Best stock trading platform UK

Last updated: 17.05.2021
Paddy Osborn
Author:
Paddy Osborn
Adviser
CFD & Trading
Experience
24 years

When people think of stocks trading, they often picture the classic Wall Street trading floor, with brokers competing to get the best deals. But these days, stock trading is accessible to all and can be a very lucrative income stream.

So how do you get started with stock trading? Well, you’ll need to find a reputable broker that will allow you to access the market, but there are a few other things you’ll need to be aware of. Fortunately, at Nexmarkets we have got you covered with this informative guide to finding the best stock trading platform in the UK.

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  • Stocks explained
  • Trading stocks CFDs
  • Getting started with stock trading in the UK
  • The advantages of CFD trading
  • Choosing a broker
  • Conclusion

Stocks explained

Most people are aware of stocks as a financial asset, many are unsure of exactly what they are. When you buy a stock through a traditional stockbroker, you are effectively buying a small portion of a listed company. Companies usually list stocks for sale as a way of raising funds for the development of their business.

Stocks can be bought and sold in a variety of ways, but they are predominantly done so via stock exchanges. The most famous of these you may well have heard of, such as the Nasdaq, London Stock Exchange or New York Stock Exchange. You may also be familiar with some of the top stock indexes, which represents a segment of the market – often the top firms on an exchange. Amongst the most well known are the FTSE 100 and Japan’s Nikkei.

There are two types of stock. The common stock actually entitles the stockholder to certain perks, such as the option to vote at shareholders’ meetings and a regular dividend payout. Preferred stocks, on the other hand, do not come with voting rights, though they typically offer higher dividend payouts than with common stock.

However, one of the drawbacks in stocks trading is that acquiring stocks has often involved opening a dedicated account with your bank and a fairly long process of placing an order and actually acquiring the asset. Stocks have also traditionally been seen as a long term investment only.

Trading stocks CFDs

One alternative to traditional stock market investment that has proved massively popular in recent years is a type of derivative known as CFDs. A CFD offers traders to gain stock market exposure without having to own any underlying assets. They can be used to trade stocks as well as other assets, such as funds and cryptocurrencies.

When you trade CFDs, you can profit whether an asset moves up or down in price. If you think the price of a stock will go up, you can go long on it and issue a buy order. Alternatively, if you think a stock is going to go down, you can opt to short sell it.

Effectively, opening a CFD contract is exactly what it says on the tin. The buyer enters into a contract with the seller wherein they agree to pay the difference between a stock’s price at the start of the contract and its price when the position closes. This means that if the stock moves the way you predicted, you will gain profit. Of course, if the stock moves against you, you will lose out on the trade.

Getting started with stock trading in the UK

To trade stock CFDs, you’ll need to find a stock trading platform in the UK that can give you access to derivatives. There are plenty of options out there and choosing the best platform takes a little research. Fortunately, there are plenty of guides out there explaining how to choose the best stockbroker in the UK for CFDs.

When you come to actually start trading stocks CFDs, you will do so via a trading platform. Here you will see options to buy (go long) or sell (go short) on various shares. The option will usually default to whatever you currently have displayed on the chart. If you had been looking to buy Tesla shares UK, for example, and are looking at previous price history, then clicking ‘Buy’ will open a position for Tesla.

When the trade window opens, you’ll then have a couple of other options. These include the amount you wish to trade and potentially the option for leverage. Once this is complete, you can monitor the position and when it closes – assuming the price has moved in your favour – you’ll be credited with the difference.

The advantages of CFD trading

So what are some of the main advantages of trading stock CFDs over the assets themselves? Well, there are quite a few benefits in fact.

Firstly, Trading stocks CFDs allows you to profit whether a stock moves up or down. If you were to buy Amazon shares in the UK from a traditional stockbroker, for example, you will only benefit if the value of the company increases. CFDs allow you to profit even if the price moves down.

Trading CFDs is much quicker than trading stocks on the traditional market. This allows a trader to make high-volume transactions – such as is the case with day trading – and profit from the small price fluctuations that occur over a short period – sometimes just minutes.

Often, choosing the best shares to buy in the UK takes a huge amount of research. Whilst CFD trading also requires careful scrutiny of the markets, speculating on price movement is very different – especially when you can profit from any movement. Whereas a traditional investor may need to get to grips with numerous industries and technologies, the CFD trader focuses most of their research on the price movement itself.

When trading stock CFDs, you get additional tools at your disposal to help manage your trades. These include stop-loss and take profit orders. This means that if, say you buy Amazon shares UK and want to close the deal at a certain point, you can order your broker to close the position if the price moves against you beyond a certain point (stop-loss) or take profit at a point where you believe the price movement may swing from an upturn to a downturn. You can buy Tesla shares UK, buy amazon shares UK, or buy apple shares UK.

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Choosing a broker

Of course, to get started with stock trading in the UK, you’ll need to find a reputable broker, which in itself requires a little research. Firstly, you need to ensure that any broker you consider meets the necessary licencing and regulatory requirements. These details will usually be found at the bottom of a provider’s main website. It’s also important to make sure a broker has all the necessary security credentials for handling your funds – at the very least it should have a dedicated account for client funds that are separate from the business itself.

Many of the top brokers on the market will actually offer a demo account, allowing you to try out their services using virtual funds. The Nextmarkets demo account, for example, gives you €10,000 in demo funds to try your hand at trading over 1000 CFD types. Experience like this can also prove invaluable when you start trading for real. Find the best stock broker UK and best shares to buy UK.

Conclusion

Stocks trading is a tried and tested form of investment but in the age of the internet, the process involved in actually acquiring a portfolio seems somewhat pedestrian. Trading stocks CFDs is the perfect alternative if you are looking for an accessible way to speculate on the price of the underlying stock, without having to actually take ownership of the asset.

As we have seen, there are many benefits to trading stocks CFDs – not least that you can profit whether a company’s value goes up or down. Trading derivatives also allows you to open and close positions in just minutes, meaning you can make a profit from one transaction to the next, whereas traditional stock investment is much more of a waiting game.

If you are looking to enter the markets, then the next step is to find yourself a reputable broker and start learning the ropes. However, always remember that any kind of trading involves risk and, just as you can profit from stocks CFD trading, so too can you lose money – so always conduct plenty of research before you start opening positions.

Stock trading UK FAQ

👍What are stock CFDs?

Contracts for Difference – or CFDs – are a form of derivative that lets you speculate on the price of numerous asset classes, from stocks to cryptocurrencies. There are several advantages to trading CFDs over assets themselves, as we discuss in our guide to CFD trading. One of the great things about CFDs is simply how accessible they are – anyone with a computer and an internet connection can enter the markets.

📈What are the best stocks to buy?

Choosing the best stocks to buy will depend on your investment goals. However, it’s worth noting that with the traditional stock market investment you need to pick a stock that you think will increase in value. When you trade stock CFDs, you can actually profit whether the value of a company goes up or down.

Stock trading UK will always incur some kind of fee – whether you go through a traditional broker or opt to enter the world of online CFD trading. Most reputable platforms will offer a breakdown of their fees in their terms and conditions. However, some platforms offer fee-free trading, but usually have a wider spread than those which charge a commission.

❓How do I open an account for stock trading in the UK?

The process involved in opening a stock trading account will vary from platform to platform. For stock trading in the UK online, most brokers will need to verify your identity. Sometimes this is done automatically, but on other occasions, you may need to provide a valid form of ID. Typically, the process involved in opening an account takes a few minutes at the most.

💪How do I trade stocks online?

If you are looking to start trading stocks online, then you’ll need to find an online platform giving you access to the markets. Stock trading in the UK is regulated by the FCA, so you’ll need to make sure any platform you choose has the necessary licencing credentials. Once you have an account, then you can usually start making trades right away. If you are new to the market, however, we recommend using a demo account first, until you have learnt the ropes. 

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