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 like Apple, Facebook or Google.

Find out more about stock trading here.

How do you start stock trading?

If you're interested in online 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.

How can an online stock broker help?

Online stock brokers act as a middlemen between you and the stock market.

There are three different types of stock brokers:

  1. Advisory brokers: These are brokers who suggest the shares you should buy.

  2. Execution only brokers: These brokers only make the trades you instruct them to.

  3. Discretionary brokers: These brokers act on your behalf buying and selling shares at their own discretion to earn you the most profit.

How to find the best trading platform

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 online trading platform 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.

What is a stop-loss order?

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%.

Choosing the best stock trading app

There are a few online trading apps you might want to try before you commit. Each has different features and designs.

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.

When you're trying to choose the best online stock broker, you should look at what they offer in these areas.

What is the best trading platform?

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 market trading platforms include:

  • Degiro

  • Hargreaves Lansdown

  • IG

  • Interactive Investor

  • Saxo Markets.

How do you make money through stock trading?

You make money by buying shares at one price and selling it for a higher price. Keep in mind that stock prices can fluctuate over time.

What to think about before you invest

Before you start to buy shares online you should remember to keep a few things in mind:

  1. Only invest what you can afford to lose in online trading. Remember, there's no guarantee you'll get your money back.

  2. 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.

  3. 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.

Paying tax on shares

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).

You will still need to pay 0.5% SDRT, but rounded up to the nearest multiple of 5 and only on trades with a value of over 1,000 if you buy shares that cannot go through the CREST system (known as 'residual securities').

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 2020-21 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 2020/21 tax year. This means your gains would need to exceed 12,300 in order for you to be required to pay capital gains tax.

Online stock trading FAQs


Can I buy shares in any company?


No, only companies that are listed on stock exchanges, like the London Stock Exchange (LSE) or the Alternative Investment Market (AIM).


How can I cut the cost of share dealing?


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.


Do I pay tax on share dealing?


Yes, any profits are subject to Capital Gains Tax and you also must pay 0.5% Stamp Duty. Here is more on investment tax.


Can I deal in shares through a mobile app?


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.

About our online stock trading comparison


Who do we include in this comparison?


We include share dealing accounts from our panel that offer online stock trading. They are regulated by the Financial Conduct Authority (FCA).

Here is more information about how our website works.


How do we make money from our comparison?


We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.

Last updated: 22 January, 2021