Forex Trading In The UK

Forex trading in the UK accounts for the lion’s share of the $6 trillion daily global turnover. This article will explain how to get started forex trading in the UK, covering the best trading platforms and brokers, the tax implications, plus online training courses for beginners.

Best UK Forex Brokers 2020

Plus500 Offer forex trading via CFDs with tight variable spreads and a range of well over 70 currency pairs. Free Unlimited Demo Account.
76.4% of retail accounts lose money.
Pepperstone offers spreads from 0.0 pips on the Razor account and have almost 61+ pairs available to trade. Lots start at 0.01.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Trade Forex on 0.0 pip spreads with the world's leading True ECN forex broker - IC Markets. Great choice for serious traders. ASIC regulated.
Forex.com are a leading forex broker. Offering the largest range of currency pairs (80+) and some of the tightest spreads in the industry.
XM.com deliver ultra low spreads across a huge range of Forex markets. Flexible lot sizes, and Micro and XM Zero accounts accommodate every level of trader.
Axi is a global online FX and CFD trading company, trusted by 60,000+ ambitious customers in 100+ countries around the world.
72.6% of retail investor accounts lose money when trading CFDs with this provider
Trading 212 Offer a truly mobile trading experience. With tight spreads and a huge range of markets, they offer a dynamic and detailed trading environment.
67 major, minor and exotic FX pairs
CFDs carry risk. 79% of traders lose.
Global brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.73.5% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Binary.com deliver advanced forex trading via the MetaTrader5 platform and 3 Account Types
NinjaTrader offer Traders Futures and Forex trading. Use Auto-trade algorithmic strategies and configure your own trading platform, and trade at the lowest costs.
IG offer spread betting, CFD and Forex trading across a range of markets. They are FCA regulated, boast a great trading app and have a 40 year track record of excellence.
76% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
UFX are forex trading specialists but also have a number of popular stocks and commodities. Offering tight spreads and one of the best ranges of major and minor pairs on offer, they are a great option for forex traders.
Established spread betting, forex and CFD broker with over 30 years in the business. Regulated around the globe.
Ayondo offer trading across a huge range of markets and assets. They also offer negative balance protection and social trading.
CMC Markets is headquartered in London and listed on the LSE. They offer competitive spreads on a global range of assets.
XTB is one of the largest stock exchange-listed FX & CFD brokers in the world, offering access to over 2000 instruments from two platforms: its own award-winning xStation 5 and the traditional MT4.
Trade 33 Forex pairs with spreads from 0.0 with the 'Zero' account. Prices quoted to 5 decimals places, and leverage up to 1:1000
Avatrade offer 50+ currency pairs and their spreads are some of the best among any broker. They are regulated across 5 continents.
A regulated bank, Saxobank offer CFD, Stocks and Forex trading on 35,000+ markets via the SaxoTrader Pro and SaxoTrader Go platforms
Vantage FX are a Raw ECN Forex broker, regulated by ASIC is Australia. Boasting MT4, MT5 and Webtrader platforms, a range of account types and a deposit bonus of up to 50%
BDSwiss offer 250+ Shares, Indices, Forex, Commodities and Cryptocurrencies markets via CFDs. With spreads from 1 pip and an award winning app, they offer a great package.
78.3% of accounts lose money when trading CFDs.
Trade on FX pairs with 1:500 leverage.
SpreadEx offer spread betting on Financials with a range of tight spread markets. Popular award winning, UK regulated broker.
Trade a long list of forex pairs with leverage.
Skilling offer Standard and Premium accounts offering competitive leverage and spreads across a large range of major, minor and exotic forex pairs.
69% of retail CFD accounts lose money.
50 currency pairs are available, including majors, minors, and exotics
Trade with leverage on a range of FX pairs.
Trade FX pairs with tight spreads & leverage.
Trade on dozens of forex pairs with low spreads.
Trade a range of FX pairs with 1:30 leverage.
Trade major, minor & emerging forex pairs with 1:30 leverage.
Trade on popular FX pairs and cross-rates
Trading available on close to 40 major, minor, and exotic currency pairs
Trade major, minor & exotic currency pairs
Trade on close to 20 currency pairs
Trade with leverage on dozens of popular currencies.
Trade over 70 pairs and keep trading costs to a minimum, with tight spreads or the lowest commissions with Fusion
IronFX offers trading in major currency pairs, plus minors and exotic pairs
Forex trading is available on major, minor and exotic currency pairs
Dukascopy offers FX trading on over 60 currency pairs
Libertex - Trade Online. Libertex offer CFD and Forex trading, with fixed commissions and no hidden costs.
easyMarkets.com - Simply Honest. Trade CFDs on Forex, Commodities, Indices, Shares & Cryptos With a Top Rated Forex Broker
Offering a range of Accounts, including ECN, Instaforex can reduce average spreads to just 0.8 pips. The range of pairs offered is also among the largest of any broker.
Deriv.com are a new brokerage, offering binary options and CFD trading
ATFX are an award winning, UK regulated broker. Offering Forex and CFDs with competitive spreads and a customer service focus.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.02% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Alpari International offer forex over a huge range of pairs including Major, minor and exotic pairs. All with competitive spreads and laddered leverage.
FXTM Offer forex trading on a huge range of currency pairs. Spreads can be as low as 0.1 with the ECN Account types.
82% of retail accounts lose money.
Just2Trade offer hitech trading on stocks and options with some of the lowest prices in the industry
New Forex broker Videforex can accept US clients and accounts can be funded in a range of cryptocurrencies. Payouts reach 95% per trade.
Multi-Award winning broker. Specialising in Forex but also offering stocks and tight spreads on CFDs and Spread betting across a huge range of markets.
FXCM are an FCA regulated, London based broker. Companies under the FXCM umbrella are also regulated in Australia and Canada.
Zulutrade provide multiple automation and copy trading options across forex, indices, stocks, cryptocurrency and commodities markets
ETX Capital are a London based, FCA regulated broker offering tight spreads across a wide range of markets. They offer professional client services to Pro clients. ETX are offering a FREE trading course to new clients, and free guaranteed stops on the TraderPro platform.
Capital.com offer 68 Forex pairs for trading. All have competitive spreads. The firm also ensure negative balance protection.
Show All Brokers ⇩

How Does Forex Trading Work In The UK?

Forex (FX) traders generate income by speculating on price fluctuations in the currency market. They sell one currency pair while simultaneously buying another, which is why they’re quoted in pairs.

To do this, traders register for an account with an online broker who connects them to the market, providing a platform to conduct analysis and execute trades. UK brokers also extend credit, known as leverage, so you can take larger position sizes – increasing potential returns.

Forex trading is legal in the UK. In fact, along with the US, the laws and regulations governing forex trading in the UK are among the most robust in the world.

The body responsible for overseeing the UK forex market is the Financial Conduct Authority (FCA). All brokers looking to accept UK traders must obtain a license from the FCA. By choosing a regulated broker, traders reduce the risk of scams and their capital is protected should a broker go into liquidation.

Brokers & Platforms

The best forex trading brokers in the UK offer leading online platforms to connect customers to the FX market. The platform is where you conduct price analysis, take positions, and utilise any additional trading tools available. Platforms are free to use when you sign up for an account, so it’s worth shopping around.

If you’re not sure which platforms to even start with, MetaTrader 4 is widely regarded as the best forex trading platform for both beginners and advanced traders. Reviews show it’s easy to pick up, has a range of signals, over 30 indicators, plus a live news feed and economic calendar.

The cheapest way to test software is to sign up for a free demo account. You can then try signals, charts, strategies, and any automated trading capabilities. Most of the top forex trading platforms offer demo accounts.

Often featuring in reviews of the best 5 forex trading platforms are:

  • MetaTrader 4 (MT4)
  • MetaTrader 5 (MT5)
  • Trading Station
  • xStation
  • cTrader

Note minimum deposits vary between companies, but UK forex traders will find accounts with low deposit requirements of just £100.

Trading Hours

In contrast to the majority of financial markets, the FX market has no physical location or central exchanges. As a result, trading hours run around the clock five days a week, through a network of organisations, banks, and retail traders.

Opening times are staggered across the world but traders can expect significant volume throughout the day. With that said, forex operating hours are reduced on the weekends, so expect less activity on a Saturday and Sunday.

Note, if you’re forex trading in the UK, time zones on your platform will be shown in GMT.

Spreads

The spread is the difference between the ask price and the bid price. It represents the cost of trading. Let’s say the GBP/USD currently has an ask price of 1.0925 and a bid price of 1.0923, then the spread is 0.0002 – the ask price minus the bid price.

Profit margins in forex are slim. So the more capital you have to invest the greater the potential returns. However, most UK FX brokers extend leverage to their customers. This means for a small deposit, known as margin, you can take a much larger position, amplifying potential profits. Of course, this does mean losses are also magnified.

Mobile Apps

The best forex brokers in the UK make their platforms available through a mobile app. In fact, reviews show an increasing number of new traders are learning to trade the forex market on mobile devices.

Mobile apps today offer almost the same functionality as desktop platforms. That means you can conduct technical analysis on charts, monitor signals, and execute trades. You can also chat with the online trading community and follow training courses.

How To Start Forex Trading In The UK

For beginners, follow this straightforward guide to get started forex trading from home.

Register For An Account

Sign up for an account with an FCA licensed broker. Check reviews to make sure the broker is reputable with customer support available. Some brokers also offer no deposit bonuses and other incentives, including attractive spreads.

For further guidance on forex brokers, including Vantage FX UK Trading Limited, see the full list here or compare all UK forex brokers above.

Choose A Currency Pair

You’ll find dozens of currency pairs at most brokers. For forex dummies, the most popular are the major currency pairs. These always include the US dollar and are traded in the greatest volumes. As a result, there is enough liquidity that you can trade almost anytime. The other benefit of major currency pairs is that they often come with the lowest spreads and associated trading costs.

Included in the majors are:

  • EUR/USD
  • USD/JPY
  • GBP/USD
  • USD/CHF
  • USD/CAD
  • AUD/USD
  • NZD/USD

There are also minor currency pairs, which don’t include the USD. The most-traded have the Great British Pound, Euro, or Japanese Yen in. Then there are exotic currency pairs that are formed of a major currency and a currency from a developing country, such as Brazil. Because they’re harder to find, spreads on exotic pairs are usually higher.

‘Buy’ Or ‘Sell’

Once you’ve decided on a currency pair, use technical or fundamental analysis to determine whether to buy or sell. For example, are there upcoming market events you expect to affect the price of currencies?

If you believe the base currency will rise versus the quote currency, you would buy. You would sell if you thought the opposite.

Set Stops & Limits

These important risk management tools can help protect profits and limit losses. Set a stop-loss to automatically close out a trade when losses reach a certain level. Use a stop-limit to exit a trade when profits hit a certain point.

Monitor & Exit

In the ‘open position’ area of your platform, you can monitor your trade. You can also set notifications to get alerts when buy or sell percentage points are reached. Once you’re ready to exit the trade, simply select ‘close’ from your open positions. Any profits or losses will shortly appear in your account.

For further guidance on forex trading strategies, see here.

Is Forex Trading Taxed In The UK?

For beginners, it can be easy to get swept up in the uncapped income potential. But it’s important to first understand the trading tax rules and laws in the UK.

So, do you pay tax on forex trading in the UK? Profits from forex trading are taxable. However, taxability depends on which category your activity falls into. The UK government’s tax branch, the HMRC, splits trading activity for tax purposes into the following:

  • Speculative – The speculative trader likely has other sources of income, with occasional profits from forex trading a supplementary source of income. As a result, profits are tax-free until the tax allowance, which was £12,000 in 2019-2020, has been reached.
  • Investing – Forex trading is treated as a business, with earnings often the primary source of income. Profits are taxable under the capital gains regime.

Professional tax advisors can help establish which activity your forex trading falls into, and therefore, whether you should be paying tax on your earnings.

Keeping a detailed record of trades, including profits, losses, dates, and trade sizes, will make filing your annual tax return less stressful.

For further guidance on day trading taxes, see here.

Education

The forex traders in the UK that generate consistent profits never stop learning. Fortunately, there is a wealth of resources available, from books and online training courses to forex trading diplomas.

Free YouTube videos are a good place to get the basics explained. For more in-depth training, online university sessions and training courses can demo strategies and chart analysis. Reviews show the best courses have engaging coaches and mentors, innovative trading techniques, and are available to answer questions. Other useful learning forums include blogs and magazines.

It’s never been this easy to get your hands on free forex training tools and with technology today, you can learn at a time that works for you.

Is Forex Trading In The UK Profitable?

Success stories of forex millionaires are common online. But in reality, the salary earned varies hugely. Some months may be profitable, but in others, you may not generate any income. So if you want a stable and consistent salary, look at other jobs.

Final Word

Forex trading in the UK facilitates access to the world’s largest financial market. Both beginners and experienced traders can get the tools needed to trade on the forex market, including the best brokers, platforms, and online training courses. And with robust laws, UK traders are operating in one of the most regulated forex environments.

FAQ

What is forex trading in the UK?

Forex traders in the UK aim to profit from price movements in the currency market. The UK market is one of the most regulated in the world, giving traders multiple licensed brokers to choose from.

Is forex trading illegal in the UK?

No – forex trading is not illegal. The Financial Conduct Authority (FCA) regulates the financial markets, including forex. Any broker seeking to sign up forex traders from the UK must obtain a license to trade from the FCA.

How does forex trading work in the UK?

Online brokers connect UK retail traders to the global forex market through a digital platform. Traders then sell one currency pair while buying another, looking to profit when converting. Investors often trade on leverage from brokers to take larger position sizes, thereby increasing potential returns.

How do I start forex trading in the UK?

To start trading forex in the UK you will need to register with a licensed online broker. Once signed in to your live account, you can deposit funds and access leverage. From your platform, you can conduct price analysis and take a position when an opportunity arises.

Do I pay tax on forex trading in the UK?

Forex trading profits in the UK may be taxable. Your obligations will depend on whether your trading activity is treated as speculative or for investment purposes. If speculative, profits may be tax-free while if for investment purposes, you may owe capital gains tax. For further guidance on UK trading taxes, see here.