Disclaimer: Broker Comparison Ltd does not provide investment advice. The information provided is of a general nature and does not address the circumstances of any particular individual or entity. You should always check up-to-date fee and charges information with any broker prior to making any trade. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information that has been provided. If you are unsure of anything, you should seek financial advice from an authorized advisor.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. Losses may exceed the value of your position. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.
What are UK Stock Brokers?
A stock broker is a professional trading services provider that executes buy and sells financial instruments on behalf of clients – both retail and professional. A section of stockbrokers in the UK, the full-service brokers, offer trade advice and help clients make investing decisions. The majority of online stock brokers in the UK, however, do not offer trading advice or manage their client’s trader accounts.
They only provide an online trading platform that gives traders access to the London Stock Exchange (LSE) or the over-the-counter exchanges (OTC). Most will also let you access instruments listed with stock exchanges in other countries. They may even give you access to resources like financial news to help with research. And most will integrate several trading and analysis tools to assist with technical analysis.
These stock trading platforms UK are authorized and regulated by the Financial Conduct Authority (FCA). They have also been given a verifiable license number.
How Do Online Stock Brokers in UK Work?
A stockbroker provides traders with a platform where they can trade stocks and other financial instruments. But there are different types of brokers and they all play different roles. The three most popular roles played by UK brokers include trade execution, advisory, and discretionary brokerage service providers.
Execution-only brokers are the most common among online stock companies in the UK. And as the name suggests, these will only provide you with a platform where you can access the market and complete buy and sell orders on your behalf. They do not offer trading advice.
Advisory brokers, on the other hand, provide you with a trading platform and offer trade advice. But you get to make the investment decision based on the information provided. The broker will only enter into trades or close positions of your choice.
Discretionary brokers not only provide a trading platform and trading advice but also execute trades on behalf of clients. They manage your investment portfolio, research the markets, and independently open and close trades as they fit.
Most UK stock brokers will charge you a fee, spread, or commission when you use their trading platform or services. The broker’s commission is usually common among full-service brokers. A handful number of UK brokers, on the other hand, offer no-commission brokerage services. They only maintain bid-ask spreads for stock trades and such other trading and non-trading fees as rollover, withdrawal-processing, currency conversion, and inactivity charges.
What Services do UK Stockbrokers Offer to Their Clients?
Different UK stock brokers provide different services. These include;
- Connect trader to market: The brokerage company provides traders with a platform through which they can access financial instruments listed in local and international stock exchanges.
- Access to research and trading tools: Both execution-only and full-service brokers will also provide you with access to a wide range of free but premium research, trading, and risk management tools.
- Facilitate fractional trading: Some UK brokers and apps will also let you buy fractional shares, which is ordinarily not possible for independent traders.
- Facilitate leverage trading: The majority of online brokers will also let you buy or sell stocks with leverage. Retail traders have access to leverages of up to 1:30.
- Researching markets and advising traders: Some stock brokers, especially full-service brokers, will research the markets, and advise traders. Most will also enter into and close trade positions without consulting their clients.
A Quick Three-Step Guide to Buying Stocks in the UK
Step 1: Choose a UK Stock Broker
Identify a reliable UK stockbroker and register a stock trading account with them. In this account creation process, the broker will usually ask for your personal information and demand that you verify your identity.
But in an industry where every stock broker claims to be the best, you need to learn how to vet and identify your broker. We will be telling you what to look for in a broker below.
Step 2: Select a stock to buy
Once the stock trader account is approved, deposit funds therein. There are several brokers for London stock exchange markets which will also grant access to stocks listed with foreign stock exchanges. From this list, select the stock you wish to buy or sell (as a CFD).
Step 3: Place a trade
After creating a trader account and identifying the stock you wish to buy or sell, place a trade. In most brokerages, placing a trade is as easy as entering the amount you wish to spend on the stock, setting maximum leverage, setting the take profit, and stop-loss levels, and hitting the buy button.
What Are the Different Types of Stock Brokers in the UK in 2022?
There are multiple types of stock brokers in the UK today. Let us go over three of the most popular briefly, to understand what they are and how they work:
Full-service brokers offer highly personalized trading services. They are actively involved in how you make investment decisions and execute them. Most will also take over the management of your stock portfolio.
They will carry out market research on your behalf, make recommendations on the best stock to buy, and even enter into or close these trades. The full-service broker serves a commission for the portfolio management services. And most are typically biassed towards high net worth investors looking for passive income-generating opportunities.
Discount brokers help traders fulfill stock trades at reduced fees. Unlike full-service brokers, they do not offer trading advice and neither do they manage investment portfolios on behalf of clients. They do not research markets or advise on the best stock to buy or the best time to sell.
Instead, they provide users with a self-service platform on which they can execute their trades. These platforms are resource-rich and feature premium research, analysis, trading, and risk management tools. They charge reduced commissions, compared to full-service brokers, and therefore appeal to retail investors.
As the name suggests, online brokers are trading companies that facilitate buying and selling of stocks and other assets over electronic networks. These refer to UK brokers that let you trade stocks via proprietary web trading platforms and apps or such conventional trade platforms like the MT4 and MT5.
Most of them maintain low stock trading fees and give traders access to a wide range of local and international stocks. The few that maintain trading fees are mostly commission-free. A majority of these will only charge a competitive spread and an overnight fee for margined trades.
What are the Pros and Cons of UK Stock Brokers 2022
- Portfolio diversification: Stockbrokers in the UK present you with a wide variety of both local and international stocks that you can use to diversify your portfolio.
- Fractional trading: Some online stock brokers in the UK allow you to buy fractional shares, allowing you to own a portion of value stocks in the market. This option is not available to individuals who choose to buy company shares directly from the exchange.
- Leverage trading: Some online trading brokers offer leverage trading that allows you to open large trade positions with little capital.
- Multi-directional trading: Some brokers let you go long (BUY) or short (SELL) on a stock.2
- Stock trading is risky: Stock trading can be rather risky – especially if you are day trading with borrowed funds (leverage). Stock prices are also considerably volatile and highly unpredictable.
- Costly: Trading could also be rather costly especially if your stock broker maintains high trading, non-trading fees, or maintains hidden fees.
- Low maximum leverage for stock trades: Most of the stock brokers the UK will only give you access to leverage of 1:5.
How Much Does it Cost to Use a Stock Broker in the UK?
There is no standard trading cost when it comes to stock investing. Different stockbrokers maintain different types of charges on their trading platforms. But while there is no way of telling how much it costs to trade stocks in the UK, most of the stock brokerages are rather transparent. They are required to be upfront with the charges on their platform and will let you view the cost of a trade before you hit the buy or sell order.
That said, you need to understand the cost of trading can be split into trading and non-trading fees. Trading fees comprise the actual spreads and overnight fees for leveraged trades. Non-trading fees, on the other hand, range from deposit and withdrawal processing fees, currency conversion fees, inactivity fees, broker commission, and any other administrative charges imposed by a stockbroker.
Brokers are usually transparent with their trading and non-trading fees. But to learn about the charges imposed by a stockbroker and if they maintain hidden fees, go over the online reviews of the brokerage platform or check the broker’s website.
What To Look for When Choosing a UK Stock Broker in 2022?
In an industry where every stock broker claims to be the best, finding one that speaks to your needs can be tough. To help you sort through this chaos and find your stock broker in UK, we ask that you consider these factors and use them to vet an online trading broker.
- Regulation and reputation: A good UK stock broker must be regulated by the FCA. They should also have a track record of reliability, especially when it comes to uptime and customer support. To check whether a stock broker is regulated and for what financial activities they are authorized to offer visit: FCA Register (fca.org.uk)
- Stocks on offer: Check the number and variety of stocks supported by the broker. A good stock broker should host a wide array of both local and international stocks from varying niches, allowing for easy portfolio diversification.
- Availability of Leverage Trading: Confirm that your preferred stock broker allows for leveraged stock trading and check their leverage limits if this is what you are looking for.
- Associated fees: Check the cost of trading on the preferred stock broker. Confirm all the costs affecting your trade, and the broker’s transparency. Also, ensure you understand their fee structure.
- Tools and resources: You may want your broker to feature premium trading analysis and risk management tools, as well as rich educational and financial news resources. Confirm, also, if the broker provides demo accounts to traders.
- Trade execution: How fast is the broker platform in executing trades? Are there incidences of slippage and how often does this happen? Confirm these from the stock broker reviews published on reputable review platforms
- Account types and minimums: Check the types of trader accounts offered by the broker. From micro, mini, standard, and PRO account to ECN Accounts and Islamic accounts. Confirm their trading minimums and associated fees.
You now understand how stock brokers work, how to place trades with UK stock brokers, the types of brokers available in the UK, and what to look for when choosing your broker. But to help you get started with stock trading, we look at some of the most popular UK online trading brokers in 2022.
1. eToro – Our Pick for 0% Commission Stock Trading
eToro is a no-commission broker. We also include the broker here because it not only maintains highly competitive but also transparent fees. You, for instance, will not pay any spread or additional broker fee when you buy real stock on the platform.
The only fees that you need to look out for when trading on the platform are the variable spread for stock CFD trades and an equally variable rollover fee for margined trades. A currency conversion fee of between 50 and 150 pips for non-USD deposits and a $5 withdrawal-processing fee. Importantly, eToro will let you view all the changes impacting your stock trade before you hit the buy/sell button.
eToro is one of the few online brokerages that let you buy real stocks from LSE-listed brands – some of which pay dividends. But in addition to real stocks, it exposes you to a wide range of stock CFDs and stock indices like the all-popular FTSE 100 that you can trade with leverages of up to 1:5. Please note that, Unlike traditional share dealing platforms, trading real stocks on eToro comes with some restrictions, for example, investors cannot move the stocks to another share dealing platform and therefore will only be allowed to close their positions on eToro trading platform. Please refer to eToro’s t&c.
But before you can start trading these stock options on eToro you will need to create a trader account and verify your identity. The account creation process is straightforward and the approval process fast. And seeing that eToro is a multi-trader platform, you can register and start trading on either its official website or mobile app.
You can start buying or shorting stocks on eToro after making a $10 deposit ($500 for bank deposits). The online broker also supports fractional trading, allowing you to invest in virtually any stock, index, or ETF – regardless of its market value. Supported payment methods include credit cards, debit cards, bank transfers, e-wallets (PayPal, Skrill, Neteller, and SOFORT), Trustly, and RapidTransfer.
Note that eToro (UK) Ltd. is licensed and regulated by the FCA. Client deposits are insured by the FSCS for up to £85,000 and eToro further insured these accounts for up to £1 million with Lloyds of London. The broker even has a registered office in One Canada Square, Canary Wharf, London E14 5AB.
In addition to supporting the majority of stocks listed on the London stock exchange, eToro exposes you to stocks from these 16 foreign stock exchanges:
- Free demo account: eToro presents all its platform users with a free demo account with $100,000 in virtual funds for practice trading.
- Intuitive interface: eToro maintains one of the most intuitive and beginner-friendly user interfaces. Appealing to both beginner and pro traders.
- Resource-rich platform: Both the web trader and eToro mobile app feature a wide range of trading, research, and risk-management tools. They are also rich in educational content and offer live trading webinars.
- Biased support: Only traders that have subscribed to the eToro club have access to fast customer support via phone and live chat. The rest can only request help through support tickets and email.
- High non-trading fees: eToro has been criticized for maintaining high non-trading fees, especially the withdrawal processing fees.
2. Degiro – Our Pick for International Stocks and Shares
Degiro gives you access to a wide range of international stocks, seeing that its features shares from companies listed in 50+ markets across the world. It lets you diversify your portfolio and invest in key developed markets across Europe, North America, and emerging markets, especially Asia.
Unlike most other online stock brokers operating in the UK, Degiro does not offer stock CFDs. You can only trade real stocks on the platform. The upside to this is, unlike most stock brokerage companies, Degiro lets you buy real stocks with borrowed funds i.e. leverage (debt money).
Note, however, that while such brokers as eToro and Capital.com have their leverage limits fixed at 1:5 of the trade capital, Degiro’s maximum leverage limit is highly variable. The broker employs a ‘Risk System’ to calculate how much leverage each trader can access.
The account creation process on Degiro is quite straightforward. Like all other online stock brokers, you will need to provide the broker with your personal information and verify your identity and current address. The broker doesn’t maintain a minimum deposit amount and neither do they have a maximum buy limit. And you can only deposit or withdraw funds via bank transfers when trading on Degiro.
Degiro supports fractional trading and doesn’t have a minimum or maximum buy limit. If you are trading stocks listed on the London Stock exchange on Degiro, you will be charged a fixed fee of £1.75 per trade. Degiro doesn’t charge a broker fee for US and Canadian stocks. The cost of trading Australian, Singaporean, Japan, and Hong Kong stock trades is fixed at €5 while all other stock trades carry a €3.90 fixed charge.
Other fees charged by Degiro include a currency conversion fee of 0.25% if you deposit with any other currency other than your account’s base currency. Short-selling stocks attract a fixed fee of between 1% and 2%, while leverage (Debit Money) attracts a 3% interest charge.
We must observe that Degiro is licensed and regulated by the Financial Conduct Authority (FCA). UK trader deposits into Degiro aren’t, however, insured with the FSCS although the broker claims they hold 100% of client funds in a segregated bank account. This means a higher risk to invested capital when trading with Degiro. You should make sure you are comfortable with what this means to you and be aware of Degiro’s terms and conditions before you invest.
In addition to trading key stocks listed with the London Stock Exchange, Degiro will let you buy selected stocks from the following popular exchanges:
- Multi-platform broker: Degiro lets you trade on both their proprietary web trader and mobile app.
- Security-focused: Degiro lets you enable 2FA, face ID, and touch ID security measures on the trading app. It also doesn’t share client data with third parties.
- Low fees: Degiro’s fees are competitive compared to other traditional platforms.
- Limited trade options: Unlike most online stock brokers that let you buy real stock as well as trade CFDs, Degiro doesn’t support stock CFD trading.
- Limited trading tools: The Degiro trading platforms feature limited trading, analysis, educational, and risk management tools.
3. XTB – Our Pick for Customers Support
XTB also makes it to this list because of its customer support services. This support team is available 24/5 to attend to your queries. It is also easily accessible on phone, through live chat on the website and app, and by email. It is then complemented by a rich FAQs section and XTB blogs on the website that addresses common problems affecting stock CFD traders.
Get started by creating a Stock Trader account with XTB. The registration process is straightforward with fast approval time.
Unlike other UK brokerages like eToro and Capital.com, XTB doesn’t support the purchase of real stocks on its trading platform. Here, you can only trade CFD assets. You nevertheless get to buy and sell 1800+ CFDs for some of the most popular stocks on the London stock exchange and stock exchanges across the world.
Note that the online stock company doesn’t maintain a minimum deposit limit. The minimum trade limit, however, varies from one supported stock market to another. For example, you need a minimum of $50 to buy stocks on NASDAQ or NYSE and 1000 SEK to buy stocks listed on the Stockholm stock exchange.
Nevertheless, you can open sizeable trades when you use their maximum leverage of 5X the trade capital. And the supported deposit and withdrawal methods on XTB include credit cards, debit cards, bank wire transfers, Skrill, and Paysafe.
Note that XTB is a no-commission broker. Therefore, when trading stock CFDs on the platform, you will only have to pay a highly variable but competitive spread and an equally variable roll-over fee for margined trades that remain open overnight. Deposits are also free but withdrawals below the £60 limit attract a fixed processing fee of £12. The UK-based broker also allows you to view the cost of the trade before you hit the buy or sell button.
XTB is also registered in the UK and licensed by the Financial Conduct Authority (FCA). Client deposits into the UK are also insured with the FSCS for up to £85,000. The online broker even maintains a physical office in London.
In addition to listing some of the popular shares for companies listed on the London stock exchange, XTB exposes you to stock CFDs from the following foreign stock exchanges.
- Rich educational tools: The XTB website is rich in trading education content in the Learn-to-Trade section and you are also presented with a free demo account where you practice your trading strategies.
- Multi trader platform: XTB is available on the proprietary web trading platform, xStation5, and mobile app xStation Mobile.
- Does not offer MT4 platform: You can only access XTB via the broker’s proprietary trading platform. It is not available on universal trader platforms like MT4 or MT5.
4. Plus500 – Our Pick for Friendly Platform
Plus500 has an easy onboarding process. It also features a wide range of educational content, especially the Trader’s Guide which teaches novice investors how to interact with different financial instruments. These newbies are then allowed to practice trade and perfect a strategy in the free Plus500 demo trader account.
After creating an account and verifying your identity, you can start trading stock CFDs (Plus500 doesn’t support the trade of real shares). But you first need to make a deposit of at least £100. Supported deposit and withdrawal options for UK residents include credit cards and debit cards, eWallets like Skrill, and PayPal, and bank transfers.
There is no maximum investing amount and you have access to leverages of up to 1:5 when trading stock on Plus500.
Deposits and withdrawals are free with Plus500. The company is also a commission-free brokerage that maintains highly competitive trading fees. These include a highly variable spread for different stocks and an equally variable rollover fee for overnight funding. The only other fees Plus500 charges are the currency conversion fee for non-GBP deposits and a £10 inactivity fee for dormant trader accounts.
Like all the other brokers featured in this guide, Plus500 is registered in the UK and authorized by the Financial Conduct Authority (FCA).
Among the 2000+ instruments listed on Plus500 is a host of stocks and shares listed on the LSE and foreign stock exchanges in 25 other countries including:
- Excellent support: Plus500 maintains a highly responsive support team available online 24/7 on live chat, email, and social media.
- Resource-rich platform: The Plus500 trading platform is rich in market research, trading, charting, and risk management tools, as well as educational content.
- Multi-trader platform: You can trade shares on Plus500 via its proprietary web trader and mobile app.
- Only CFD trades: Unlike competitor online brokers like eToro or Capital.com, Plus500 does not support the trade of real shares.
Other Benefits of Using a UK Stock Broker?
You now understand the different types of stockbrokers available in the UK, how they work, and how to pick the best broker. We have even discussed what we consider the best online brokerages in the UK today.
But why should you use a stock broker? What are the benefits of buying shares through an online stocks company? We look at the five most potent below:
- Easy access to stock markets: The global exchanges are not open to the public. Therefore, online stock companies come in handy in connecting both professional and retail traders to the stock market.
- Lets you invest in foreign companies: The best stock brokers in the UK will also provide you with a platform that you can use to access foreign stock markets.
- Trade advise and portfolio management: Full-service stock brokers also provide you with investment advice and some offer to professionally manage your stock portfolio.
- Trade with minimal capital: From this UK brokers comparison guide, you learn that the majority of stock brokers will let you trade stocks on leverage – as much as 5X your trading capital. Though, it’s very important to understand the risks associated with investing in CFD before starting your trading journey.
What are The Risks of Using a UK Stock Broker?
Regulatory agencies like the FCA and FSCS play a key role in shielding clients from exposure to unnecessary risks. FCA ensures strict compliance with trading rules while FSCS insures investors’ deposits. That notwithstanding, investors are exposed to numerous trade risks, most of which can be attributed to investing via UK stock brokers. These most common include:
- Exposure to unnecessary risk from churning: Professional portfolio managers are paid a commission every time they trade on behalf of clients. Gullible traders may expose you to unnecessary risks by churning trades – entering into multiple not-so-well-thought trades as they chase this commission.
- Leverage misuse: Novice traders often misuse leverage or do not understand how to use it, exposing them to such unnecessary risks as blown accounts or even negative balances. CFD trading is risky and traders should make themselves aware of any potential losses before funding a real account.
- The stock broker may go under: You can lose your investment if your stock broker is declared insolvent and there aren’t sufficient assets to settle their liabilities. Even though each investor is covered by FSCS, the £85,000 may not be enough for traders that maintained relatively larger accounts.
- Inordinate trading advice: In the age of trading signals, unlimited webinars, and unsolicited advice from self-proclaimed trading ‘gurus’ it is easy to be lost in the wealth of trade advice, both factual and cooked. This primarily affects novice traders who are yet to master analysis and research.
Is stock day trading legal in the UK?
Yes, it is legal to day trade shares and stocks in the UK. You are free to open as many stock trades as possible in different markets. Be sure to have access to premium trading, market research, and risk-management tools.
Since day trading involves taking advantage of even the slightest adjustments in stock prices, you will need significant trading capital if you are to make tangible incomes off the trade. Note, however, that day trading carries relatively high risks. You will also need extensive stock trading experience.
The list of UK stockbrokers, registered, and licensed to operate in the country is long. And they all are designed to appeal to different clientele. While some appeal to beginner stock traders, others appeal to experienced investors. There even are best brokers for the London stock exchange and the UK market while others pool in the widest range of international stocks listed with foreign stock markets.
This article guides you through this chaos and helps you identify some of the best online brokers in the UK. It starts by introducing you to the different types of online stock companies operating in the country, how they work, and what to look for in the best trading brokers. It then goes through the operation of listing 5 brokers in the country, telling you the stocks on offer, their trading costs, their onboarding process, and their deposit/buy limits.
Q & A
Different stock brokers have their fair share of strengths and weaknesses. In this post, we have shared with you some of the popular stock trading platforms in the UK and highlighted their key strengths and weaknesses. Go through this list again and choose one that speaks to your needs.
It all comes down to your own preferences. We have compared a list of online trading brokers that offer stocks in the UK. Some of them -such as eToro- offer access to a wide range of real and CFD stocks on a friendly trading platform with access to multiple educational sources.
Different stockbrokers maintain different trading fees. While all the stock brokers we have featured in this UK stock brokers comparison guide do not maintain broker commission, the majority maintain spreads and rollover fees on both real stock and stock CFD trades.
You first need to figure out your investment strategy and investment goal. Identify the stocks you would like to buy, the leverage you would like to use and the level of support you will need to trade effectively. Go through the Stock broker websites and online reviews, check the broker that best appeals to your needs, and register a trader account with them.