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.
Daily market research and Autochartist access
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
Best ECN execution on the MT4 platform
Excellent implementation of cTrader and Smart Trader Tools
Marketsi strategy builder helps traders trade smarter
Competitive trade execution with low slippage
Commission-free trading on 3000+ assets
User-friendly proprietary platform with top-level analysis
, ECN trading with leverage up to 1:500.
, Highly regulated, choice of fixed or floating spreads.
, Award-winning proprietary trading platform alongside MT4.
5.0/5 in this category
ECN trading with leverage up to 1:500
FPMarkets 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.
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
4.5/5 in this category
Highly regulated, choice of fixed or floating spreads
Based 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.
High-quality educational offering via SharpTrader
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
4.5/5 in this category
Great ECN execution on MT4 platform
Pepperstone is well-known for its diverse selection of third party platforms, which includes a variety of social copy trading platforms. For UK traders, Pepperstone offers a solid and trustworthy base, thanks to no less than three top tier financial regulators, namely the Australian Securities and Investments Commission (ASIC), the Financial Conduct Authority (FCA) (UK), and the German BaFIN. In addition, Pepperstone is also regulated through the Cyprus Securities and Exchange Commission (CySEC), and the Dubai Financial Services Authority (DFSA). Pepperstone’s active trader program rebates a percentage of the spread, which is dependent on monthly trade volumes. UK premium clients are expected to trade minimum of $15 million per month, or 150 standard lots in order to qualify for tier-1 rebate (10% per lot).
Excellent choice of trading platforms consisting of MT4/MT5, and cTrader
Market-leading MT4/MT5 upgrade package, Autochartist, and API trading
Social trading support via Myfxbook, MetaTrader Signals, and DupliTrade
Leverage of up to 1:400 and superb trade execution
4.5/5 in this category
Excellent educational offerings
Markets.com has been operating as a forex and CFD broker since 2008 and is a publicly listed company on the London Stock Exchange (LSE: PTEC). Markets.com is highly regulated in the UK Financial Conduct Authority (FCA), and the Cyprus Securities and Exchange Commission (CySEC). Interestingly, Markets.com is comprised of two main brands. Opening an account with Markets.com in the UK is very simple and quick to accomplish. You may also take advantage of a free demo account to test out the available features and platforms on offer. If you wish to deposit, there are several options available and Markets.com does not charge any additional fees for deposits or for withdrawals. These services are also very fast and efficient as is their customer support, which includes fantastic learning materials.
Very Competitive Forex Fees
Very Wide Choice of Assets
Choice of Trading Platforms
Excellent Customer Support
4.5/5 in this category
Award-winning proprietary trading platform alongside MT4
Capital.com grew into one of the most trusted UK brokers, operating with UK Financial Conduct Authority (FCA) oversight. UK traders get a cutting-edge proprietary web-based trading platform. It includes broad-based technical analysis tools and services from Trading View. It also features actionable trading ideas, financial articles, seamless multi-chart toggling, personalized watchlists, and risk management tools. The Capital.com mobile app has almost 800,000 registered users and is available for Android and iOS devices.Traders get a well-balanced asset selection of 4,000+ trading instruments in a commission-free trading environment. The competitive pricing environment from 0.6 pips or $6.00 per 1.0 standard lot adds to the benefits at one of the leading UK brokers. Capital.com also publishes quality market commentary on Capital.com TV and its website. Investmate, the core of the Capital.com educational offering, delivers an outstanding service the beginner traders. Numerous well-thought-through trading guides, video courses, and webinars are also available.
Excellent Forex and cryptocurrency selection
A competitive commission-free pricing environment
Award-winning proprietary trading platform alongside MT4
High-quality educational section built around Investmate
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:
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.
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.
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.
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.
A reputable Forex broker will ensure clients manage their portfolios from a competitive trading environment, as the profitability of traders increasing revenues at non-market-maker brokers enables a stable income. Therefore, auxiliary trading services fulfill an essential role for any successful broker. On top of an excellent regulatory environment, top Forex brokers in the UK offer a distinct advantage in overall financial services.
The financial infrastructure in the UK remains superior in global terms. The vast network of brokers, banks, counterparties, accountants, lawyers, analysts, and research firms located in the UK offers unlimited access to financial products with an excellent support network. Whether the client is a new trader or a hedge fund, the UK financial services sector deploys the right tools for the entire spectrum, adding to an unparalleled list of advantages and allowing all types of traders to acquire the necessary edge in today’s financial markets.
Being the global financial center of the world, the market information available within the extensive UK financial sector includes every economy around the world. Therefore, traders generally receive market-moving information promptly. This offers a wide range of mobile trading opportunities and allows traders insight into areas often ignored by brokers based in many other countries. Countless specialized and boutique outlets cater to all types of strategies and markets, with a network of brokers enabling access.
Within the financial services sector, an essential component of the UK economy, the quality of professional experts is high throughout the industry. UK Forex brokers either hire in-house or seek third-party partnerships to ensure traders not only have access to a high quantity of research and market commentary but also a high quantity. UK Forex brokers attempt to offer highly skilled professional experts to assist traders to reach their goals.
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.
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.
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.
How to start trading Forex in the UK?
Education is the most critical step and will dictate the profitability of any portfolio. Beyond that, select the Forex broker most suitable to your needs, make a deposit, and you can embark on your Forex trading venture.
What time does the Forex market open in the UK?
The Forex market is open 24/5, but the UK open is generally considered to be between 8am to 9:30am UK time.
How can I become a Forex trader in the UK?
Education, patience, and adequate trading capital form the three pillars on which most successful Forex traders build their portfolios. Make sure you undertake each before you become a Forex trader just by opening a trading account and funding it with real money.
How much do Forex traders make in the UK?
The answer to this question is dependent on many individual circumstances, including time, capital, and trading strategies. Over 75% of retail traders lose money, and more than 20% earn only small returns.