In today’s accessible investment world, the stock market is a potentially lucrative option for traders looking to capitalize on market volatility. This guide provides essential information about the Best CFD trading platform in the UK, evaluating key factors like regulation, fees, asset offerings and more. With the right broker, traders can thrive in the dynamic UK CFD landscape.
Summary
In the UK, the Financial Conduct Authority (FCA) oversees the CFD market, ensuring security and transparency. Our experts have ranked eToro as the best overall platform, with its innovative CopyTrader feature, robust risk management tools, and over 3,000 tradable assets. Trading 212 and AvaTrade also make the list for their low fees, extensive assets, and strong regulation. Choosing an FCA-approved broker is crucial for UK traders to ensure adequate consumer protections.
Best CFD Trading Platform in the UK
eToro
eToro, our pick for the top CFD platform in the UK, stands out for its user-friendly interface and innovative features like CopyTrader, which allows traders to copy successful portfolios. eToro provides access to over 3,000 CFD assets, including stocks, ETFs, currencies, commodities, and indices.
Regulation is a key priority, with eToro fully licensed by the FCA and other global regulators like CySEC and ASIC. This ensures traders benefit from stringent oversight and security protocols.
Spreads start at just 0.15% with no commissions, keeping costs low. And for new traders, eToro’s $100,000 practice account provides a risk-free environment to gain experience. Overall, eToro hits the mark on all fronts, from asset diversity to transparency and innovative tools.
Trading 212
In second place, Trading 212 appeals to active traders with its extensive lineup of assets. Users can trade over 3,000 global stocks, 180+ forex pairs, commodities, and major indices. The availability of short and long positions with leverage across markets gives traders ample room to implement diverse strategies.
Trading 212 also shines with commission-free trading and spreads averaging just 1%. Tight spreads keep costs down, especially when opening and closing positions frequently.
Importantly, Trading 212 holds licensing from the FCA, giving UK traders confidence in its regulatory oversight. Security features like segregated accounts add an extra layer of protection. Overall, Trading 212 hits the sweet spot between robust asset offerings, competitive pricing, and trustworthy regulation for CFD traders.
AvaTrade
AvaTrade, another top contender, provides access to more than 1,250 CFD instruments. Traders can choose from forex, stocks, commodities, ETFs, bonds, and indices using the popular MT4/MT5 platforms or AvaTrade’s proprietary platform.
Leveraged trading up to 1:30 is available to amplify exposure to markets. Hedging is also supported to offset risks. And educational resources like video courses and market analysis help traders refine their strategies.
Fees are competitive, with no commissions and average variable spreads of 1.2%. For UK traders, AvaTrade accepts several convenient payment methods like bank transfers, debit/credit cards, and e-wallets. With multiple global licenses, including from the FCA, AvaTrade offers a well-rounded and secure trading solution.
Plus500
Plus500, a London Stock Exchange-listed company, is a trusted choice for CFD trading, offering over 2,800 instruments. Asset classes include forex, stocks, options, commodities, indices, and ETFs. Traders can access global markets easily with tight spreads from just 1%.
Plus500 sets itself apart by not charging any commissions. And for added insight, tools like the Trading Sentiment Indicator provide real-time data on other trader’s positions. This helps inform trading decisions.
Security is a priority, with Plus500 holding FCA licensing, along with other tier-1 global regulators. Segregated client accounts and negative balance protection provide additional risk safeguards. For cost-conscious traders, Plus500 ticks all the boxes.
IG
Rounding out the top UK CFD platforms is IG. Established in 1974, IG offers access to over 17,000 global markets across indices, forex, shares, commodities, and more. Spreads start at just 0.6 points on major forex pairs for cost efficiency.
IG sets itself apart with comprehensive educational resources and multi-platform support. This includes mobile apps and a web platform for convenience. Portfolio backtesting capabilities allow traders to evaluate the viability of strategies. And 24/7 customer service provides helpful support when needed.
With FCA licensing and segregated client funds, UK traders can feel confident in IG’s regulatory standing and security protocols. Overall, IG appeals to active traders seeking deep market access, robust tools, and competitive pricing.
Fees for Trading CFDs
CFD brokers offer different fee structures, but costs typically include spreads, commissions, and financing charges.
For mainstream CFD assets, eToro has competitive spreads starting from 0.9 points on currencies and 0.15% on stock indices. Trading 212 and AvaTrade have average spreads of around 1% on major markets.
Plus500 does not charge commissions, only applying a small spread markup. Meanwhile, IG charges commissions on some instruments like shares, along with tight spreads (0.6 points on forex).
Overall, costs range from 0.6 points up to around 1.5% per trade across the top platforms. Traders should compare broker fee schedules carefully.
Taxes on CFD Trading Profits in the UK
In the UK, profits from CFD trading are subject to Capital Gains Tax (CGT). For basic-rate taxpayers, this is charged at 10% on total annual gains above the tax-free allowance of £12,300. For higher-rate taxpayers, CGT is 20%.
However, losses from CFD trading can be used to offset capital gains to lower tax liability. Keeping detailed trading records is essential for tax reporting purposes.
Some professional traders may be liable for Income Tax instead, charged at 20% of annual profits above £12,571. Seeking guidance from a tax advisor is recommended when unclear.
Conclusion
In summary, CFD trading in the UK requires choosing a licensed broker like eToro, researching assets thoroughly, implementing risk management strategies, and tracking activity for tax purposes.
Success lies in utilizing regulated platforms with robust tools, staying informed on markets, and continually evaluating trading plans against performance. With the proper diligence, UK traders can navigate the fast-paced world of CFDs and work towards their financial goals.
