If you want to invest in the most valuable companies such as Amazon and Microsoft or get in on pharmaceutical stocks like AstraZeneca or Pfizer you'll need an online trading account. Compare some of the best trading platforms that can make it easier for you to trade the shares you want.
Your investments are not guaranteed; they can decrease in value as well as increase and you may not get back the full amount you put in.
If you're interested in online stock trading, you'll need to open a stock trading or share dealing account online. Then you can add money to it and start to buy shares online and sell them as a way of making money.
You do this by using a stock trading platform. A trading platform is software that you use to conduct your trading. This includes opening, closing, and managing market positions through a financial intermediary such as an online broker.
Online stock trading is the process of buying and selling company shares over the internet. It's sometimes called share dealing.
A 'share' is a unit of ownership in a particular company. Share dealing allows you to buy stock in companies such Apple, Facebook or Google and then sell that stock for a profit when the price of the stock rises in future.
Different stock trading platforms offer varying features and fee structures. So when looking for the best trading platform, UK residents should think about these factors:
Fees: All online market trading platforms, UK wide, charge you a fee for each transaction you make. This is the case whether you want to buy shares online or sell them. If you're doing a larger trade, the fee might be calculated as a percentage of the transaction. Some providers also charge an ongoing annual or monthly fee on top of this. The best platforms usually have more fancy features, which will cost you more.
Ease of use: Online stock trading can be complex. Often you'll need to respond quickly to market changes. So look for a share dealing platform that lets you make fast, accurate, hassle-free trades.
Access to data and research: The best trading platform, UK wide, for your needs will give real-time market updates. Others give dynamic or delayed market updates. And sometimes, a share dealing platform will give you research and broker analysis on individual stocks. This information can be helpful to make decisions about which shares to buy.
Trade options: Look at what options are available for you to buy shares or sell them. Can you buy or sell shares at a set price? Are stop loss orders an option? This will help reduce your risk.
Margin loans: Some people borrow money to help build their investment portfolio. If you want to do this, check to see if your share dealing platform or online broker offers margin loans.
Security: How secure is the platform? The best trading platform will make sure your funds are safe.
Stock trading platforms can come in the form of desktop software, web-based platforms, or even smartphone apps.
It's hard to say which is the best online trading platform, UK wide. But when you're choosing you should think about factors such as share selection, design and extra features.
The best stock trading app should offer you a wide variety of stocks to trade. If it has a limited share selection, and the shares you want to buy aren't on the app, you could miss out on important money-making opportunities.
The design of an online trading app should make it easy to use. It's important that you can find all the features and tools you need quickly.
Some stock trading apps offer extra features, like demo accounts and stop loss functions.
The best share dealing platform for you is the one that suits your financial needs and your investing strategy.
Some well-known and reputed online stock trading platforms include:
|Trading Platfrom||Platform Fee||Share dealing charge||Investment Options|
|Degiro||£0||£2.03||Shares, ETFs, Options, Futures|
|IG||£8||£8||Shares, ETFs, Funds|
|Interactive Investor||£9.99||£7.99||International shares, Funds, Investment trusts, ETFs|
|Hargreaves Lansdown||£0||£11.95||Shares, ETFs, Funds|
|Saxo Markets||£0||£8||Shares, ETFs, Funds|
Only invest what you can afford to lose in online trading.
Stock trading is risky as the value of stocks can rise and all because of external economic factors. This means that you might get back less money than you originally invested.
When you're stock trading, start with small investments
This'll give you time to get used to the process of buying and selling shares on whichever you feel is the best trading platform for you. This is especially important if you're new to online trading.
Do your research
Before you start trading online, research each company you want to buy and sell shares from. Visiting their website and search for economic news stories about them as well as look at how they're performing and have performed historically.
Although everyone has their own investment needs and goals, essentially the end goal is make as much of a return on your investment as you can.
Here are some tips based on conventional wisdom that investors can keep in mind:
Think long term. Unless you're an expert trader with knowledge of the day-to-say intricacies of the stock market, trying to make short-term gains is probably not a good idea. Instead, if you're thinking of investing in stocks, be prepared to tie your money up for at least five years. That covers any market fluctuations from affecting your eventual return on investment.
Diversify your portfolio. Investing in a variety of different industries, maximises returns by investing in different areas that would each react differently to the same event.
Don't panic. Many investors often panic when the market has a momentary dip and follow other people into selling. Highs and lows are part of investing in the stock market, and it can be more profitable to be patient and ride it out.
To start online stock trading you'll need to open an online stock trading account. Once you've opened a trading account you can transfer the amount of money you want to use to trade into the account. You can then use that money to buy and sell shares.
No, only companies that are listed on stock exchanges, like the London Stock Exchange (LSE) or the Alternative Investment Market (AIM).
Certificated share dealing is when you buy or sell paper share certificates, as opposed to digitally traded shares. You can find certificated share dealing accounts here.
If you plan to make several trades each month a frequent trader account could reduce your cost per trade. Check the terms with each company.
Many people think you need a lot of money to start stock trading, but that's not necessarily true.
You can start with just a few hundred pounds, and increase how much you invest gradually as you get a better sense of the market and also have more money to invest.
Yes, but only if the company offers one. You still need to open an account online and add money before you can make any trades on the app.
When you instruct a broker to carry out a trade, the broker goes to the post where the stock is being traded. If this broker has a buy order of say 100 shares and another broker has a sell order for the same share, the brokers negotiate and settle the deal.
Otherwise the broker must go to specialist who deals with the kind of shares you want to buy.
By owning shares in a company you become eligible to receive dividend payments up to four times a year. However, you will only be paid if the company has:
Made a profit (after-tax)
Agreed to pay out dividends (through an AGM vote)
If you are paid dividends from your shares, you will likely get the choice to use the money to buy more shares or to be paid in cash.
A stop-loss order is an order placed with a broker to buy or sell once the stock reaches a certain price. The purpose of a stop-loss order is to limit losses.
For example, if the stop loss order is set to 5% below the price you bought the shares, the broker will sell the shares if the price of the stock falls by 5%.
If your shares are held in an ISA, you will not need to pay tax on your profit or purchases.
If they are not in an ISA, you may need to pay stamp duty and capital gains tax.
Stamp Duty Reserve Tax (SDRT) will be 0.5% of the trade's value if you buy UK shares that are settled through CREST (the UK electronic settlement system).
The amount of capital gains tax you pay when you sell your shares will depend on your income tax bracket and how much money you make from the sale. In the 2021/22 tax year, capital gains tax is 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers.
There is a capital gains tax-free allowance of £12,300 for the 2021/22 tax year. This means your gains would need to exceed £12,300 in order for you to be required to pay capital gains tax.
Using a regulated stock trading platform ensures that your trading is safe and secure. But that doesn't take away from the fact that stock trading is an inherently risky activity. This is why you should trade with more money than you are willing to use. At the same, educate yourself about trading by reading books and news articles to increase your knowledge.
Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from lenders regulated by the Financial Conduct Authority (FCA).
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Last updated: 27 July, 2021