Forex & CFD Trading Brokers – UK

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Compare and review the leading UK trading brokers
In TradingBroker.co.uk we compare the top forex brokers, CFDs, spread betting, binary options and social trading platforms  in UK, and we offer in-depth brokers reviews on the most popular trading platforms in United Kingdom. Read our online forex education guide: What’s Forex Trading  | Basic Forex Glossary  | Why to trade forex online ? Benefits |  What’s CFD Trading.

What is the Forex Market

The Foreign Exchange Market – or as they often call it, the Forex market – is where currencies are being traded. Not only it is the largest financial market, where hundreds of billions of dollars are getting exchanged every single day, it is actually a market that is still growing, and because of its fluidity and sheer size, it is considered to be the most efficient financial market in the world.

How does it actually work?

The most important thing about currency trading, is to understand the simple notion that lies behind the numbers. Every single exchange will involve buying a currency, and selling another at the same time. The value of one currency is a non-existent phenomenon, since its value will always be determined by comparing it to another currency. The currency quoted first, will be the ’base currency’, and the currency they will use as a second reference, will be the ’counter currency’. Together, they are a ’currency pair’. Traders learn to think about currency pairs as a single unit they can either buy, or sell. The most often traded currency pairs are EUR/USD, USD/JPY, GBP/USD, and USD/CHF.

How to trade Forex

When someone decides they want to get in on the action, the first and most important thing is to understand the basic terminology. We’ve already discussed what is the base, and counter currency is, but there are some other important elements.

  • The exchange rate will tell how much somebody have to spend in counter currency to get the base currency.
  • The long position means somebody wants to buy the base currency, and sell the counter currency
  • The short position means that somebody wants to buy counter currency, and sell base currency
  • The bid price is the price the broker is willing to buy base currency at, in exchange for the counter currency. It is the best price somebody’s willing to sell their counter currency
  • The ask price is the price the broker will sell the base currency at, in exchange for the counter currency. The ask price will be one’s best price at which they are willing to buy from the market.
  • The spread  is the difference that will be between the bid, and the ask price

The next important step, is to learn how to read the forex quote. The bid price will always be on the left, quoted first, and the ask price will always be on the right, as the second reference.

Deciding what currency to buy, and sell

This is the trickiest part. Unless somebody wants to rely on pure luck, this is where anybody who wants to make some money, will need to have insight. They don’t necessarily need a degree, but they will need to have some dedication, and resourcefulness, so they’ll be able to make some predictions, and educated guesses about the possible change in the economy. Knowing a thing or two about politics also won’t hurt.

Why to Trade Forex

Have you ever had a chance to trade in Forex Market? Do you know why to trade in Forex? Yes, the Forex market is becoming popolar nowadays, and it is widely regarded as the most efficient financial market in the world. So trading Forex seems like a no brainer, but let’s see what are the advantages, and disadvantages when it comes to the market.

Advantages:

Ease of entry: Most experts would agree, that the nr. 1 reason for the sudden increase in interest towards Forex, are the requirements that can be met relatively easily. While for example the SEC requires anybody to have, and keep a minimum of $25,000.00 on their account, Forex allows some micro lots with only a single dollar on the account! As a result, accounts can be opened almost instantly, and funded by credit card on the same day! True 24-hour trading: Most market cannot really guarantee a 24-hour trading window because of the time differences, not Forex. Forex is basically open 24 hours a day, for 5, 5 and a half days every week. This makes a huge difference for many traders, a difference they’ll take full advantage of. Free analysis tools/trading softwares: Traders are usually paying for the analyzing softwares and quotes, some of them even pays for them on a monthly basis. At Forex, all dealers will offer state of the art softwares, and quality market analysis, without traders having to pay for it. No commissions: The next obvious advantage is the no commission policy. Traders will only have to pay to enter the market, the dealers generally won’t ask for commission.

Disadvantages:

Forex is not perfect, there are several disadvantages of it, let’s see the most important ones: Unregulated, without a central marketplace: The most obvious disadvantage of Forex is the lack of regulation. It is a jungle out there, and dealers are being constantly accused of unfair activities against the traders. Moving prices to create losses, stop orders, you name it. If someone really wants to be in the safe side, they need to choose a dealer with a great reputation. The differences between interest rates, and negative rolls: In the best case scenario, this can be an advantage, but often ends up being a disadvantage, and the newcomer is forced to pay daily, just to keep their position. Knowing the dealer’s roll policy is crucial here. Bank Interventions: Government banks will intervene from time to time without the knowledge of the average investor, so they can preserve the value of their currency. Those interventions are usually disguised well, so there is little anyone can do. The end result of the intervention is always the artificial weakening, or strengthening of the currency, making it very hard to do fundamental trading. Retail and wholesale price differences: About two-thirds of the trades that are going down on Forex, are being made between dealers, and large organizations, like banks, or hedge funds. The problem with that, is that those organizations will be able to buy at wholesale prices, while the every day investors, will be forced to buy – and also sell – at retail price, which will always show in the spread.

Forex Trading in UK

London, and the United Kingdom have been a financial center of Europe for many centuries, so it shouldn’t come as a surprise to anyone that the United Kingdom offers great opportunities when it comes to Forex dealing. London is actually the largest currency trading center today, with nearly 37% of all trading, and an astonishing $1,5 trillion going through forex securities of London, compared to the 6% of Tokyo, and 18% of New-York. When it comes to foreign currency trading, the United Kingdom offers plenty of experienced dealers with great reputation, making the country one of the most well-equipped places in the whole world for foreign currency trading. Forex Regulations in the United Kingdom Foreign currency trading in the United Kingdom is regulated by FCA, the Financial Conduct Authority. They were given their statuory powers by the Financial Services and Markets Act, that was passed by the United Kingdom Parliament in 2000. This organization is an independent body, that not only regulates, but supervises the whole financial services industry in the United Kingdom. No country is free of scandals and fraud, but when it comes to security, the United Kingdom probably offers the best solutions for safe foreign currency trading to anyone. FCA requires the client for example, to separate their assets from the assets of the company, making the clients’s account almost 100% immune to some claims that creditors could make in the unfortunate event of a fraud, or bankruptcy. 

John Walker

John Walker

Editor at Tradingbroker.co.uk
John was born in London ( United Kingdom ) and studied at The London School of Economics. Currently he lives in Sydney ( Australia ) and he works as editor at Tradingbroker.co.uk.
John Walker

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