Best Forex Brokers in UK 2019
UK Forex Brokers Comparison Table
|Broker||Rating||Official Site||Regulations||Min Deposit||Max Leverage||Trading Platforms||Foundation Year||Publicly Traded||Trading Desk Type||Currencies||Commodities||Indices||Stocks||Crypto||Commission on trades||Fixed spreads||offers promotions||Official Site|
By 18 User Reviews
ActivTrader, MT4, MT5
No dealing desk
By 46 User Reviews
80.6% of retail CFD accounts lose money
ASIC, CySEC, FCA, FSB, ISA, MAS
No dealing desk
80.6% of retail CFD accounts lose money
By 41 User Reviews
BaFin, CNMV in Spain, CySEC, FCA, IFSC
Your capital is at risk.
BaFin, CySEC, FCA, FSA
No dealing desk
Your capital is at risk.
How to Choose a Forex Broker (as a UK trader)
Ever since the global financial crisis in 2008, the number of new forex brokers joining the industry has plummeted tremendously. In addition, we also see a large number of brokers exiting the industry entirely. In a highly competitive industry such as the online forex trading industry, only the strongest get to survive. While this means that only the established brokers stick around to offer their services, you still need to do all the due diligence to ensure that the forex broker that you partner up with is the right broker for you. In this case we have conducted all the due diligence on your behalf.
But here’s what you do need to think about, what kind of a trader are you? First you need to establish your trading needs.
To find the best forex broker that will meet these needs will require some research. Since there are hundreds of brokers on the internet that are trying to compete for your custom, there will definitely be plenty of choice. Nevertheless, these brokers must comply with a certain set of criteria before they can even be considered. First of all, you need to ensure that the broker can be trusted to handle your money. In addition, you also want a broker that can provide you with a reliable trading platform to trade with. Of course, there are also other factors that you look at such as the trading cost in terms of commissions and spreads, as well as account types available, customer support and other value added services.
The online forex trading industry operates on a global basis on the Over The Counter (OTC) market. The OTC market is largely unregulated hence leaving the field wide open for scam brokers to try and scam unsuspecting traders. Nevertheless, you can protect yourself by trading only with regulated brokers. Regulated brokers unlike their unregulated peers, operate within the strict confines of the regulations imposed by the regulatory authorities. These regulated brokers are usually based in major financial centers around the world such as London, Singapore, Hong Kong, Tokyo and New York.
Because forex brokers are operating in different jurisdictions, the regulatory requirements of each broker are different. Nevertheless, there are certain requirements which are considered the industry standard and are followed by regulatory authorities from all over the world. An example of this is the need for the broker to keep segregated accounts for their clients’ funds and the broker’s operational funds. Another standard requirement among regulated forex brokers in the industry is the need to maintain a specific level of liquidity to ensure that the broker has enough liquidity to meet their contractual obligations.
UK (United Kingdom) Regulation
For a UK based trader, the best option is to look for brokers which are regulated by the UK regulatory authorities. In the UK, the relevant financial authority for the forex trading industry is the Financial Conduct Authority (FCA). The FCA is an independent body from the UK’s government. It is financed by the membership fees collected from the members that it has oversight over.
Brokers under the FCA’s jurisdiction are required to show a minimum of 1 million in operating capital and this number increases as the number of traders increases. In addition, FCA regulated brokers are required:
- To process all withdrawal requests instantaneously
- To submit yearly audited reports to the FCA for scrutiny
- To submit periodic financial statements of capital holdings to ensure that the broker is in compliance of its capital adequacy ratio.
By trading with a regulated broker under the FCA, you also have the benefit of protection of your trading funds under the FSCS (Financial Services Compensation Scheme). All FCA regulated firms are required to be a member of the FSCS. The aim of this scheme is to compensate traders of the loss of the money in the event the broker runs into insolvency issues. Under the FSCS, traders are guaranteed protection up to a maximum amount of £50,000. In the event of liquidation, traders will receive 100% of their money up to £30,000. Above £30,000, they will get to receive a maximum of 90%.
Trading Platform & Software
Apart from regulatory oversight, another important factor that needs to be carefully evaluated is the choice of trading platform that the broker has provided. Most brokers usually provide their traders with a selection in order to cater to the different categories of traders in the online trading community. These platforms are usually in the form of a desktop application, web based platform or a mobile trading app. The platforms may also be proprietary (built by the firm itself or for the firm) or provided by a third party trading solutions provider such as MetaQuotes Software, the developer of the popular MetaTrader 4 platform.
What you want to verify with a broker’s trading platform are:
- The ease of use
- The execution speed
- The charts quality
- Range of Technical Indicators
- The risk management tools
- Social trading capability
Spreads, Commissions & Leverage
The next thing that you need to be concerned about is the trading cost. This can take the form of commission charges or spreads or a combination of both.
Most forex brokers in the industry do not charge commissions on the trades that they execute unlike in the equity market. Instead, traders are required to pay a small spread in lieu of the absence of commission charges. The spread is just the difference between the BID and ASK price. Depending on the currency pair, it is usually less than 5 pips for the most frequently traded currency pairs. With spreads, you want to know if the broker offer fixed or variable spreads. With fixed spreads, the spread doesn’t change according to the market conditions. Variable spreads on the other hand is dependent upon the market conditions.
Some brokers operate with a Non Dealing Desk (NDD) business model. With this business model, the broker simply relays your orders to the interbank market where it will be matched. For this service, the broker usually charges a commission on top of the spreads that you pay on the interbank market. Usually the commission is based on a small percentage of the trading volume.
In addition to trading costs, check how much leverage is the broker offering. The leverage ratio is simply the amount of capital which you can borrow from the broker to increase your market position. For example if a broker is offering a leverage ratio of 1:500, this mean for every pound in your trading account, you can increase your investment by a factor of 500. In other words, it is possible to hold a market position worth £50,000 with just £100. Take note that while it is possible to increase your profit potential with leverage trading, the risk of losing more than what you invested also increases when you use leverage.
The types of trading accounts that are available vary from broker to broker. Brokers who are beginner friendly and cater to small time traders often provide their traders with micro and mini trading accounts. These accounts allow traders to trade in amounts that are smaller than a standard trading lot. A standard lot is equivalent to a market position of 100,000 units of currency.
- With a micro account, you can trade in a lot size as small as 1000 units of currency.
- A mini account lets you trade in a lot size of 10,000 units of currency.
In addition, different types of trading accounts have different benefits and privileges. The higher ranking is the trading account, the more privileges will the account holder be entitled to.
The type of trading account that traders can open is also dictated by the minimum initial deposit. The Mini account is the lowest grade trading and often requires only a small initial minimum investment which is usually £250. At the other end of the scale, we have the Premium or VIP trading account which usually requires a substantial amount of minimum initial deposit and can run into tens of thousands of pounds.
While it is easy to get distracted by all the bells and whistles offered by a broker, you should never neglect to check out their customer support services. This is because of the fact that no matter how experienced you are as a trader, there will always come a time when you will need the assistance of the customer support team. When that time comes, you want to be able to get in touch with the support team without any hassles.
Hence, check what are the methods that the broker has made available for communicating with the support team. If a broker’s customer support team is difficult to reach or to get in touch with, you might want to rethink about your choice of broker and save yourself a lot of frustration at the end of the day.
In addition, take note of the hours that the support services are available. Remember that the forex market is a 24 hours market and it doesn’t operate within the confines of normal office hours. Hence, if the support services are only available during office hours, you might find yourself regretting your broker choice when you really require the assistance of the support team to resolve your problem.
There are some brokers who offer additional value added services in order to differentiate themselves from other brokers in the industry. These additional value added can be the provision of a free trading signals service or free VPN service. Other valued added services that can be taken into consideration include comprehensive trading education and robot trading services. While some of these additional value added services might be nice to have, it is important to remember that they should only be taken into account after evaluating the basic services provided by the broker.
Regardless of how experienced or capable a trader might be in spotting profitable opportunities in the market, he is only as good as the broker that he is using. If a broker is unwilling to cooperate and provide the kind of services that the trader needs to capitalize on the trading opportunities, then it might be better for the trader to just keep his money in the bank. The forex market doesn’t have any clear rules or precedent on how it will behave and this creates a good opportunity for those who are skilled in analyzing the market to score a profit.
But we mustn’t forget that a huge part of the trader’s success comes from the broker that provides him with all the tools to make a proper analysis and the platform to carry out the trade. If either of these is missing, then the trader will find himself tremendously handicapped. To help our readers avoid any of this unpleasantness, we have carefully screened some of the leading forex brokers in the industry and prepared a selection of the best UK forex brokers for you to choose from. These UK forex brokers are selected based on meeting all the above mentioned criteria that we have discussed about earlier in this guide.