Best Online Trading Platforms

Trading platforms are operated by stockbrokers, CFD brokers, spread betting brokers and forex brokers and act as a platform for buying and selling underlying securities or OTC (over-the-counter) products.

All trading platforms are different and specialise in certain things. For example, City Index has some of the best trading signals and post-trade analysis for traders that want a bit of stimulus and to improve their execution strategy. Or, IG can have better liquidity than the underlying exchanges so is excellent for larger traders.

Here are the main things to consider when choosing an online trading platform:

• Market access – How many stocks, commodities, indices and forex pairs can you trade?
• Account types – Does a trading platform offer spread betting (tax-free profits), CFDs, Spot FX and futures & options?
• Trading experience – Is the platform better for beginners or experienced traders?
• Regulation – All online trading platforms need to be regulated (by the FCA in the UK)
• Costs & fees – Which brokers are cheapest for your type of trading?
• Added value – Is it just a trading platform or do they offer added value trading tools, analysis and education
• Voice brokerage – Can you work complex orders over the phone?

• Margin – Trade on margin to leverage your risk capital
• Tax efficient – Profits can be tax-free through financial spread betting
• Low cost – No stamp duty for short-term speculation

• Risky – Trading is a very high-risk form of investment
• Complex – Trading order types can be hard to understand
• Short-term – Expensive for long-term investing

The FCA regulates online trading platforms in the UK for retail traders so margin rates are set and standard across most trading platforms.

Margin rates in the UK are capped at: 

• Indices: 20%
• Major Forex pairs: 3.33%
• Commodities: 10%
• UK & US shares: 20%

Getting the best margin rate from an online trading platform

These margin figures represent the deposit you have to put down when opening new positions and are in place to protect brokers as well as clients. The percentage is set based on what a big percentage move would be in the market to ensure that clients and brokers can fund a position.

However, if you are an experienced trader you can opt for a professional account, and get better margin rates. These differ from broker to broker. You can see the current professional margin rates in our professional trading account comparison.

Margin enables traders to leverage their risk capital and get more exposure to the market. For example, if you are trading the FTSE 100 you can trade £100,000 worth of FTSE with only £5,000 in your account if your broker is offering 5% margin. The advantage of this is that you get more exposure to the market and can diversify positions. However, the disadvantage is that your losses are multiplied and if you can lose your entire account balance with small percentages moves.

All trading platforms have demo accounts and it is one of the easiest ways to compare trading platforms is to open a demo account before you apply for a full account.

Testing a broker’s trading platform with a demo account

Most demo accounts will give you a good idea of the look and feel of a broker’s trading platform and usually come with some virtual funds to trade with. Demo accounts allow you to test order tickets, layouts and the trading tools that are available on the real platform.

Comparing demo accounts for trading is quick and easy to do as most provide almost instant access after confirming your details via email. Be aware that brokers use demo accounts as a lead generation tool to convert prospects into real traders. However, most salespeople at respectable brokers are very knowledgeable about the technology on their platform and are more than willing to talk to prospective clients on the phone, via email or in-person about the features on offer. One point to note though is that if a salesman is too pushy, that should be a warning signal that they are best avoided.

Saxo Markets, City Index and IG are three large online trading platforms that offer voice brokerage.

Choosing a broker that offers telephone trading as well as an online trading platform

Whilst most traders will choose a broker based on their ability to trade online, having an experienced dealer who can execute trades for you whilst you are not in front of a computer can be very important.

Some traders still prefer to trade over the phone, and those that do may form very close relationships with their dealers. Some traders talk to their brokers more than anyone else, so making sure that any broker you choose has a good desk of experienced dealers is vital.

Dealing over the phone is also handy if things go wrong and an error needs sorting out or if you have a particularly complicated strategy to execute that requires cross margin calculations that cannot be done online.

Voice brokerage is usually more common at prime brokers for professional and institutional traders, where hedge funds want to reduce the risk of trading errors by getting their traders to give orders over the phone or messaging systems rather than do it themselves. If you ask a dealer to execute a trade for you and they do it wrong, they will have to make good on what you asked for. Whereas if you are trading yourself online on a dealing platform and press buy instead of sell, you only have yourself to blame.

Brokers such as IG, Saxo Markets and Interactive Brokers that provide DMA or hedge client positions allow scalping where traders buy and sell positions quickly in order to take small profits and losses.

Yes, it is possible to make money trading online. However, online trading is a very high-risk form of investment, and only around 20% of online retail customers make money trading online.

Margin rates are the amount of leverage you get when you trade. For example, a margin rate of 10% in share trading means that you can buy £1,000 worth of shares with a £100 deposit, the equivalent of 10 times leverage.

All trading platforms in the UK must be regulated by the FCA and on the Good Money Guide, we only feature trading platforms that are regulated by the Financial Conduct Authority.

Choosing a broker that is appropriately regulated for your type of trading

One of the most important things about choosing a broker for online trading is ensuring that they are properly regulated for the type of trading you want to do.

You can look up whether a broker is regulated by searching the FCA register. The FCA register keeps a record of all regulated persons and firms in the UK, as well as what financial services and products they are allowed to offer.

Regulated trading platforms must display the fact they are regulated and also appropriate risk warnings that display the risk of the products that they offer.

Never trade with a trading platform that is not regulated by the FCA, as your funds are not covered by the FSCS.

You will need your national insurance number, ID and the ability to prove you understand the risk involved in trading online.

As long as you are classified as a retail trader and use an FCA-regulated broker for online trading, your money is protected up to a certain amount by the FSCS.

Publically traded online trading platforms like IG, CMC Markets, City Index (owned by StoneX) and Interactive Brokers are generally safer as they must report their financial status to the stock exchange and investors more frequently than private companies. By keeping an eye on a company’s share price you can see how healthy its balance sheet is.

There is no guarantee that any trading platform will not go bankrupt, but there are ways to keep an eye on the health of the company behind it.

Funds up to £85k are predicted by the FSCS if a broker defaults, but not above that amount, unless insurance is in place.

The most popular markets for online trading are:

• Stocks
• Forex
• Commodities
• Indices

The top ten traded instruments on online trading platforms are:

• FTSE 100
• DAX
• DJIA
• NASDAQ
• S&P 500
• EURUSD
• GBPUSD
• USDJPY
• Gold
• Crude Oil
• UK Shares
• US Stocks

You can read about why each instrument is so popular for traders and what makes them appealing in our guide to the best markets for trading online.

Yes, as long as you use an FCA regulated broker

A level-2 trading platform shows the market depth as well as the bid-offer prices. They are useful for getting better pricing, placing big orders, and seeing liquidity on the order book.

MT5 is the successor to MT4, one of the most popular trading platforms across the global. Brokers without their won trading platforms are able to use branded versions on MT5 to give their clients access to the markets.

IG is the oldest online trading platform and was founded in 1974

It is no longer possible to trade cryptocurrencies through spread betting and CFDs as the FCA has banned crypto trading. However, you can buy and sell cryptocurrencies without leverage through a cryptocurrency exchange. Be careful though as cryptocurrencies are an unproven and unregulated asset class and extremely high risk.

However, you can read our analysis on some of the best accounts for buying cryptocurrency here.