The Forex industry in the UK is highly competitive, and not all Forex brokers in the UK are suitable for all types of traders.
Before considering a UK-based Forex broker, each trader needs to determine his/ her needs and trading style.
- Eightcap, Competitive pricing + excellent daily videos.
- BlackBull Markets, Best ECN trading environment, with scalping and hedging.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
- Pepperstone, Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platform.
- Plus500, multi-asset and CFD broker.
- ActivTrades, .
- FP Markets, ECN trading with leverage up to 1:500.
Best UK Brokers Comparison
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Regulators | ASIC, CySEC, FCA, SCB | FMA, FSA | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB | ASIC, CySEC, FCA, FMA, FSCA, MAS |
Year Established | 2009 | 2014 | 2006 | 2010 | 2008 |
Execution Type(s) | ECN/STP, Market Maker | ECN/STP, No Dealing Desk | Market Maker | No Dealing Desk, NDD | Market Maker |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 1.0 pips | 1.3 pips | 0.9 pips | 1.1 pips | 1.3 pips |
Average Trading Cost GBP/USD | 1.2 pips | 2.0 pips | 1.5 pips | 1.4 pips | 1.7 pips |
Average Trading Cost Gold | $0.12 | $0.90 | $0.29 | $0.15 | - |
Trading Platform(s) | MetaTrader 4, MetaTrader 5, Trading View | MetaTrader 4, MetaTrader 5, cTrader, Trading View | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ | Other, MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Trading View+ | Proprietary platform, Web-based |
Islamic Account | |||||
Negative Balance Protection | N/A | ||||
| Visit Website | Visit Website | Visit Website | Get Started Visit Website75-95% of traders on margin lose | Get Started Visit Website82% of retail CFD accounts lose money |
Eightcap
In Summary Competitive pricing + excellent daily videosEightcap sets itself apart from most competitors by offering MT4 traders the Capitalise AI plugin, enabling algorithmic trading in a code-free environment. It lowers the entry bar for algorithmic trading, a necessity for successful Forex trading. Eightcap also upgrades MT5 with the FlashTrader. News traders benefit from an AI-powered economic calendar. Therefore, I rank Eightcap among the best Forex brokers in the UK.
Traders get competitive commission-based trading fees with spreads from 0.0 pips for a commission of $7.00 per 1.0 standard round lot. Eightcap also maintains a well-balanced asset selection of liquid trading instruments, including 100+ cryptocurrency CFDs.
Pros & Cons
- Low minimum deposit and high leverage of up to 1:500
- Competitive cost structure
- Excellent technology infrastructure and seasoned management team
- Daily research and quality educational content
- Limited leverage in some areas
BlackBull Markets
In Summary Best ECN trading environment, with scalping and hedgingI rank BlackBull Markets among the best Forex brokers in the UK due to its ultra-competitive ECN environment. Data feeds from 66+ third-party providers ensure deep liquidity, and competitively priced, commission-based ECN accounts commence with fees as low as $4.00 per lot. It creates a distinct competitive edge for high-volume traders.
BlackBull Markets supports algorithmic trading through MT4/MT5 and cTrader, while VPS hosting ensures 24/5 low-latency trading. Algorithmic traders can connect advanced trading solutions to the BlackBull Markets infrastructure via API. Autochartist offers an MT4/MT5 upgrade, and BlackBull Markets is a leading broker for copy and social traders.
Pros & Cons
- ECN/NDD execution model with deep liquidity
- Institution-grade pricing for retail traders via proprietary price aggregation
- ZuluTrade and Myfxbook for social trading
- Leverage of up to 1:500
- Limited deposit options
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsBased in Dublin Ireland, AvaTrade is an ECN/STP broker that offers traders throughout the United Kingdom a trustworthy and highly regulated trading platform. The AvaTrade platform is multifaceted and covers a range of popular trading options including MetaTrader 4 (MT4), MetaTrader 5 (MT5), AvaTradeGO, and WebTrader. Avatrade is considered a top forex and CFD broker due to its high level of trust, with several regulators including the Australian Securities & Investment Commission (ASIC), the Japanese Financial Services Authority (JFSA), and the Investment Industry Regulatory Organization of Canada (IIROC). In addition, UK traders can enjoy 6 ETF options and 2 bond options. While the account deposit minimum is set to $100, new members can take advantage of a demo account to test out the company’s options and features for free.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
Pepperstone
In Summary Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platformI rank Pepperstone among the best UK Forex brokers as traders get NDD order execution with ultra-fast average order execution speeds of 30 milliseconds. Commission-based trading fees start from 0.0 pips for a commission of $7.00 per 1.0 lot, and a volume-based rebate program lowers costs for qualifying traders.
Traders can manage their portfolios via upgraded MT4/MT5, cTrader, or TradingView, and the proprietary mobile trading app. The well-balanced asset selection of 1,500+ CFD assets includes Forex, Forex indices, cryptocurrencies for professional clients, and ETFs.
Pros & Cons
- Excellent choice of trading platforms consisting of MT4/MT5, cTrader, TreadingView and Pepperstone Platform
- Market-leading MT4/MT5 upgrade package, Autochartist, and API trading
- Social trading support via Signal Start, MetaTrader Signals, Copy Trading by Pepperstone, DupliTrade
- Leverage of up to 1:400 depends on jurisdiction and superb trade execution
- Demo accounts have 60-day time limits
Plus500
In Summary multi-asset and CFD brokerPlus500 maintains a well-balanced asset selection that features the iShares FTSE100 ETF, 105 UK equity CFDs, cryptocurrencies, and options. Forex traders benefit from minimum spreads of 0.6 pips or $6.00 per 1.0 standard round lot, on par with competitive commission-based ECN/STP/NDD brokers. Beginners get a quality education via the Plus500 Trading Academy. It places Plus500 among the best CFD brokers in the UK on my listing.
The user-friendly proprietary trading platform and mobile app offer a sentiment-based indicator, the high-quality data-driven analytical tool +Insights, and a fee-based guaranteed stop-loss order. Traders also receive real-time email, SMS, and push notifications.
Pros & Cons
- Broad asset selection in equities and options
- Free and unlimited demo account
- Advanced free-of-charge analytical trading tools
- Global and regulated fintech platform
- Sub-standard trading platform without support for automated or social trading
ActivTrades
In SummaryActivTrades is an FCA-regulated broker with 20+ years of operational experience, offering trader protection via the UK Financial Services Compensation Scheme (FSCS) up to £85,000 and enhanced client protection with funds secured up to $1M. The well-balanced asset selection includes the FTSE 100 as a cash index and index future, seven GBP currency pairs, 13 ETFs, and 126 UK equity CFDs.
Traders get MT4/MT5, the proprietary ActivTrader, and TradingView for social traders. ActivTrades can execute 100K orders per second with an average execution speed below 0.004 seconds. Therefore, I rank ActivTrades among the best Forex brokers in the UK.
Pros & Cons
- Demo Account
- Highly Regulated
- Low Spreads
- No Choice of Trading Accounts
FP Markets
In Summary ECN trading with leverage up to 1:500FPMarkets offers UK traders a wide range of tradable assets along with an excellent track record, and tier-1 regulation. Established in 2005, this Australian company outdoes most other brokers in the UK, as it offers members the opportunity to trade in over 10,000 individual shares and stocks. In addition, FPMarkets features well-over 60 forex pairs and crosses, all of the major commodities, no less than five cryptocurrencies (including Bitcoin), and 11 equity indices. The company is well-regulated through the Australian Securities and Investments Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC), with additional regulation through the Financial Services Authority of St. Vincent and the Grenadines.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
How to Choose the Right Forex Broker in the UK
One of the most important aspects of any broker is trustworthiness. The Financial Conduct Authority (FCA) is one of the prime global authorities. Every UK-based Forex broker must hold a license with the FCA, and in doing so, these brokers operate under a high level of security. It should be noted that regulation is not everything, as there are cases of well-regulated brokers defrauding clients, but the FCA does grant a trustworthy environment. It should also be noted that UK-based traders can opt to trade with brokers that have other, non-FCA regulations. Traders also need to consider cost structure and asset selection, as they will have a direct impact on the profitability of any executed trading strategy.
Almost all Forex brokers in the UK offer reputable trading platforms, with MT4 the industry standard, often marketed as a cutting-edge and industry-leading gateway to financial markets. While the MT4 infrastructure possesses those capabilities, the out-of-the-box version, as offered by most brokers, falls short of this. Competitive brokers offer the necessary third-party plugins or create an alternative in-house. This may be one of the most overlooked aspects of the overall product and service portfolio of UK-based Forex brokers. Auxiliary trading services, like research, VPS hosting, account management services via MAM/PAMM, should also be considered, as they set apart brokers focused on the minimum to operate and those with a genuine desire to grant traders a competitive edge.
Is Forex legal in the UK?
Yes, Forex trading is 100% legal and regulated in the UK, which is the largest Forex trading market globally, with over 37% of all daily volume flowing through the UK financial sector and its hundreds of brokers servicing it.
Let’s break down the most important aspects to consider when choosing a Forex broker in the UK:
1.Forex Regulation in the UK
The UK, with the FCA as the regulator in charge of the industry, became the primary financial sector destination after 2002, when the passage of unfavorable legislation forced an exodus out of the U.S.A.
The online trading conditions under which Forex brokers in the UK operate under FCA oversight remain the most competitive ones globally, even after Brexit. Adding to its leadership position are trading instruments that are legally available, like contracts for difference (CFDs) and other derivatives not available in the US. Most top Forex brokers in the UK have relatively low minimum deposit requirements, often less than $100 or a currency equivalent. Security of funds, which must remain fully segregated from corporate capital, is superior in the UK to any other jurisdiction.
Role of the FCA for UK Forex Brokers
The FCA provides a set of requirements that must be met before a Forex broker can receive an operating license. It also maintains a set of rules to ensure transparency and a stable capital structure. Violating them will result in investigations, fines, and possible suspension of a license, ensuring only trustworthy brokers operate legitimately out of the UK.
Below is a list of some requirements all UK Forex Brokers must comply with:
● Maintain minimum capital requirements of £125,000 for straight-through processing (STP) models and £730,000 for market makers.
● Client deposits must remain segregated from corporate funds.
● Daily submission of the capital balance, and monthly as well as quarterly financial documents.
● Ensuring the business model operates in line with best practices.
● Brokers must disclose the risk involved with each trading instrument to its clients and always act in their best interest.
Client deposit protection of up to £85,000, per the Financial Services Compensation Scheme (FSCS), is the highest in the world. By comparison, brokers regulated by the Cyprus Securities and Exchange Commission (CySEC) deploy the Investor Compensation Fund (CIF), capped at €20,000. The FCA also maintains a list of scam brokers, as many fraudulent brokers attempt to copy an FCA regulated one. This allows traders to swiftly identify genuine brokers from scam “clone brokers”, as the FCA designated them.
How to Verify FCA Authorization
Traders should locate the FCA register number, usually located at the bottom of the broker’s homepage. Comparing it with the official FCA database will then verify FCA authorization. It will also reveal all known clone firms for the registered broker.
Avoiding Forex Scams in the UK
More and more UK traders and consumers are finding themselves the unwitting targets of UK fraudsters, who market Forex scams and fraudulent platforms on social media. The easiest way to avoid Forex scams in the UK is to trade with an FCA-regulated Forex broker that is legally allowed to accept clients resident within the UK. If you are choosing an FCA regulated broker, make sure to check the official FCA database to avoid cloned UK firms and scammers.
How a Regulated Market Benefits You
As a UK trader, trading with a regulated Forex broker ensures a safe and trustworthy trading environment, access to best business practices, the security of deposits and financial stability of the broker, and ease of mind that a regulator will ensure brokers catering to UK traders act in their best interest.
2. Trading Platform & Software
Trading platforms come either as a desktop client, a web-trader, or a mobile app. Traders should make sure that they are user-friendly with quality charts and a broad range of technical indicators. Trade and risk management tools are equally important. MT4 is the industry standard, and various brokers offer it, with some brokers simultaneously maintaining the MT5 version. Note that some brokers offer proprietary platforms that can be superior to both MT4 and MT5.
3. Spreads, Commissions & Leverage
Trading costs and leverage remain essential aspects every trader needs to consider. Spreads refer to the difference between the bid and ask price. There are two types of spreads: fixed and variable. The former does not change according to market conditions, while the latter accurately reflects them. The most competitive offers start at a minimum cost of just 0.8 pips, with the lowest spreads usually applying to the EUR/USD, the most liquid currency pair.
Forex brokers deploying an STP/ECN execution model allow access to raw spreads as low as 0.0 pips for a commission per lot. It is ideal for high-frequency and short-term traders. While some brokers charge $3.00 or and $4.00 per 1.0 lot, others charge up to $20.00.
Many confuse high leverage with high risk and blame account losses on it, but to be honest, losses are usually the result of poor risk management, not high leverage. Still, to protect traders from making poor leverage decisions, the European Securities and Markets Authority (ESMA) has limited the available leverage for all EU-based brokers. Some brokers cap the maximum leverage at 1:30, but others allow for an impressive ratio of up to 1:500.
4. Account Types
The most important distinction between account types is between commission-free accounts and commission-based accounts, as this distinction impacts the cost per trade. Some brokers offer mini accounts, where the new traders with smaller deposits can trade mini lots, equalling 10,000 currency units. By comparison, one standard lot totals 100,000 currency units. An outdated but still common approach is tiered accounts, where brokers offer better conditions for more substantial deposits.
Can I Trade with a UK Broker If I Live in the EU?
UK brokers with an EU client base typically have established EU-based subsidiaries, usually in Ireland, Germany, the Netherlands, France, Spain, or Cyprus. They cater to EU-based traders while offering them a trading environment under the European Securities and Markets Authority (ESMA) regulatory jurisdiction. UK brokers usually no longer accept EU-based traders at their FCA-regulated subsidiaries and will redirect to EU-based subsidiaries during account registration.
Therefore, EU-based traders can trade with UK-headquartered brokers at their EU-regulated subsidiaries, but they cannot access the UK trading environment, which is undergoing competitive changes. They will deal with EU-based and regulated subsidiaries of UK brokers, but the trading environment remains dictated by ESMA rules and regulations.
What is the Best Trading Platform for Beginners in the UK?
While individual requirements differ, the below checklist includes all aspects a competitive trading platform should provide:
- Regulation - FCA regulation and a clean operational track record of more than ten years eliminate the risk of scams and fraud. It also ensures the segregation of client deposits from corporate funds, negative balance protection, and an investor compensation fund securing 100% of deposits up to £85,000.
- Local-currency accounts - A GBP trading account is helpful, especially for spread betting accounts. USD alternatives are generally available, ideal for Forex traders, where 80%+ of all trades include the US Dollar.
- Local payment methods - Bank wires and credit/debit card deposits are widely available, including online banking. Many brokers offer Skrill and Neteller, while World Pay, Stripe, and PayPal, are alternatives, but they are not always available everywhere.
- Spread sizes - Forex traders should pay no more than 0.1 pips in a commission-based and 0.7 pips in a commission-free pricing environment on major currency pairs during the most liquid trading periods. Equity traders should get blue-chip stocks from £0.01 and the FTSE100 index from 1.0 points.
- Fees - Competitive Forex trading commissions max out at $6.00 per 1.0 standard lot, and equity commissions at 0.10%. Volume-based rebate programs for high-volume traders should exist and will lower final trading fees.
- Products - A balanced Forex asset selection should exceed 60 currency pairs. Equity traders should have, at the minimum, a choice of international blue-chip names, while ETFs are useful for easy and cheap diversification.
- Asset diversity - Competitive UK brokers cover multiple sectors but should include Forex, equities, indices, and commodities.
- Algorithmic Trading Support - UK brokers with proprietary trading platforms should offer API trading, while out-of-the-box alternatives like MT4, MT5, and cTrader fully support algorithmic trading. VPS hosting for 24/5 low-latency market access is a bonus.
- Superb order execution - Deep liquidity and cutting-edge trading infrastructure ensure traders can execute orders at their desired prices.
- Account type diversity - The two primary account types are commission-free and commission-based, plus sub-account options. Spread betting accounts, which are tax-free, are equally available and the primary choice for UK-based traders. Some brokers offer specific account types for investors, Islamic traders, copy traders, managed account services, and retirement planning.
- Demo account - Unlimited demo accounts are useful for beginners to test trading conditions, seasoned traders to test new strategies, algorithmic traders to bug-fix trading solutions and test EAs and copy traders to evaluate signal providers.
- Mobile trading - Mobile apps are ideal for traders who want to manage their portfolios on the go, but they are unsuitable for analysis and trading.
- Competitive deposits/withdrawals - While deposits are usually free, traders may pay withdrawal fees, including third-party payment processing costs.
The Pros & Cons of Forex Trading in the UK
Pros:
- The Forex market is decentralized and operates 24/5.
- The Forex market is the most liquid financial market.
- Lower capital requirements than other asset classes make it more accessible.
- Algorithmic trading support, which accounts for 80%+ of daily volume.
- Copy trading and signal services offer diversification opportunities.
- Account management and mobile trading available.
- Low-cost deposit and withdrawal methods can ensure frictionless financial transactions.
Cons of Forex trading in the UK are:
- Despite widespread availability, the lack of education can create a fundamental misunderstanding of Forex trading, its requirements, and possibilities.
- Insufficient trading capital and unrealistic trading expectations can result in overtrading and other costly mistakes.
- Traders often fail to deploy adequate risk management.
- Many traders overuse leverage.
- Promotions of unrealistic trading performances by questionable Forex brokers and their affiliates.
- A lack of in-depth education sometimes causes beginners to fall victim to scams and fraud.
Forex Trading Taxation in the UK
With currency trading gaining popularity, two of the most commonly asked questions about taxation of Forex trading profits in the UK are “Do Forex traders pay tax in the UK?” and “How can I avoid paying taxes on Forex?”. While these remain somewhat complex topics that depend upon personalized circumstances, UK traders generally are required to pay a capital gains tax (CGT) on trading-related profit. There is a £12,000 allowance for individuals. Any profit above that is taxable. It is the responsibility of traders to declare profit from trading in their annual tax returns filed with Her Majesty’s Revenues and Customs (HMRC), the tax authority of the UK.
There is a difference in the tax treatment of CFD/spot market trading and spread betting. The former is taxable in two brackets. Those with a total income below £50,000 pay a 10% tax, the rest 20%, unless HMRC deems trading-related income to be taxable under personal or corporate tax rates. The £12,000 tax-free allowance (£24,000 for couples) still applies. UK retail clients trading in spread betting accounts are generally not required to pay taxes, which is why it has become the dominant form of currency trading in the UK, offered by all UK brokers.
How Can I Avoid Paying Taxes on Forex?
UK retail clients trading in spread betting accounts are broadly not required to pay taxes on any profits, which is why it has become the dominant form of trading in the UK and is offered by all UK-based brokers.
Economic Turbulence and the Forex Market in the UK
Since the turn of the millennium, economic turbulence has increased, resulting in significant changes to the Forex market in the UK. Several brokers filed for bankruptcy amid higher capital requirements imposed by the FCA to ensure financial stability, while others left the jurisdiction voluntarily. Regulations stipulated by the European Securities and Markets Authority (ESMA) also had an adverse negative impact together with MiFID II, but Brexit could rectify them as the UK will no longer be subject to the E.U.'s rules. The FCA will ensure that financial stability, transparency, and competitiveness remain an essential driver of the UK financial system, which besides an excellent infrastructure, enjoys a favorable time zone and tax-friendly environment which is also positioned to improve after the end of the Brexit transition period.
The aftermath of the 2008 global financial crisis and the January 2015 unpegging of the Swiss franc from the euro by the Swiss National Bank caused ripple effects across the financial system and the end of unsustainable brokers. It has also given rise to a new breed, and competition remains healthier than ever. The rise of artificial intelligence and machine learning solutions brought FinTech companies into the mix, evident in 2019, when London took the crown as the world’s number one technology investment hub, dethroning Silicon Valley in the U.S.A. The Forex market in the UK will change further, become more competitive, and offer traders around the world more favorable options.
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