Best Online Stock Brokers UK 2023

Selecting the right online stock broker is crucial in the fast-paced trading world.

I’ve tested, scored, and ranked the best online stock brokers in the UK.

Whether you’re searching for security, user-friendliness, or extensive trading options, I’ve got you covered.

So, in a nutshell, what are the best online stock brokers in the UK? The best online stock brokers in the UK are eToro, known for its social trading features and user-friendly interface; IG Markets, which offers a robust platform and a wide range of stock options; and Plus500, noted for its simple, intuitive trading platform. These brokers are well-regarded for their reliability, range of offerings, and customer service.

Best Online Stock Brokers UK Ranked

Here is a quick list of the best stock brokers to use in the UK based on my hands-on analysis:

1. eToro – Overall best online stock broker UK for beginners
2. IG – Best stock broker UK for a large selection of investment options
3. Plus500 – One of the best online stock brokers for short-term trading of CFDs
4. XTB – Best stock broker for utilising leverage
5. Interactive Brokers – Best UK stock broker for experienced traders
6. Trading 212 – Best online broker UK for auto investing
7. AJ Bell – Best traditional stock broker
8. Saxo – Best online stock broker for professional traders
9. Hargreaves Lansdown – One of the oldest stock brokers in the UK
10. Webull – One of the cheapest online stock brokers

Best Online Stock Brokers Compared for UK Traders

Here I’ve compared the stock brokers based on six key factors you must consider and compare:

Rank	Broker	No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
1	eToro	3,000+	17	£0	$5 withdrawal fee, inactivity fee, currency conversion fee	$10	Proprietary web trading platform and mobile app
2	IG	12,000	8	Depends on how many trades you made in the preceding months	Quarterly custody fee, inactivity fee charged only after 2 years	£250	Proprietary web trading platform/mobile app, MetaTrader 4, ProRealTime, L2 Dealer
3	Plus500	1,900 stock CFDs	6	S&P 500 CFD spread: 0.7	Inactivity fee of $10 per quarter after 3 months if you don’t log in	$100	Proprietary web trading platform/mobile app Web-Trader
4	XTB	2,240	17	£0	Inactivity fee of €10 per month after 1 year of trading inactivity and if no deposit was made in the last 90 days	$0	Proprietary web trading platform/mobile app xStation 5
5	Interactive Brokers	12,162	90	Fixed pricing: $0.005 per share, min. $1, max. 1% of trade value	One withdrawal free per month, after that $10	£0	Trader Workstation (TWS), IBKR GlobalTrader, IBKR Mobile, IMPACT
6	Trading 212	7,000+	14	£0	0.7% fee if you deposit over €2,000 in total into your Invest account using credit/debit cards or electronic wallets	£0	Proprietary web and mobile platform
7	AJ Bell	13,000+	19	£9.95 commission per trade. £4.95 per if you have more than 10 trades in the previous month	Custody fee of 0.25% per annum	£0	Proprietary Youinvest web and mobile platform
8	Saxo	23,500+	50	$0.02/share	€120 inactivity fee, 0.15% custody fee	£0	Proprietary web trading platform/ mobile app SaxoTraderPRO, SaxoTraderGO, MetaTrader 4
9	Hargreaves Lansdown	8,000+	21	Based on previous month: 0-9 trades: £11.95 per trade; 10-19 trades: £8.95 per trade; 20+ trades: £5.95 per trade	£0	£0	Proprietary web and mobile platform
10	Webull	1,000+	5	£0	£0	£0	Proprietary web and mobile platform

Best UK Stock Broker Reviews

Research shows in 2023, around 2 in 5 Brits (42%) invest and trade, up from 36% in 2021¹.

Choosing the best stock broker is crucial for newcomers in the market.

Having worked in the retail investment sector in London over the last four years, I had the opportunity to experience the rise first-hand.

Additionally, in my role working for one of the UK’s leading financial companies, “a trustworthy and respected provider of news, education and market analysis for the everyday investor”, I was able to work with and test some of the biggest UK stock brokers on the market.

Using my experience in this field, I’ve compiled a list of the best stock brokers in the UK based on six key criteria:

1. Number of stocks
2. Number of stock markets
3. Real stock fees
4. Non-trading fees
5. Minimum deposit
6. Trading platforms

Factors such as usability, research tools, educational materials, and additional features were also considered.

All the stock brokers I’ve reviewed below are regulated by the UK’s financial watchdog, the Financial Conduct Authority (FCA).

1. eToro – Overall best online stock broker UK for beginners

The overall winner on my list of the best online stock brokers and what I recommend to beginners is eToro.

eToro ranks as a top online stock broker in the UK, with a user base of over 30 million since 2007².

The platform is known for its safety, regulated by the UK’s FCA and CySEC. It offers up to £85,000 protection through the FSCS.

eToro’s appeal includes its no-commission policy on many stocks, UK and global. It also supports fractional shares, allowing investment in big stocks like Apple and Google for as low as £8.

The broker’s platform is rich with features such as CopyTrader, aiding new traders to mirror expert trades. Its ‘Smart Portfolios’ provide a mix of stocks for passive investors.

eToro is not just for stock trading; it offers over 90 crypto options and CFD trading in forex, goods, and indexes, making it a diverse trading place.

For beginners, eToro’s simple interface and tools like real-time charts and market insights are very helpful. The platform is accessible on desktop and mobile, with dedicated apps for iOS and Android.

Starting with eToro is easy, with a $10 minimum deposit and various payment methods, but note a 0.5% deposit fee for GBP.

To sum up, eToro serves well for both new and seasoned UK traders, providing a full suite of trading tools and features.

Read my full eToro review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
3,000+	17	£0	$5 withdrawal fee, Inactivity fee, currency conversion fee	$10	Proprietary web trading platform and mobile app

Pros:

• Commission-free trading for stocks and ETFs
• Smooth and straightforward account setup process
• Access to social trading features

Cons:

• $5 charge for withdrawals
• Limited to a single account currency option
• Room for improvement in customer support services

2. IG – Best stock broker UK for a large selection of investment options

"68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money."

IG, established in 1974, is acknowledged as a leading stock broker in the UK. With access to over 17,000 markets day and night (largely through CFDs and spread bets), IG stands out for offering a broad range of investment options.

The FCA regulates IG, ensuring top-tier investor safety. Client funds are kept in separate trust accounts, protected from company use.

IG’s trading platform excels in flexibility and is user-friendly across various devices, including Android, Windows, and iOS. It features advanced tools like ProRealTime, MetaTrader 4, and L2 Dealer, which allow traders to create custom indicators and directly access stock exchange order books via DMA.

While IG’s superior services come with notable costs, such as share commissions and inactivity fees after two years, the value provided justifies the expense for active traders.

Beginners favor IG for its award-winning platform rich with educational tools. The app supports a smooth transition from basic trading to more complex operations like forex and futures. Starting an account with IG is free, appealing to new traders.

Experienced investors appreciate IG for its extensive stock and fund offerings. Frequent traders benefit from reduced fees, and 24/7 index trading suits various trading styles. IG’s portfolio includes ETFs, ISAs, SIPPs, and spread betting—a concept it introduced.

IG enhances its stature with advanced charts, extended trade hours, diverse products, and expert analysis. Their 24-hour customer service and negative balance protection underscore IG’s commitment to trader support.

IG presents a well-rounded, secure, and prize-winning platform, catering to both new and experienced traders’ wide-ranging needs.

Read my full IG review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
12,000	8	Depends on how many trades you made in the preceding months	Quarterly custody fee, inactivity fee charged only after 2 years	£250	Proprietary web trading platform/mobile app, MetaTrader 4, ProRealTime, L2 Dealer

Pros:

• Premium web trading platform
• Excellent educational resources
• Diverse deposit and withdrawal options

Cons:

• Customer support can be slow

3. Plus500 – One of the best online stock brokers for short-term trading of CFDs

Plus500, a distinguished CFD stock broker in the UK, appeals to traders who prioritise affordability. It offers low-cost stock CFD trading and competitive spreads, even with fees for overnight funding, currency conversion, and guaranteed stop orders.

The broker’s platform works across Android, Windows, and iOS, offering over 2,000 CFD instruments across various markets. This range provides traders with numerous choices for investment.

The broker charges a USD 10 monthly inactivity fee after three months of non-use, which could be a drawback. However, all you need to do is log in to your account to prevent the fee.

Plus, it could improve its educational resources for new traders. However, the demo trading account is beneficial for beginners to practice.

Plus500 is suitable for those interested in global markets, offering access to international trading without traditional stock brokerage constraints. Its zero commission on trades and no charges for deposits or withdrawals make financial dealings straightforward.

The platform is proprietary, available via web browsers and apps for mobile devices. The lack of third-party platform integration, like MT4, might not suit all traders. Beyond stocks, Plus500 offers CFDs in options, ETFs, forex, commodities, and indices.

Regulated by the FCA, Plus500 assures traders of its commitment to safety.

In summary, Plus500 stands out for CFD trading and international market access, offering an effective and economical platform with room for enhancements.

Read my full Plus500 review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
1,900 stock CFDs	6	S&P 500 CFD spread: 0.7	inactivity fee of $10 per quarter after 3 months if you don’t log in	$100	Proprietary web trading platform/mobile app Web-Trader

Pros:

• Intuitive, user-friendly platform
• Easy and efficient account setup
• Fast and responsive customer service

Cons:

• Lackluster research capabilities
• CFD fees are middle-of-the-road

4. XTB – Best stock broker for utilising leverage

XTB, launched in 2002, is recognised as a leading stock broker in the UK. It allows trading of real stocks and CFDs on 15 global exchanges, offering a broad array of investment choices.

Investors enjoy 0% commission on stock trades and can leverage positions up to five times their cash investment. This means with only £200, one can hold stocks worth £1,000.

Traders have access to over 1,850 stock CFDs from the UK, US, and European markets, ensuring a wide-ranging trading experience. XTB also provides CFDs in commodities, indices, ETFs, and forex, enabling portfolio diversification.

XTB’s xStation 5 platform is praised for its user-friendly design and works across all devices. It features high-quality charts, custom settings, and various analysis tools, backed by expert market insights.

In addition to xStation 5, XTB supports MT4, accommodating different trading preferences. The broker’s demo account is a valuable tool for new traders to practice without risk.

XTB is committed to customer service, evidenced by its stellar reputation and thorough trading academy. It’s particularly well-suited for day traders.

XTB keeps trading costs low, with no commissions on trades up to £100,000 monthly and reasonable fees above this limit. It’s regulated by the FCA, enhancing its safety credentials.

To summarise, XTB has confirmed its status as a top online stock broker in the UK. It provides versatile trading platforms and a wealth of analysis tools, serving both new and experienced traders.

Its emphasis on user experience and asset variety places XTB at the forefront of online trading.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
2,240	17	£0	Inactivity fee of €10 per month after 1 year of trading inactivity and if no deposit was made in the last 90 days	$0	Proprietary web trading platform/mobile app xStation 5

Pros:

• Commission-free stocks and ETFs for investments up to £100k per month
• Free and speedy deposit and withdrawal process
• Swift and simple account opening

Cons:

• Charges an inactivity fee

5. Interactive Brokers – Best UK stock broker for experienced traders

Interactive Brokers (IBRK) is recognised as a strong and versatile broker in the UK, appealing to both new and experienced stock market traders. It provides access to over 70 global stock exchanges, offering vast market reach for investors.

The broker prioritises safety, adhering to high regulatory standards. Its cost structure is attractive, with low fees for shares and ETFs. For those watching their budget, the lack of a required minimum deposit is beneficial, though a £2,000 minimum is needed for margin trading.

Interactive Brokers offers two account types: IBRK Lite for beginners and IBRK Pro for seasoned traders, each designed to meet different trading needs.

The platform is known for its extensive trader education, with courses, webinars, and a demo account that allows practice with virtual funds.

Interactive Brokers stands out for its adaptability, catering to users’ growing investment knowledge with access to a range of both local and global assets.

In summary, Interactive Brokers serves as a comprehensive trading platform in the UK. It invites traders to start without a minimum deposit, offering a breadth of resources and investment options, thus holding its place as a top broker choice.

Read my full Interactive Brokers review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
12,162	90	Fixed pricing: $0.005 per share, min. $1, max. 1% of trade value	One withdrawal free per month, after that $10	£0	Trader Workstation (TWS), IBKR GlobalTrader, IBKR Mobile, IMPACT

Pros:

• Competitive trading fees and attractive interest rates (as high as 4.58% for USD) on cash balances
• Extensive product offerings
• Abundant high-quality research tools

Cons:

• Intricate desktop trading interface
• Limited customer service

6. Trading 212 – Best online broker UK for auto investing

Trading 212, a London-based fintech established in 2006, is a leading online stock broker in the UK, serving over 2 million customers.

It’s ideal for both beginners and experienced investors, offering a wide range of investment options including stocks, ETFs, forex, commodities, CFDs, and cryptocurrencies.

Known for its commission-free trading and fractional shares, the platform also features an automatic investment system, or Robo-advisor, though it lacks bonds and options and charges a 0.15% currency conversion fee.

The platform is divided into Trading 212 Invest for commission-free asset trading, and Trading 212 CFD for leveraged financial products. It stands out for its automated investing feature, enabling users to create diverse portfolios for various investment goals, with funds automatically invested regularly.

Trading 212 is user-friendly and largely fee-free, though there is a 0.7% deposit fee for large credit or debit card deposits.

Additionally, it offers a CFD trading platform with negative balance protection. Regulated by the UK Financial Conduct Authority and insured under the Financial Services Compensation Scheme, it ensures customer security.

New users can also receive a free share worth up to £100, enhancing its appeal for newcomers to investing.

Read my full Trading 212 review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
7,000+	14	£0	0.7% fee if you deposit over €2,000 in total into your Invest account using credit/debit cards or electronic wallets	£0	Proprietary web and mobile platform

Pros:

• Commission-free real stocks & ETFs
• Simple account opening

Cons:

• Limited research tools

7. AJ Bell – Best traditional stock broker

AJ Bell, established in 2000 and formerly known as Sippdeal and AJ Bell Youinvest, is a prominent online stock broker in the UK, renowned for its affordability and wide range of investment options.

As one of the pioneers in offering an online self-invested personal pension (SIPP), AJ Bell has cemented its reputation as a reliable and well-established investment platform.

The platform allows investors to access over 3,700 funds, shares, and investment trusts across 24 markets, encompassing nearly every investment category, including both funds and shares.

Known for its competitive pricing, AJ Bell charges a low annual fee, making it one of the most cost-effective traditional stock brokers in the market. In 2022, the company expanded its offerings with Dodl, a low-cost investment app featuring a limited but curated range of investments at just 0.15% per annum.

Customer service at AJ Bell is highly regarded, adding to the overall positive experience for investors. The platform is not only user-friendly but also secure, with the Financial Services Compensation Scheme (FSCS) protecting against financial loss.

Additionally, as a platform registered with the Financial Conduct Authority, AJ Bell ensures that customer funds are ring-fenced, offering peace of mind that investments are secure, even in the unlikely event of the company facing financial difficulties.

Overall, AJ Bell stands out as one of the best online stock brokers in the UK, combining affordability, a vast range of investment options, excellent customer service, and robust financial security.

Read my full AJ Bell review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
13,000+	19	£9.95 commission per trade. £4.95 per if you have more than 10 trades in the previous month	Custody fee of 0.25% per annum	£0	Proprietary Youinvest web and mobile platform

Pros:

• Simple trading platform
• Top-rated customer service
• Self-invested personal pension (SIPP)

Cons:

• Basic research tools

8. Saxo – Best online stock broker for professional traders

Saxo Bank, established in 1992 in Denmark, is a renowned multi-asset broker in the UK, offering an exceptional trading experience with over 72,000 tradable instruments.

Regulated by the Danish FSA and the FCA, it provides a sophisticated trading platform available on both desktop and mobile, known for its user-friendly design and robust security features.

The broker caters to a diverse range of traders with three account types: Classic, Platinum, and VIP, each offering different services and features. Saxo Bank’s trading fees are volume-dependent, and it requires a minimum deposit of $10,000, which might be a consideration for some.

However, this is balanced by its extensive range of trading options, including stocks, ETFs, currency pairs, and more, and its responsive customer service, available through phone and email.

Saxo Bank stands out for its comprehensive research tools and educational resources, including interactive charting, trading ideas, daily podcasts, and a range of learning materials.

While it excels in offering a diverse range of investment options and excellent customer support, potential users should consider the higher minimum deposit and transaction fees.

Read my full Saxo review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
23,500+	50	$0.02/share	€120 inactivity fee, 0.15% custody fee	£0	Proprietary web trading platform/ mobile app SaxoTraderPRO, SaxoTraderGO, MetaTrader 4

Pros:

• Extensive range of offerings
• Top-notch research
• Interest on uninvested cash

Cons:

• Minimal customer service

9. Hargreaves Lansdown – One of the oldest stock brokers in the UK

Hargreaves Lansdown, established in 1981 and based in Bristol, is a leading UK stock broker renowned for its focus on long-term investing.

As an FTSE 100 listed company and regulated by the Financial Conduct Authority (FCA), it offers a secure and diverse investment platform, including Stocks and Shares ISAs, Junior ISAs, SIPPs, and traditional brokerage accounts.

Known for its extensive selection of over 3,000 funds, Hargreaves Lansdown stands out for fund investment, although it offers fewer technical analysis tools for active trading. The platform charges a 0.45% annual fee on stocks and ETFs in ISAs, with share dealing fees starting at £11.95 per trade, reducing for frequent traders.

A new ISA account can be opened with a £100 deposit or monthly contributions of £25.

Despite higher charges for stock and ETF trading, its efficient customer support and comprehensive educational resources make it a preferred choice for investors seeking long-term investment opportunities in the UK.

Read my full Hargreaves Lansdown review.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
8,000+	21	Based on previous month: 0-9 trades: £11.95 per trade; 10-19 trades: £8.95 per trade; 20+ trades: £5.95 per trade	£0	£0	Proprietary web and mobile platform

Pros:

• Top-rated educational material
• Extensive customer support
• Lifetime ISA available

Cons:

• High trade fees for in-frequent traders

10. Webull – One of the cheapest online stock brokers

Webull, established in the US in 2017 and launching in the UK in July 2023, is a notable online broker for budget-conscious investors.

Regulated by the Financial Conduct Authority (FCA) and covered by the Financial Services Compensation Scheme (FSCS), it offers a secure platform with protections up to £85,000.

Specializing in US stocks with over 10,000 available, Webull allows fractional share trading, making high-value stocks accessible.

The platform’s appeal lies in its low fees, with only 0.025% per trade and a 0.35% currency conversion fee on GBP deposits. It offers advanced trading features, including options and margin trading, and supports cryptocurrency trading with a $1 minimum.

Webull’s user-friendly interface is complemented by a free demo account and comprehensive charting tools, although its focus on US stocks and lack of a broader asset range or tax-efficient accounts like Stocks and Shares ISA might limit some investors.

Despite this, its competitive pricing and trading capabilities make Webull an attractive option for UK users interested in the US stock market.

Key rating criteria:

No. of stocks	No. of stock markets	Real stock fees	Non-trading fees	Minimum deposit	Trading platforms
1,000+	5	£0	£0	£0	Proprietary web and mobile platform

Pros:

• Low-cost platform
• High interest rate on uninvested cash
• Advanced trading tools

Cons:

• Limited selection of assets

How Do I Choose a Stock Broker UK?

Choosing the best stock broker in the UK requires careful consideration of your individual needs, trading goals, and preferences.

Along with the key rating criteria I used to rank the brokers, here’s what to look for:

• Determine Your Trading Goals and Needs:
  • Are you a long-term investor or a day trader?
  • How much capital do you intend to invest?
• Regulation and Safety:
  • Ensure that the broker is regulated by a reputable authority, such as the Financial Conduct Authority (FCA) in the UK.
  • Look into the broker’s track record. A broker with a good history of stability and trustworthiness is a positive sign.
• Costs and Fees:
  • Examine the fee structure, including trading commissions, spreads, account maintenance fees, and any other associated costs.
  • Be wary of hidden fees.
• Trading Platform:
  • Is the platform user-friendly and suitable for your level of expertise?
  • Does it offer tools and features that align with your trading strategy, such as technical analysis tools, charting, news feeds, etc.?
  • Is there a mobile app available for trading on-the-go?
• Account Types and Minimum Deposit:
  • Consider if the broker provides different account types that suit your investment size and needs.
  • Check if there’s a minimum deposit requirement and if it aligns with your budget.
• Research and Educational Resources:
  • For beginners, educational content, webinars, and tutorials can be invaluable.
  • Access to market research, news, and analysis can be beneficial for all traders.
• Customer Service:
  • Ensure the broker provides reliable customer support, preferably with multiple channels like chat, phone, and email.
  • Consider response times and the quality of assistance offered.
• Additional Features:
  • Do they offer a demo account for practice?
  • Are there any unique tools or features that can enhance your trading experience?
  • Do they provide any additional benefits such as a loyalty program, cashback, or bonuses?
• Reviews and Recommendations:
  • Read online reviews and ask for recommendations from experienced traders or friends.
  • Remember to be cautious of overly negative or overly positive reviews; look for a balanced perspective.
• Deposit and Withdrawal:
  • Check the available methods for depositing and withdrawing funds.
  • Ensure that the withdrawal process is straightforward and without unnecessary delays.
• Leverage and Margin:
  • If you’re interested in trading on margin, check the broker’s leverage offerings and ensure you understand the risks involved.

Once you’ve considered these factors, shortlist a few brokers and test their platforms (many offer demo trading accounts).

This hands-on experience can be instrumental in making your final decision.

Remember, what’s best for one trader might not necessarily be best for another, so choose an online stock broker that aligns closely with your individual needs and goals.

What Is an Online Stock Broker?

An online stock broker in the UK is a digital platform that allows individuals to buy and sell securities, primarily stocks, over the internet.

These platforms have gained immense popularity due to their convenience, low-cost structures, and the ability for users to manage their portfolios with ease from any location.

Operating predominantly via websites and mobile apps, online stock brokers in the UK provide users with tools to research, monitor, and trade a range of securities.

This includes not just stocks but often also bonds, commodities, foreign exchange, and other financial instruments. These platforms are designed to cater to both novice investors, with user-friendly interfaces, and experienced traders, offering advanced charting tools and analytical resources.

Online stock brokers work simply. First, a person opens an account with a broker to start trading or investing.

This usually involves undergoing identity verification and fulfilling other regulatory requirements set out by the Financial Conduct Authority (FCA) in the UK.

Once the account is set up and funded, the user can begin placing trade orders. These trades are then executed by the online broker on behalf of the client in the relevant stock exchanges, such as the London Stock Exchange (LSE).

Online stock brokers typically earn revenue in a few ways. Some might charge a commission or fee for each trade, while others might offer commission-free trading and earn from the bid-ask spread or by offering additional paid services. It’s also common for them to generate interest from the cash balances maintained in user accounts.

One notable distinction of online stock brokers in the UK is their emphasis on technology. Many offer sophisticated analytical tools, real-time market data feeds, and interactive educational resources to aid their clients in making informed investment decisions.

Some even incorporate social trading features, allowing users to mimic the trading strategies of more experienced investors.

Additionally, the regulatory oversight from the FCA ensures that these platforms maintain high standards of transparency, security, and fairness, offering UK investors peace of mind as they navigate the world of online trading.

Stock Investing vs Trading

Stock investing and trading represent two distinct approaches toward the stock market, each catering to different financial objectives and time horizons.

Investing involves building wealth over extended periods, often years to decades, by acquiring stocks in companies with solid fundamentals and holding them to realise appreciation.

The focus is on the intrinsic value and growth prospects of a company. In contrast, trading seeks to capitalise on short-term market fluctuations, with traders buying and selling stocks over days or even minutes.

Their decisions are primarily influenced by market trends and patterns rather than long-term company fundamentals.

While investing tends to be viewed as a marathon, emphasising patience and long-term value, stock trading is more of a sprint, requiring quick decisions and a keen eye on market dynamics.

The choice between the two largely depends on an individual’s risk tolerance, financial goals, and market expertise.

Here’s a good video with more detail on how the stock market works:

How to Trade Stocks in the UK

Trading stocks in the UK involves a series of steps that can be easily followed, even by beginners.

Here’s a step-by-step guide to trading stocks in the UK:

1. Educate Yourself: Before diving into stock trading, it’s vital to educate yourself about the stock market and trading principles. Understand the basics of stocks, the stock market, and how trading works.
2. Choose a Trading Strategy: Decide on your trading strategy based on your investment goals. You could opt for day trading, swing trading, position trading, or other strategies, each with its own risk and reward profile.
3. Select an Online Stock Broker: With the proliferation of technology, online stock brokers have become the go-to choice for most traders in the UK. Look for a broker that’s regulated by the Financial Conduct Authority (FCA). Consider factors such as fees, available research tools, user interface, and customer support when making your choice.
4. Open a Trading Account: Once you’ve chosen a broker, you’ll need to open a trading account. This will typically involve providing personal information, undergoing identity verification to comply with anti-money laundering regulations, and depositing funds.
5. Research and Analyse: Use tools provided by your broker to research stocks. Look at company fundamentals, recent news, and technical analysis charts to inform your trading decisions³.
6. Place Your Trade: Once you’ve decided on a stock to trade, you can place your order. There are various order types, including market orders (buy/sell at the current market price) and limit orders (buy/sell at a specific price or better).
7. Monitor Your Investments: Keep an eye on your portfolio and the broader market conditions. Utilise tools and alerts provided by your broker to stay informed.
8. Review and Adjust: Periodically review your portfolio. Depending on market conditions and your investment strategy, you may want to hold, sell, or buy more of a particular stock.
9. Stay Updated: The stock market and economic conditions can change rapidly. Regularly read financial news, reports, and other resources to stay informed.
10. Know When to Exit: It’s essential to have both an entry and exit strategy. Decide in advance the price at which you’ll sell a stock, either to lock in profits or cut losses. This can help take emotion out of the decision-making process.
11. Consider Tax Implications: In the UK, you may be liable to pay Capital Gains Tax on profits made from selling stocks. Utilising tax-efficient wrappers like Individual Savings Accounts (ISAs) can provide tax benefits. It’s a good idea to consult with a financial advisor or tax professional about potential tax obligations.
12. Continue Learning: The world of stock trading is vast and constantly evolving. Continue to educate yourself, whether through courses, seminars, or books, to refine your trading skills and strategies.

Common Stock Broker Fees

Stockbrokers, particularly online platforms, have a variety of fee structures.

Here’s a rundown of the most common fees you might encounter:

1. Trading Commissions: This is a charge for executing a trade. While many online brokers have moved towards commission-free trading for stocks and ETFs, some still charge for options, mutual funds, or other securities.
2. Account Maintenance or Inactivity Fee: Some brokers charge fees if an account balance falls below a certain threshold or if the account is not actively traded.
3. Margin Interest: If you borrow money from your broker to purchase stocks, they will charge you interest on the borrowed amount.
4. Withdrawal Fees: Some brokers may charge a fee when you withdraw money from your account, especially if it’s an international bank transfer or a wire transfer.
5. Research and Data Subscriptions: Advanced charting, live data feeds, and premium research reports might come at an additional cost.
6. Platform Fees: Some brokers offer advanced trading platforms that come with a monthly or annual fee.
7. Foreign Exchange Fees: If you’re trading in international markets, there might be fees associated with converting your currency.

Popular Stock Trading Strategies

Stock trading strategies vary based on investment goals, risk tolerance, and time horizons.

Here are some of the most common stock trading strategies:

1. Buy and Hold: This is a long-term strategy where investors purchase stocks and hold onto them for a prolonged period, regardless of market volatility. It’s based on the belief that, over time, the market will provide a positive return despite short-term fluctuations.
2. Value Investing: Pioneered by Warren Buffett and Benjamin Graham, value investors look for stocks they believe are undervalued by the market. They use fundamental analysis to evaluate a company’s intrinsic value and compare it to its market price⁴.
3. Growth Investing: Growth investors seek companies that exhibit signs of above-average growth through revenues, profits, and other factors, even if the stock seems expensive from a price-to-earnings perspective⁵.
4. Momentum Trading: Traders using this strategy buy stocks that are trending up and sell stocks that are trending down. They rely on technical analysis to identify stocks with strong momentum.
5. Swing Trading: Swing traders aim to capture the short- to medium-term gains in a stock over a few days to several weeks. They rely on both technical analysis and fundamental research.
6. Day Trading: Day traders buy and sell stocks within the same trading day, ensuring that all positions are closed before the market closes. Day trading requires a keen understanding of technical analysis and a fast decision-making process.
7. Short Selling: In this strategy, traders borrow shares of a stock and sell them, hoping to buy them back later at a lower price. It’s a bet that a particular stock’s price will decline.
8. Scalping: A subset of day trading, scalping involves making a large number of small trades throughout the trading day to profit from minute price movements.
9. Pound-Cost Averaging: Investors regularly invest a fixed amount in a particular stock (or index fund) regardless of its price, aiming to reduce the impact of volatility on the overall purchase⁶.
10. Dividend Investing: This strategy focuses on buying stocks of companies that consistently pay dividends. The idea is to generate a steady income stream in addition to potential capital gains.
11. Pairs Trading: Involves taking a long position in one stock while simultaneously taking a short position in another, typically related, stock. The idea is to hedge against market conditions that affect the overall sector or industry.
12. Sector Rotation: Based on the idea that different sectors of the stock market perform better at different stages of the economic cycle. Investors rotate their investments among sectors to capitalise on this phenomenon.
13. Contrarian Investing: Contrarians buy stocks that are out of favor and sell popular stocks, believing that the majority of traders are usually wrong and that market trends will reverse.

When choosing a strategy, it’s essential to consider your investment goals, risk tolerance, and available resources.

Many traders often combine elements from different strategies or modify them to fit their unique circumstances and insights.

Moreover, continuous learning, adaptation, and monitoring are key to success in stock trading, given the ever-changing nature of financial markets.

Pros & Cons of Stock Trading

Here’s a breakdown of some pros & cons of trading stocks in general:

Pros:

• Potential for High Returns: Historically, stock markets have provided a higher average return than many other investments, such as bonds or savings accounts.
• Liquidity: Stocks are typically easy to buy or sell thanks to the vast number of daily transactions, making them a highly liquid investment.
• Diversification: With a vast number of companies and industries represented in stock markets, investors can diversify their portfolios, spreading risk across different sectors.
• Dividend Income: Some stocks offer dividends, providing a regular source of income for investors in addition to potential capital gains.
• Ownership: Buying stocks means owning a piece of the company, and with that comes the potential benefit of voting in shareholder meetings and having a say in the direction of the company.
• Accessibility: With the rise of online brokerages, stock trading has become accessible to almost anyone, not just institutional or wealthy investors.
• Opportunity to Learn: Active trading can lead to a deeper understanding of the market and business world.

Cons:

• Market Volatility: Stock prices can be highly volatile, leading to potential losses. Short-term market movements can be unpredictable⁷.
• Potential for Losses: Unlike some other investments, there’s no guaranteed return in stock trading, and it’s possible to lose the entire investment.
• Time-Consuming: For those wanting to actively trade or manage their portfolio, it can be time-consuming to research and monitor investments.
• Emotional Stress: Watching the value of investments rise and fall can be emotionally taxing, leading some to make impulsive decisions.

Common Questions About UK Stock Brokers

Here are some answers to some of the most asked questions regarding online brokers in the UK.

What is the best way to buy stocks in the UK?

The best way to buy stocks in the UK is through an online stock broker. First, choose a broker regulated by the Financial Conduct Authority (FCA) to ensure safety and compliance. Look for platforms with low fees, a wide range of stock options, and educational resources.

Register for an account with the chosen broker, complete the required identity checks, and deposit funds. Use the broker’s platform to research and select stocks. Decide how much to invest and whether to place a market order (buy at the current price) or a limit order (set a specific price).

After buying, monitor your stocks through the platform. Consider diversifying your portfolio to manage risk. Always review the performance of your stocks and stay updated on market trends.

For tax efficiency, consider using a Stocks and Shares ISA account, which allows for tax-free gains. Remember to invest wisely and consider seeking advice from a financial advisor if needed.

Which is the best stock broker UK?

Here are the best stock brokers in the UK:

1. eToro – Beginner-friendly, 0% commission on real stocks, 3,000+ real stocks
2. IG – Excellent education content, 12,000+ real stocks
3. Plus500 – Low-cost CFD trading, 1,900 stock CFDs
4. XTB – 0% commission on stock trades, 2,240 real stocks
5. Interactive Brokers – Huge selection, advanced tools, 12,162 real stocks
6. TD Ameritrade (Charles Schwab) – Great third-party research, low-cost
7. Webull – Easy-to-use platform, paper trading, no commissions for trading stocks
8. Admirals – StereoTrader dashboard for MetaTrader, 3,445 real stocks
9. Spreadex –  User-friendly platform, spread betting, 3,000 stocks
10. AvaTrade – Stock CFDs, copy trading features, 600+ stock CFDs
11. Hargreaves Lansdown – Great for beginner investors, 21 stock markets
12. Interactive investor – 16 stock markets, simple flat-fee subscription service, 40,000 UK and global stocks

Final Thoughts

Selecting the right stock broker in the UK is paramount for any investor, whether novice or seasoned. The ideal broker should align with your trading preferences, financial goals, and desired level of support.

With a plethora of choices available, it’s essential to consider factors like fees, platform usability, available assets, educational resources, and regulatory oversight.

By carefully weighing these considerations and regularly reassessing your needs, you can find a broker that not only facilitates your trading journey but also enhances your potential for success in the dynamic world of stock trading.

For beginners, I’d recommend eToro as the best stock broker for beginners in the UK.

FAQs

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Sources:

1. https://www.finder.com/uk/investment-statistics ↩︎
2. https://www.statista.com/statistics/1262787/etoro-registered-users/ ↩︎
3. https://nms.kcl.ac.uk/simon.parsons/publications/conferences/aamas15b.pdf ↩︎
4. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10448074/ ↩︎
5. https://business.purdue.edu/faculty/mcconnell/publications/Capital-Market-Imperfections.pdf ↩︎
6. https://www.investor.gov/introduction-investing/investing-basics/glossary/dollar-cost-averaging ↩︎
7. https://legacy.farmdoc.illinois.edu/nccc134/conf_1999/pdf/confp16-99.pdf ↩︎