How To Find The Best Trading Platforms in the UK?
The UK has a very long story of trading both in currency exchange and stocks. In fairness the Brits are a nation of merchants and have always consider trading a good opportunity to increase their wealth. London, for his position has been named as the financial centre of the world and more or less things have remained the same. With the arrival of digital opportunities have simply increased significantly: if traditionally the stock exchange was the place to go in order to trade financial instruments now you can trade from everywhere you are with very little capital needed to start. With lots of choices tough there are also challenges and in this article we will try to help you in order to avoid potential scams and make sure you get only the best and most reputable brands when you are trading online. Regardless if you are a beginner or an experienced trader.
*Financial investments do carry risks – Your Capital is at risk
How to check my online broker and their trading platforms are reputable and regulated?
Online trading in the UK is regulated by the Financial Conduct Authority (FCA) which in the past was called the Financial Services Authority (FSA). The FCA was born in 2013 and his annual turnover is over £450 million. It is an independent organisation and reports directly to the UK government. The turnover is made of membership fees that companies active in the financial services industry are paying. The FCA has unique powers to regulate the markets in the UK and those are the main duties:
- It regulates all the marketing of financial products and services
- If they believe there might be fraudulent or illegal actions they can investigate both individuals and companies
- It can even ban financial products temporary (normally a year) of permanently
- They can ask firms to modify their promotions or offers if they find ground for misleading advertising
The competition in the UK for online trading has increased significantly in the last few years and the reasons are that with the digital era it is very easy to trade online. Also the market is completely regulated which allow companies to offer online accounts at very low costs making it very easy for the customers to get into the trading action. The recent boom of cryptocurrencies and forex has increased the popularity of online trading and as you would expect tough has also attracted a number of shady characters an companies that have been trying to attract beginners or even experienced traders and convince them they are legitimate.
Despite in the last couple of years things have improved massively it is really important to do your home work before investing and our mission at TopTradingPlatforms.co.uk is to do help you in this task.
The best thing you can do is to follow the FCA guidelines: the FCA expressively warns UK traders to avoid unauthorised brokers and avoid those companies at all costs. Those firms are normally based in oversees locations and they do offer all sort of trading: forex, cryptocurrencies, commodities, CFD‘s, Spread Betting and so on. Until here nothing strange but if you see that they are advertising unrealistically high returns and even sometimes guaranteeing profits than this is a big alarm bell. If you see any ‘profit guarantee’ there isn’t even the chance to continue further: it is a scam and the broker is not legitimate. Run away!
Any online trading broker that have their headquarter in the UK has to be regulated by the FCA. But there is a but! There are a number of companies who claim to be based in the UK and sometimes even show a very posh London postcode but in reality they have nothing to do with the UK and aren’t even actually register at the address they claim to be. How can you spot those? Well, the first rule to remember is that if something is too good to be true…than it is probably too good to be true! Those companies normally offer better exchange rates than all the other competitors and they lure customers in by allowing them to make some initial hefty profits.
Things tough are very likely to turn bad as afterwards they start to experience very nasty things like their account get suspended, their money freeze and when they try to make a complain they finally find out that the company doesn’t even have offices in the Uk and are not even legally allow to offer online trading in the first place. This is why it is so important to use independent services like TopTradingPlatforms.co.uk as we have reviewed all the companies available and we do only feature brokers that are fully regulated. So in short by following our top brokers and trading platforms reviews you can’t go wrong.
The FCA have made a sensible effort to identify and even try to stop similar websites to offer trading services in the UK but it is not easy as those shady characters are sometimes going the extra mile. In some instances they have even used the registration number of actual certified brokers to try and convince potential traders. If you do come across something like this make sure you contact the FCA immediately as they can and will investigate further. So the first step for an online trader is to make sure the company is registered with the FCA or alternatively simply select one of the brokers that are featured in TopTradingPlatforms.co.uk as those have been already pre-selected.
What are the important aspects to look at when selecting an online trading broker?
So checking if a broker is regulated and if it is a legit company it is surely essential and the first thing to do but there are others criteria you will need to evaluate. As any companies brokers are there to make a profit and in order to do so they have to charge a fee. The fee can be charged in many different ways but ultimately it is a cost that will reduce your potential profit. So when choosing an online broker it is really important that you understand what you are being charged and what is the trading offer. Those are the three main aspects to look at:
- Assets offered
The more financial instruments a broker offers, the better. Even if you already know that you will only trade a certain stock or if you will just restrict yourself to some currency pairs it is still important that you have a broader possible choice if you decide to enlarge your trading horizons. Some online traders do offer more than 300 assets to trade so this is surely an added value for the traders that can find more opportunities to make a profit.
Another thing to consider is the spread.Most online brokers try to stay competitive and attract as many traders as possible. For this reason they do not charge any fees or commissions on trade deals. They do get their profit through the spread which is the difference between the buying and the selling price for a particular asset. Normally the spreads are not fixed but are charged depending on the assets that you are trading and sometimes also the trading account that you have with the broker: normally better spreads are offered for example on major currencies but you need to be aware you not being overcharged and if you are you need to understand the reason. Some brokers do have higher spreads but they do also provide a better services like better education, dedicated account manager, better tools and so on. This is all true however ultimately a tighter spread means there are much more opportunities for the broker to earn more money and reduce their losses. Normally the online brokers that are featured in TopTradingPlatforms.co.uk all have reasonable spreads but there are always differences. We have analysed all the reputable brokers and reviewed all the spreads: in this way you will know the most competitive ones. As a trader you can have more than one account with different brokers: the best way is therefore to trade one asset with one broker and another with someone else depending on the spreads that they are offering.
The last main thing to consider is the leverage. In the UK there aren’t limits on the leverage that a broker can offer so online trading brokers do normally offer pretty high leverage and for some assets this can even reach 1000:1. This means that you can trade amounts up to £100,000 with an initial capital of just £100. While this is great as you can potentially increase your profits significantly you also need to be aware that if the market turn against you, you can incur sever losses. So before using the leverage make sure you fully understand how it works and be prepared to stop losses if things are not going following plans. Leverage are a nice adds on but you do not have to use them if you not feeling confident.
How to find the best trading platforms?
Other important aspects to consider when choosing an online trading broker is the trading platforms that they are offering to traders. Most brokers will have more than one platform and you should be able to seamlessly trade on the go. It is also important that you have a good web-based platform so that you can use any device to connect. Most brokers do offer free demo accounts so you can try all the functionalities of the trading platforms without risking any of your money. It is also important that the trading platform is intuitive especially if you are a beginner however the broker should give you the ability to have advanced and customisable tools that you can use as you progress into your trading career.
Other things to consider are:
- how good is the customer service and how easy is to reach them
- Deposit and withdrawals methods accepted and fees (yes some brokers do charge them) – the more the better
- Educational material / training – the most reputable brokers will make an extra effort to help you in your path by offering a wide range of free learning materials like videos, books, webinars and other useful tools. Again those are all very good added values to consider in the package.