UK share trading platforms let you buy and sell UK companies via CFDs or spread bets so you can potentially profit when they go up as well as down and trade on leverage to maximise your risk capital. We have ranked, compared and reviewed some of the best FCA-regulated UK share trading platforms to help you choose the most appropriate stock broker for your investment objectives.
What is UK Share trading?
UK share trading is short-term speculation on the value of companies listed on the London Stock Exchange. Share trading differs from share dealing, which is more geared to buying UK shares for long-term capital growth and dividends.
The main things to consider when choosing a broker for trading UK shares are:
- Pricing – how much do the broker charge per trade
- Market access – how many UK shares are you able to trade on their platform
- Overnight financing – if you are trading on leverage what are the overnight costs
- Account types – can you trade on margin through CFDs and spread bets as well as invest in a SIPP, ISA or general investment account?
Advantages of using a UK share trading platform
- Regulated by the FCA and funds protected by the FSCS
- Leverage trading means you can get more exposure to the market
- You can go long and short to profit from rising and falling markets
- Profits from spread betting on UK shares are tax-free
- Do not have to pay stamp duty on OTC trades
Disadvantages of using a UK share trading platform
- It is hard to make money in the short-term compared to long-term share investing
- Losses from short positions are potentially unlimited
- Overnight financing means holding a position longer than a month wipes out stamp duty savings.
How can you trade UK shares?
The main three ways to trade UK shares are:
- Physical shares – where you buy and pay in full for company shares through a share dealing platform.
- CFDs – through a contracts-for-difference broker, where your profit and loss is based on the difference between the opening and closing price of a trade
- Spread betting – where you bet on the price movement of shares through a spread betting broker
Our rankings for the best brokers to trade UK shares with are based on our awards which have asked 7,000 investors and traders to rank their accounts compared to peers based on customer service, pricing, market access and added value. Before featuring brokers in our “best of” lists we also interview the CEOs, analysis pricing and market data, and test the platforms thoroughly ourselves.
Best UK share trading broker for CFD trading & spread betting
IG is one of the best UK share trading platforms based on our data matrix and analysis as they offer the most UK companies (large and small), through the most account types (CFD, spread bet and investment) as well as provide a huge amount of analysis, news, trading signals and have an industry-leading online and mobile trading platform. They also provide DMA CFD trading for higher volume and advanced traders.
The main advantage of trading CFDs on stocks instead of physically buying them is that you can use leverage to increase your exposure. A stock with a deposit margin of 10% for instance would enable you to buy (or short) £10,000 worth with only £1,000 on account. CFDs for private and retail traders are generally used for short-term speculation rather than investing in the long term. You also have the ability of shorting stocks, meaning you can speculate on the price of a share going down as well as up.
The disadvantage of this of course is that as exposure increases, so does risk. By using leverage to trade it is possible to lose your entire account balance with just a 10% movement in the share price. As such the regulators are have put put limits on the amount of leverage private clients with limited experience have access to.
Share CFDs are generally not a good tool for longer-term positions as there is an overnight financing charge (as the broker is essentially lending you money to fund your position) of around 2.5% over the LIBOR rate. So holding a position any longer than a month or so becomes less economical than paying the stamp duty (0.5%) on normally stock broking purchases.
Private client CFD brokers like IG, Spreadex, and City Index, are execution only which means you have to make your own trading ideas. There are a few advisory CFD brokers around, but these should generally be avoided as brokers work on commission so have a vested interested in their clients trading more which is a conflict of interest.
Most retail CFD broker will earn revenue from clients by either widening the market spread or not hedging client positions.
Best UK share trading platform for DMA (Direct Market Access) trading
Saxo Markets is the best broker for UK share trading with direct market access. Their SaxoTraderGo platform offers access to both UK shares to physical investing, CFD trading and also UK share options.
For more experienced CFD traders getting direct market access is essential for trading UK shares. DMA, or direct market access mean that you work your orders direct on the exchange order book rather than trading from a CFD brokers widened price.
The main advantages of trading with DMA are that you get better prices because you can work limits inside the bid/offer. However, you are charged commission on trades, so must factor this in as an extra cost to your P&L.
DMA trading is also essential if you are a particularly big trader. Even in FTSE 100 stocks there is often not more than a few hundred thousand pounds worth of stock at the market price. If you are buying or selling a large position being able to nip away at the best price or work automated orders to drip feed your trades into the market are essential. This is called level-2 pricing and also shows you the market depth allowing you to execute orders more efficiently.
Best UK share trading broker for institutional & professional traders
Interactive Brokers is the best UK share trading platform based on our testing. IBKR has some of the most advanced order functionality for working large UK share trades, including VWAP, iceberg, pairs trading and drip feeding.
For hedge funds, family offices or professional traders institutional CFD brokers like, IBKR & IG provide online execution platforms and experienced voice brokers to handle large orders than need finessing in the marketplace.
The key advantage for hedge funds using CFDs are a trading tool is that they provide anonymity as you don’t actually own the underlying assets of a CFD. You are just entering into a contract based on the different between the opening and closing price of a stock.
This was how CFDs were first used and gradually became available to private traders. For hedge funds and family offices looking for an institutional CFD broker you can compare prime brokers here using our interactive prime broker finder tool.
What time do shares start trading in the UK?
UK shares traded on the London Stock Exchange are open in the main market between 8:00 to 16:30.
Can you trade UK shares outside of normal market hours?
Yes, you can trade Uk shares pre and post-market with most UK trading platforms. Brokers like IG, even offer UK share trading on the weekends.
What’s the difference between share trading and investing?
Share trading is high-risk short-term speculation. Investing is when you buy shares in the long-term.
Can you make money trading UK shares?
Yes, it is possible to make money trading UK shares is you predict the correct direction of the market.
However, If you are trading UK shares as a CFD or spread bet it is very risky as you are trading on margin. Typically only around 25% of retail traders make money trading UK shares this way.
What are the best UK shares to trade?
The best UK shares to trade are the ones with the most liquidity and news flow. These are typically in the FTSE 100 which is the 100 most valuable companies listed on the London Stock Exchange.
What is the NMS in UK share trading?
NMS means the “normal market size” it refers to the maximum amount of shares a market market is obliged to trade in one go.
What are the different types of UK share trading client classification?
The main types of UK share trading client are: retail clients (the majority of retail traders will fall into this category.), professional and, Institutional.