason that trading signals and automated robots are becoming more popular. We are going to talk about this in more detail very shortly.

On top of day trading, other popular forms of trading include:

  • Scalping: Traders focus on tiny profits at a time when the asset in question is trading within a tight pricing range.
  • Swing Trading: Traders are able to hold a position open for days or weeks at a time
  • Breakout: If you are trading and your asset has a ‘breakout’ - the asset has burst through its support or resistance line. This means that the asset will usually go up or down very quickly.

There are heaps of different strategies used by traders all around the world. One of the best things you can do to help yourself is to conduct your own research. It’s also a really good idea to have a think about what your own long-term investment goals are, and what assets interest you.

Read More:

Forex Scalping: 5 Simple And Profitable Strategies

Swing Trading VS Day Trading - Which One Should You Choose?

Day Trader Salary - Learn How Much Top Traders Earn

UK Online Trading Fees

Fees are pretty standard in most industries, it's how companies make extra revenue for providing a service. The same goes for online brokers in the UK, and beyond.

We’ve put together some of the most commonly seen fees you can expect when trading online.

Spreads

In the simplest terms, the spread is the contrast between the purchase price and the selling price of your chosen asset.

Let’s give you an example of the spread:

  • The purchase price of ZOOM stocks is $500
  • The sell price of ZOOM is $492
  • The spread here is $8

In terms of UK platforms, the spread is almost always illustrated as a ‘bid-offer’ spread. If the spread was, for example, 0.3% - you would have to make 0.3% in profit to break even. The tighter the spread the better it is for you - and the wider it is the more gains you need in order to drag yourself out of the red.

If you happen to be trading forex, then you will usually find that the spread will be illustrated as ‘pips’. In this case, if the buy price of EUR/USD is 1.3206 and the sell price comes in at 1.3208 - the spread here is 2 pips

Commission Fees

Not all, but some broker platforms charge trading fees in the form of commission. This fee is often charged as a flat fee when buying shares. This can be in excess of £10. In other cases, you might pay a variable commission. This is a percentage fee that is calculated against your total stake. 

Here is an example of how that might look:

  • You decide to stake £1,000 trading gold
  • Your broker charges a commission of 2%
  • This means that you pay £20 to enter the position
  • When you get around the closing the trade, your gold position is worth £1,500
  • As such, you pay a further 2% of £30
  • In total, you’ve had to outlay £50 just in trading commission

It’s not all doom and gloom though, as there are some reputable brokers in the online space which allow people to trade commission-free. At the forefront of this is FCA-regulated broker eToro. Not only does this popular UK trading site allow you to trade CFDs and forex commission-free, but you can do the same when buying shares and ETFs. 

Overnight Financing Fees

As we have touched on, if you leave a position open overnight, you will be charged an overnight financing fee. This is a form of interest. Always check the terms and conditions and fee table of each and every broker you consider. This will tell you if and when you need to pay overnight financing fees and at what rate.  

How to Select a UK Trading Platform

By this point, you are probably eager to get started and become a trader. Although we have reiterated this throughout, it is always important to carry out your own research when choosing a broker. There are a lot of wolves in sheep’s clothing in this industry and it can be hard to know who to trust with your money.

We’ve compiled a list of important metrics to look out for when you are on the search for the best UK trading platform for you and your personal goals.

Broker Regulation

When on the hunt for a good UK broker, we think it’s crucial to choose one that holds a licence and is regulated. If you are a UK trader you should be looking out for broker platforms which are regulated by the FCA.

By choosing an FCA licenced broker you are providing yourself with a safety net against financial fraud and losing everything you’ve got - should the broker go bust. Trading platforms with an FCA licence are obligated to segregate your funds from that of the company. Not only that but your funds are usually protected up to £85,000 in the UK via the FSCS.

Tradable Asset Diversity

Asset diversity is actually important. You might start off only wanting to trade forex, and then fancy diversifying your portfolio at a later date.

By selecting a broker with heaps of different assets to choose from, you will never be short of options. Always have a look and see what's on offer before signing up.

Spreads and Commission

We’ve mentioned both spreads and commission in this guide. With that in mind, you should always check the trading platform’s fee table before you go ahead and sign up.

Deposit/Withdrawal Procedure

When it comes to deposits and withdrawals - no two brokers are the same. Not only do accepted payment methods vary, but you might also find that some brokers charge a small fee for withdrawals.

Not only that, but it’s always worth having a look at the broker’s website you are looking into - to see what their deposit and withdrawal procedure is. By that, we mean the time it takes for withdrawal requests to be processed by the broker. 

That said, depositing using payment methods such as debit/credit cards and e-wallets like Skrill and PayPal are usually instantaneous. Whereas bank transfers can take up to 3 business days to reach your trading account.

Trading Platform Useability

This one seems obvious, but if you are an inexperienced trader, then broker site with all the bells and whistles is probably going to over complicate things for you. 

You are better choosing a site which is user-friendly and super easy to navigate. This means in turn you will likely find it easier to execute orders and hone in on your trading skills. A good option in this respect is eToro - which is ideal for traders of all shapes, sizes, and skill-sets. 

If you are a beginner, you should definitely look out for the option of the eToro demo account.

How to open a UK Trading Account Today

Now you are armed to the teeth with all of the information you need to start trading, you need a good broker to execute your orders and allow you access into the markets.

We’ve put together a generalised 4 step guide to get you started.

Step 1: Sign up with an Online Broker

Head over to the website of your chosen broker and elect to open a new account. At this point, you will need to provide your full name, residential address, email and mobile number.

As per FCA regulations, you will likely need to provide a copy of your photo ID such as a passport or drivers licence.

eToro – The Best Online Trading Platform in the UK

etoro broker

eToro have proven themselves trustworthy within the industry over many years – we recommend you try them out.

75% of retail investor accounts lose money when trading CFDs with this provider.

Step 2: Deposit Funds Into Your Account

Now you need to fund your account using a supported payment method. Please find below a list of commonly seen payment methods offered by the UK trading sites.

  • Credit card
  • Debit card
  • Wire bank transfer
  • E-wallets

Always check what the minimum deposit is on your chosen trading platform, and check whether there are any fees to pay.

Step 3: Decide What Asset you Want to Trade

By now you should have a much better idea of what asset you would like to trade. All you have to do now is select the market which you find the most interesting. Most broker websites will have a search facility - meaning you can search for the specific asset you have in mind.

Step 4: Execute a Trading Order

how to place market order

Assuming you have now chosen the asset you want to trade, you will need to set up an order so the broker knows what you want to do. 

As we discussed earlier, orders include the following:

  • Stake
  • Limit/Market order
  • Buy/Sell order
  • Take-Profit order
  • Stop-Loss order
  • Leverage

When you have filled in the relevant field you can confirm your order. As we explained, your position will stay open until you decide to close it yourself - either that or when your stop-loss or take-profit has been activated.

Online Trading in the UK - Summary

We hope that you’ve found our complete guide to trading online in the UK a helpful start for your trading endeavours. Wherever you have an internet connection - you can trade your chosen asset.

As we’ve said, it can take months or even years to learn the skills of a successful trader, so it’s a good idea to take it easy at first. A great way to learn the markets is to make the most of demo accounts on offer. Whilst not all brokers provide this feature, the ones that do provide market conditions which mirror the real trading world.

Last but certainly not least, by choosing a regulated broker you are protecting yourself from the wolves out there. This means you can rest assured that your broker is under strict regulation and your funds are protected up to the first £85,000 via the FSCS.

While there are many UK trading sites to pick from, we would suggest considering eToro. This FCA broker gives you access to heaps of asset classes - including shares, ETFs, CFDs, forex, and cryptocurrencies. It’s free to open an account and you will not pay a single penny in commission on any of its tradable markets. 

Trading Online in the UK - FAQs

1. Can I make money from online trading in the UK?

You can make money from trading online but there is no such thing as 100% risk-free trading. The best thing you can do is hone in on your skills, follow the financial news, and learn to read charts and technical analysis. 

2. How much money do I need to start trading online in the UK?

This depends on the broker platform in question. Using eToro as an example, you can deposit a minimum of $200 into your account and start trading from $25. 

3. Am I able to trade gold online?

Yes, you can trade gold online at most brokers in the UK.

4. I have an online trading account, but how can I deposit into it?

Simply head over to the broker website and sign in to your account. Here you will be given the option to fund your account with a variety of payment methods - such as a debit/credit card or e-wallet. 

5. How can I tell if the online trading platform is regulated?

A broker platform which is regulated will usually display their licence number and regulatory body proudly on its website. Failing that, you can head over to the FCA website and search for the company name to make sure.

6. What assets can you trade online in the UK?

You can now trade thousands of assets from the comfort of your home. This includes everything from Forex, gold, oil, Bitcoin, stocks and more!

Please Note: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage

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