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Online trading UK The Best Online trading platforms

online trading uk

Online trading UK has to do with the changing of one online trading to another. Foreign currency exchange can be done for several reasons. It can be used for tourism, trading, and commerce. The average daily turnover of the foreign exchange market is more than $5.1 trillion. Another name for foreign exchange is Forex or FX. The Forex market is global and it involves the exchange of various national currencies one against the other. The Forex market is the largest and most liquid of all asset markets globally. In the Forex market, currencies are traded in pairs, an example of which is the EUR/USD. All major currencies across the globe can be accessed when trading online UK.

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The Forex market exists as spot markets and derivatives markets. It offers currency, options, futures, and forwards swaps. Participants in the Forex market use  Forex for hedging against international currencies and interest rate risk towards speculating economic events taking place across the globe and diversifying their portfolios among other things.

What is the Forex market?

The Forex market is the place where the trading of currencies occurs. Currencies are used as a means of buying and selling across the globe and this is why they are considered to be very important globally. They are also used for conducting business and for foreign trade. For example, importers in the united states will have to first exchange the US dollars to Euro before they can import any item from France since the French seller will only receive Euro as a means of exchange. If you are a tourist traveling from France to the UK, you will need to exchange the Euro for Great Britain Pounds before you can carry out any transaction during your time in the UK. This is because the Great Britain Pound is the local currency recognized in the UK.

Forex market

One thing that makes the international market to stand out is the fact that there is no central marketplace for foreign exchange. Instead, foreign exchange or currency trading is carried out electronically over-the-counter; this means that every transaction involved in trading online takes place via computer network connecting traders across the globe and not just one centralized exchange. The Forex market is available for the 24 hours of the day and 5 days of the week; some insist that it is open for 5 and a half days of the week. online trading also occurs in the major financial centers across the globe, which includes the following:

  • London
  • Sydney
  • New York
  • Paris
  • Tokyo
  • Singapore
  • Zurich
  • Hong Kong
  • Frankfurt

The trading online also occurs across almost all time zones. As a result of this, online trading starts in New York, which experiences the first daylight of the day when trading day ends in the United States, it is just starting in places like honk Kong and Tokyo. This is the reason why the Forex market is always active virtually any time of the day and this is why the price quote changes constantly.

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A brief history of Forex

The stock market had been around for hundreds of years, but the same cannot be said about the Forex market. Forex market is relatively new and it has even become more popular than the stock market. online trading has to do with people concerning one currency to another to make a profit. While the Forex market is relatively new, it dates as far back as when people started using currencies as a means of exchange or when the world started minting currencies. Be that as it may, the old idea of Forex is not as vibrant as the modern idea, which is an entirely new invention that allows people to trade Forex or exchange one currency to another without actually owning those currencies. More major currencies were permitted to float freely against one another following the Bretton Woods accord of 1971. There is a variation in the prices of individual currencies and this has brought about the need for Forex trading and services.

Most of the online trading activities of today are carried out by investment and commercial banks; they do this on behalf of their clients that are interested in investing in the Forex market. This does not prevent speculative opportunities for trading one currency against another for individual and professional investors. It is also possible to trade stock online. Many stock traders now prefer online stick trading UK to the conventional way of trading stocks.

Forwards & Futures Markets and Spot Market

online trading is being done by individuals, corporations, and institutions via three different ways, which are:

  • Spot market
  • Forwards market
  • Futures market
Futures Markets UK

The spot market is undoubtedly the largest of the three since it is the underlying real estate on which the futures and forwards markets have their foundations. The futures market was the past popular in the past because it was made available to any individual investor for a very long time. The introduction of electronic trading and many Forex brokers make give the spot marker a huge advantage over the others, making it the largest of the three. The spot market has experienced an incomparable surge in trading activities and it has now fully overtaken the futures market since many traders now prefer using it.

The spot market is the place where currencies are bought and sold in line with their prices and values. The price is determined by supply and demand for that particular currency and it also reflects so many things that affect each of the currencies, some of which are:

  • Interest rates
  • Economic performance
  • Sentiment towards currency political situation on the local and international stages.
  • Perception of the future performance of currencies against each other.

A finalized deal in the spot market is called a spot deal. It can be defined as a bilateral transaction in which one investor delivers a particular amount of a currency earlier agreed upon and receives a given amount of another type of currency agreed upon with the counterparty. The settlement will be done in cash immediately once a position is closed.

Spot market involves the trading of actual currencies, but this is not the case with the futures and forwards markets, which are involved with the contracts representing claims to a given type of currency, future settlement date, and a particular price per unit.

Contracts are purchased in the forwards market and sold Over The Counter (OTC) between two parties. The two parties are responsible for determining the terms of the agreement between themselves.

The futures market has to do with the buying and selling of futures contracts during online trading UK based on the settlement date and standard size on public commodities markets like the Chicago Mercantile Exchange. The National Futures Association is responsible for regulating the futures market in the United States. Futures contracts come with specific details, like:

  • Minimum price increments that cannot be customized
  • Settlement dates
  • Delivery date
  • Number of units being traded

The exchange plays the role of a counterpart to the trader by providing settlement and clearance. Bear in mind that the terms currency market, foreign exchange market, Forex, and FX all mean the same thing.

Forex for hedging

Companies that have their business established in foreign countries stand the risk of fluctuation in the price of the currency when they buy or sell goods and services in another country. The Forex market makes it possible for them to hedge currency risk and this can be done by fixing a rate at which the transaction can be completed.

Forex speculation

To make this possible, the trader can buy or sell the currencies in a swap or forward market and this can be done in advance. Take for example a company that plans to sell a blender made in the US in the European market when the exchange rate between the two countries is 1:1 (EUR/USD).

The cost price of the blender is $100 and the company decides to sell it for 150 Euros and the price is competitive with what obtains on other blenders that are sold in Europe. This means that the company will make a profit of 50 euros, which is the same as $50 since the value of EUR/USD is 1:1. If the USD starts to rise in value against the euro and the exchange rate for EUR/USD changes from 1 to 0.8, this means that it will cost $0.8 to buy 1 euro.

If the company still makes the blender for $100 and sells it for 150 euro, it means the profit on the blender will reduce from $50 to $(50 x 0.8), which equals $20. A stronger USD, therefore, leads to a smaller profit. The risk faced by the company making the blender can be reduced by shorting the euro and purchasing the USD when the two are in parity. As a result of this, the profit made by the company will cover up the reduction in the fall in value when the USD rises. The profit will rise even further if the value of the USD falls and this will help to cover for the losses in the trade.

You can do this type of hedging in the futures market. Futures contracts are standardized and cleared by a central authority. Be that as it may, there may be less liquidity in the currency futures market compared to the forwards market. The latter exists within the interbank system and it is decentralized.

Forex for speculation

Several factors affect the demand and supply of currencies, some of which are:

  • Interest rate
  • Trade flows
  • Tourism
  • Economic strength
  • Geopolitical risk

These factors are responsible for the volatility existing in the Forex market and they make it possible for traders to make a profit from online trading UK since they cause a frequent increase or decrease in value of one currency against the other. The increase in the strength of one currency indicates a reduction in the strength of the other since currencies are traded in pairs.

Currency as an asset

Currencies as an asset class are categorized into two

  • The trader can earn from the difference between the interest rates of two currencies
  • The trader can also make a profit from the difference in the exchange rate.

Online trading investors can make money from interest rate differences by purchasing the currency that has a higher interest rate and shorting the one that has a lower interest rate. The interest rate difference between the Japanese Yen and the British pounds was high before the 2008 financial crises and Forex investors took advantage of this by shorting the Japanese yen and buying the British pounds. Another name for this strategy is “carry trade”.

Why is it possible to trade currencies?

Before the internet came to the rescue, it was very difficult for investors to trade currency. Most of the organizations involved in currency trading in those days were high-net-worth individuals, hedge funds, and multinational corporations. This is because you need a lot of capital to trade Forex successfully. The interest now makes it possible for people to trade Forex with little capital. It now makes it possible for individuals with limited capital to trade Forex successfully.

The traders can either do this via brokers or banks. To make trading a lot more profitable to the individuals, the brokers offer high leverage to every online trading investor. As a result of this, they can control a large position with a very small account balance. Leverage makes it possible for the trader to make a lot of profit, but it also exposes the trader to a lot of risks. So, it should be used carefully.

Online trading risks

online trading is both complex and risky and online trading investors need to bear this in mind at all times. The regulations in the interbank market are of different types and there is no standardization in the online trading in some other parts of the world. The interbank market consists of banks that trade with one another all over the world. The banks have the responsibility to determine and also accept credit risk and sovereign risk. These banks have equally established effective internal processes. The regulations are imposed by the industry and ensure the protection of the banks that participate in the interbank market.

The market is made up of the banks that participate and they provide bids and offers for a given currency. As a result of this, the pricing mechanism in the market is based on supply and demand. There is a very large flow of trade in the system and this makes it difficult for fraudulent traders to influence the price of any given currency. The system ensures transparency for investors that have access to inter bank dealings.

Most of the small retail Forex traders carry out their trading with small and semi-unregulated brokers or dealers. Such brokers can re-quote prices and can even trade against the customers. The brokers may be regulated by government agencies or concerned industries, depending on the country where the broker is operating. Such regulations are, however inconsistent.

Before registering with a broker for Forex or online stock trading UK, it is very important to first find out if the broker is regulated or not. As a UK trader, you should be concerned with a broker that is regulated by relevant authorities in the UK, like the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). The two of them replaced the Financial Services Authority (FSA) in 2013, April 1st to be specific. The FCA is a non-government agency and it is funded by the various companies that the outlet regulates. However, the FCA reports to the Board put in place by the Treasury. The FCA has the responsibility to protect consumers and ensure stability in the Forex market. They also ensure that competition among financial service providers in the UK remains healthy. The agency is involved with the regulation of asset managers and financial advisers.

On the other hand, the Prudential Regulation Authority is affiliated to the Bank of England and has the major role of promoting a healthy financial system in the UK via the supervision and regulation of insurers, major investment firms,   credit unions, and banks.

Benefits and challenges of online trading


The Forex market is still the leading financial market as regards global daily trading volume. To, therefore, offers the most liquidity. It is, therefore, very easy to enter and exit positions in any major currencies in a fraction of seconds.


Dealers, brokers, and banks in the Forex market give the trader opportunities to use high leverage. As a result, the trader can easily control a large position with a very small amount of money. Leverage of 1:100 is considered to be high and it is commonly seen among brokers. A trader needs to understand the risk involved in using leverage; it can have a positive or negative influence on trading since it can either give you profit or loss. Extreme use of leverage can either make you rich or make the trader go bankrupt.


The Forex market is open 24 hours of the day and 5 and a half days of the week. Trading activities start in Australia each day and ends in New York. The major centers for the Forex market across the globe are:

  • New York
  • London
  • Paris
  • Frankfurt
  • Tokyo
  • Singapore
  • Honk Kong
  • Sydney


A Forex trader requires a good understanding of economic indicators and fundamentals. He needs to know what goes on around the globe as far as the economy is concerned and he should know how these individual economic fundamentals relate to one another. This way, he will be able to grasp the particular fundamentals that drive changes in the values of currencies.

How to start online trading

In the course of this write-up, we have opened your eyes to the basic things you need to know about online trading and how it all begins. We have also shown you some of the benefits of trading Forex, as well as, some challenges you need to be wary of so that you will not get it wrong when you trade Forex. In this section, however, we are going to enlighten you about important steps to take when you want to start trading Forex online.

You can start trading Forex in just three steps that will be highlighted below:

  • Open a trading account
  • Fund your account
  • Start trading

Yes, it is as simple as that. We are going to elaborate on each of these steps below:

Open a trading account

You will need to first look for a Forex broker to register with. There are so many of them out there today and you must choose carefully so that you will not end up with the wrong one. Look for a broker that offers a very simple and straightforward registration process. Find out also if the platform is secure or not before you register there to trade Forex. You will need to fill a short application form provided by the broker.

After the registration, you will need to go through a verification process before you can have access to the full features on the trading platform. Some brokers allow you to proceed with trading even before verification, while some other brokers insist that you must complete the verification process before you can start trading Forex on their platforms. To verify your account, you need to submit certain documents to the broker and the documents must meet the requirements before you can start trading Forex on that platform. Some Forex brokers can also connect you with an account manager immediately after your trading account has been verified. When choosing a Forex broker in the UK, always go for one that is regulated by the FCA. Your funds are safe with a regulated broker.

Fund your account

After you have registered with a regulated broker in the UK and you have verified your account, the next thing to do is to fund your account so that you can start trading Forex. You can easily fund your account with any of the methods supported by the broker, provide that method is convenient for you. Before you register with any broker, you can take time to find out if the broker offers deposit methods you can use conveniently. Most deposits are processed instantly and the money will be available in your account so that you can start trading Forex instantly. This is not always the case as some brokers delay in processing deposits and some deposit methods are delayed for some time before the funds are available in your trading account.

The amount to deposit can also depend on the minimum deposit amount required by the broker. You need to find out about this before you even register an account with the broker. Some brokers allow their registered members to deposit a small amount, while some other brokers demand huge minimum deposits. If you are a newbie in online trading in the UK, it is better to start with the minimum required deposit and you can increase your deposit as you gain more knowledge of online trading and become a better and more experienced trader.

Start trading

The next thing to do after depositing money in your online trading account is to start trading. Before you kick start your trading, however, make sure that you already have a good online trading strategy, a strategy that you can follow without any hassle. You also need to have a good money management strategy so that you will not lose your fund due to repeated losses. You should kick start your UK trading experience from a demo account. Make sure that the broker you choose offers a demo account. The demo account will give you an idea of how online trading works and you will also be given virtual money with which you can practice and learn the rope.

You can use the demo account to test run your trading strategy to know how effective it is. It is not advisable to venture into live trading until you are certain that your trading strategy is effective and reliable for trading Forex profitably. As a beginner, it is also better to stick to a particular currency pair than to jump from one currency pair to another. Sticking to just a currency pair will give you a very good understanding of the pair and make it a lot easier to make money by trading that pair. You can later venture into other currency pairs as your experience in Forex trading grows. Make sure that the platform where you register for Forex trading UK allows unlimited access to its demo account. You are also better off with a Forex broker that allows you access to the demo account before you make a deposit.

Tips for a successful online trading experience

As a newbie in online trading, you may find it very difficult to start making a profit. However, you can overcome the initial challenges and become one of the most profitable Forex traders if you have access to the right guidance and mentorship. The information you have read so far can help you to make better trading decisions so that you can record more profits than losses. Studies show that only about 5% of Forex traders make a consistent profit. The tips we are about to provide in this section of the write-up can go a long way to make you one of the 5% successful Forex traders.

Helpful tips to note

  • Develop a particular trading style and goals and make sure you stick to it. It is unwise to venture into any UK trading activity without first developing a good strategy. After you have ascertained that the strategy is ok, you should stick to it no matter what.
  • The Forex market is highly dynamic. This is to say that a particular Forex strategy that works very well today may become unprofitable in a couple of months. You need to understand this dynamism and always put it into consideration when trading Forex. This will translate you to the level of profitable Forex traders.
  • Not all brokers are reliable. You should not register with that broker until you are sure that the broker is regulated by the FCA in the UK. This is not to say that other regulatory agencies around the world are not reliable. However, you are better off with a Forex trading UK platform regulated by the FCA. You can also trust those brokers regulated by international bodies, but make sure that they are regulated by tier-1 regulators.
  • It is one thing to have a good Forex trading strategy that will tell you when to buy or sell, it is another thing to have a good exit strategy. An online trading UK strategy that does not include when to buy or sell and when to exit is not a good trading strategy. One other important thing to bear in mind is the money management strategy. You must prepare all these before you start trading Forex.
  • Losses are part of the game and every trader must always bear this in mind. There is no 100% Forex trading strategy. This means there is no way you will not record losses. However, you will be on the safer side if your strategy records more profits than losses.
  • You should always keep your emotion at bay when trading Forex so that you will not end up making unforgivable trading mistakes.


Traders that have limited funds should consider venturing into swing trading or day trading. These types of trading can be easily done in the Forex market than anywhere else. Traders that have bigger funds and prefer long term trading can focus on carrying trade or fundamental-based trading new Forex traders can become better and more profitable if they focus on understanding technical analysis and the macroeconomic fundamentals that drive changes in currency values. Before you start trading online UK, find out how reliable or otherwise the broker is and also develop a good trading strategy that has a high win rate.

Online trading frequently asked question in UK

What is online trading or trading online?

Trading, you either buy and sell shares yourself or you can use an advisor and have your money managed for you. Most of our Forex brokers offer you a dictated account manager that will help with your journey of trading online.

Which brokers demo account?

The Brokers that we have listed on our website offer demo trading account and educational courses to Sharpen your trading skills.

 What is best trading platform for beginners?

We recommended XM as the Best Forex broker for beginners, with them you receive credits on your demo account, you can trade as much as you like using their trading demo account, when your ready you create a Live account.

Which broker offers the most Educational Support or Webinars?

  1. XM
  2. Easy Markets
  3. Avatrade
  4. CM Trading
  5. HYCM
  6. 24Options
  7. IQ Options

Is Online trading legal in United Kingdom?

Yes, trading online is legal from listed regulated Forex brokers.

What is best Strategy when come to trading online?

  • Day Trading
  • Scalping
  • Swing trading
  • Position trading

When it come to trading these methods are used the most and they work for many traders in the UK.

how to trade online?

You can trading by choosing our listed regulated forex brokers in UK here are the Steps:

  1. Create an Account
  2. Deposit the minimum amount required by the Broker.
  3. Receive educational courses from the Broker.
  4. Trade and Make money for yourself