CFD Brokers In The UK
CFD brokers in the UK are popular with British traders. Low fees, high leverage rates and robust regulation attract both beginners and experienced investors. As well as a list of the best UK CFD brokers, we explain how to make your own comparison, considering spreads, FCA licensing, minimum deposits and more.
What Is A CFD Broker?
CFD Trading is a very popular way to speculate on price movements of assets, like stocks. A Contract for Difference is an agreement between an investor and a CFD broker to pay the difference between the opening price and closing price of a certain asset, such as a UK stock. Crucially, traders do not own the underlying asset.
Let’s look at an example: You want to open a position on 10 shares with an asking price of £100 each. To own these underlying shares, the cost to an investor would be £1,000. However, with most CFD brokers in the UK, the cost to open a leveraged position is usually between 5% and 20% of the ask price – giving traders exposure to the full value of the asset without putting up the total amount or taking ownership of the shares.
CFD brokers in the UK are particularly popular with day traders offering low costs and straightforward access to major financial markets. With that said, CFDs can also be used by longer-term investors though it’s important to use risk management techniques, such as stop losses.
How UK CFD Brokers Work
CFD brokers in the UK offer a platform where clients can choose from a list of assets, analyse the markets, and take positions. A series of instant and pending orders are usually offered alongside a suite of charts, drawing tools and other analysis features.
Most CFD brokers offer in the UK offer trading on currency pairs with the GBP, equities listed on the FTSE, plus precious metals and energies. Note, the FCA has banned CFD brokers in the UK from offering derivatives on cryptocurrencies like Bitcoin. As a result, traders from the UK will need to turn to offshore, unregulated platforms to find these instruments.
How To Compare CFD Brokers In The UK
Important areas to consider when choosing CFD brokers in the UK include:
Your chosen asset will need to increase in value by the spread amount for you to break even. In the UK, spreads on popular FX pairs such as the GBP/USD and GBP/EUR are generally between 1-2 pips. Users should also be aware of other charges such as overnight holding fees, withdrawal fees and commissions.
The best CFD brokers in the UK will charge zero sign-up fees, but there will typically be a minimum deposit requirement – which can be as little as £10 or even £0.
Another reason CFD trading is popular in the UK is the access to leverage. Leverage is a temporary loan given to the trader by the broker which offers exposure to greater gains, but also higher losses.
Leverage is limited by the FCA (Financial Conduct Authority) to between 1:2 and 1:30. With some CFD brokers in the UK, once you have qualified for a professional account, you can access leverage up to 1:500.
CFD brokers in the UK offer access to different markets. Most platforms offer forex pairs, equities and indices, however, the range of each will vary. For example, the top providers will offer a long list of minor and exotic pairs. The best CFD brokers in the UK will also offer access to both the FTSE 100 and sometimes the FTSE 250.
Be wary of platforms offering CFDs on cryptos as these are banned in the UK and may be an indication that the brokerage isn’t licensed.
The financial regulatory body in the UK is the Financial Conduct Authority (FCA). When choosing CFD brokers in the UK, be sure to opt for one that is fully compliant with FCA regulations.
The FCA protects retail investors with measures such as the separation of investor’s money from the broker’s capital and access to the Financial Ombudsman Service and the Financial Services Compensation Scheme.
Some CFD brokers in the UK offer rewards such as deposit bonuses and promo codes for new users. Be wary of gimmicks designed to lure in new investors. The FCA has also clamped down on misleading promotions so finding platforms with generous offers is getting harder.
Most CFD brokers in the UK offer a variety of live accounts. Traders that can prove their experience or have a certain amount of capital can open more competitive accounts with tighter spreads, higher leverage ratios and additional analysis tools. The top CFD brokers in the UK may also offer dedicated account managers for those with a professional investing account.
Finding an intuitive and user-friendly platform will make speculating on the markets an enjoyable experience. Depending on the frequency and style of your trading, different platforms will also suit your needs better. Compare features such as signals, charts and automated trading options before deciding which platform is best for you.
One of the easiest ways to keep your eyes on the markets at crucial times is by using a mobile app. Many CFD brokers in the UK have designed their own applications which give traders the same functionality as traditional desktop platforms in the palm of their hand. These apps are typically available for Android from the Google Play Store and for Apple devices from the App Store. Alternatively, MT4 and MT5 mobile apps are offered alongside proprietary software.
Many CFD brokers in the UK offer an extensive range of tutorials, seminars and workshops aimed at improving your investing skills and market knowledge. For beginners, in particular, these are worth looking out for when choosing between providers.
It’s important to find CFD brokers in the UK with reliable customer support. Platforms with 24/5 live chat and responsive telephone support will help you resolve technical issues or withdrawal problems promptly. It’s worth checking user reviews for ratings on the quality of customer support before signing up.
Deposits & Withdrawals
Most CFD brokers in the UK allow traders to pay fees and deposit using a range of payment options. Typical options include credit/debit card, bank transfer, PayPal and e-wallets such as Skrill. When deciding which broker is best suited to your needs, decide first how you intend to pay and make a comparison with this in mind.
Final Word On UK CFD Brokers
CFD brokers in the UK offer a range of options in terms of fees, market access, leverage and more. There is a lot of competition, so ensure you take the time to make a thorough comparison of the platforms available and decide which is best for you. Also note that many CFD brokers in the UK offer demo accounts, which are a great way for beginners to get to grips with the services on offer before committing capital.
What Is The Best CFD Broker In UK?
When comparing the best CFD brokers in the UK, you should consider fees and deposits, leverage, tradable assets, regulatory status, accounts, and tools. Check out our list of the top CFD brokers in the UK in 2022 for our recommendations.
What Are The Advantages Of CFD Brokers In The UK?
For traders in the UK, a brokerage based or licensed to operate in the United Kingdom can offer straightforward access to British stocks and indices, plus currency pairs with the GBP. Investors will also be able to open GBP accounts and pay fees in their local currency.
Can I Trade Cryptos With CFD Broker In The UK?
The FCA has banned UK retail investors from trading cryptocurrencies through derivatives like CFDs. You’ll only be able to trade CFDs on cryptocurrencies if you’re classed as a professional trader or if you open an account with an unregulated, offshore broker.
Do I Pay Taxes Trading With CFD Brokers In The UK?
Any profits from CFD trading in the UK may be subject to capital gains tax if they exceed £12,500. It could be worth speaking to a professional tax advisor before you open a live account.
Is Investing With UK CFD Brokers Safe?
Investing in CFDs is a risky business. Traders can accumulate large losses, especially when using leverage. As a result, it’s important to sign up with a good UK CFD broker that is regulated by the FCA and offer risk management tools.