What is the best trading platform in the UK? - Expert analysis

Although the terms ‘trading’ and ‘investing’ are used interchangeably, they are not the same thing. Trading involves buying and selling assets for short-term gains. Because of that, today’s price will be what matters. Investors, in contrast, think about long-term potential gains (usually a minimum of five years) and so aren’t so concerned about day-to-day price fluctuations.

If your intention is to trade rather than invest, and you understand the principles and potential pitfalls of trading, then you’ll need to choose a trading platform.

Trading platforms differ from investing platforms in a few important ways – they might not always be obvious at first glance, however. They will likely offer some of the same products(general investment/trading accounts, ISAs and SIPPs) but how you go about using the platforms to attempt to grow your money will be very different.

Traders will need a platform that offers wide-ranging and insightful research tools, a real-time news feed, many different order types, and possibly more complex instruments such as CFDs or options. A good trading platform will be attuned to the distinct needs of a trader.

In truth, there is no such thing as ‘the best’ trading platform – only the best one for you.

So, how do you find your match?

When it comes to selecting the right trading platform, I suggest you consider the following questions:

• What kind of account you want to open

Why are you trading? What kind of timeframe are you hoping you’ll see results within? Are your goals short, medium or long-term? Do you know the tax advantages of different kinds of accounts?

Answering these questions will determine what kind of product or account you need to open. And it will determine whether you are an investor, or a trader.

It will also determine which platforms are available to you since very few offer all the various different account types.

Ask yourself:

Is your goal to fund your retirement? If so, then you should be looking for a provider that offers a self-invested personal pension (SIPP). There are tax benefits attached to a SIPP that you won’t get by trading through a general trading account. The downside is that you can’t withdraw your money until you’re at least 55 (57 from 2028) unless in exceptional circumstances.

Perhaps you want to build up a nest egg? Are you seeking financial gains that will allow you to fulfil lifestyle goals such as travelling, adjusting your work-life balance, buying your dream home, relocating or starting a business? Perhaps you want to pay for your children’s education? In which case, you might be looking for an Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISA. You can take money out of an ISA at any time you want without losing the tax benefits, although you can never invest more than £20k in total per tax year. ISAs will only save you tax, however, if you’re already maxing out your personal allowance – currently £12,570.

Are you saving for your first home? If you’re between the ages of 18 and 40, look at a stocks and shares Lifetime ISAs (Individual Savings Accounts) (LISAs) are designed to help you save for your first home or retirement and come with an automatic 25% government bonus on all contributions up to the value of £4,000. There are stocks and shares LISAs – where you invest your savings – and cash LISAs – where you earn interest on your savings. You must be between 18 and 40 to open a LISA and all income, capital gains and interest earned within LISAs is tax-free, although these funds can only be used to purchase your first home or for retirement. Ensure you are familiar with the rules surrounding this account before utilising itLifetime ISA. These ISAs are specifically designed to help you build savings for your first home or later life and, again, come with significant tax benefits.

Are you investing for your child? Junior ISAs (Individual Savings Accounts) (JISAs) are tax-free savings accounts for children under the age of 18. Only a parent can open a JISA but anyone can contribute. You can choose to save for your children through either a cash Junior ISA where you will earn interest on any cash in the account, or a stocks and shares Junior ISA where you will invest your child’s savings on their behalfJunior ISAs allow you to put £9,000 away every year, tax-free, until your child reaches the age of 18 (when the account automatically turns into an ISA). There is a cash Junior ISA, which allows you to save without paying tax on the interest your cash earns, but assuming you’re here because you want to trade, you’ll be looking for a stocks and shares Junior ISA. With this account, yon’t don’t need to pay tax on any capital growth or dividends.

If you want to gift your child financial help far beyond their 16th or 18th birthday, then you may be looking for a Junior SIPP which is a tax-efficient way to build a pension for your child. You can invest up to £3,600 per tax year with a Junior SIPP account.

Are you looking to make quick returns on daily fluctuations in stock prices, or do you want to trade complex instruments such as CFDs or options? Then you will be looking for a general trading account. If you are a trader, rather than an investor, you’ll want a platform that caters to your needs and offers access to more sophisticated tools and advanced research capabilities that most investment platforms won’t offer.

You’ll also want to look at a general trading platform instead of an ISA if you’ve already maxed out your tax Personal Allowance.

This table gives a quick overview of which providers offer the different types of account:

• Your feelings about risk

This is important. We’re all different, and your appetite for risk (how much risk you’re comfortable accepting), as well as your tolerance to risk (how much you can afford to lose), will be as individual as you.

The different asset types you invest in will expose you to different amounts of risk, so you should think carefully about how much risk you’re satisfied with. Equities (stocks and shares), for example, are considered higher risk than fixed-income assets such as bonds and gilts. CFDs and spread betting come with a very high level of risk. The vast majority of traders lose money trading with these instruments, so you should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Whatever level of risk you’re comfortable with, diversifying your portfolio (making sure you don’t have all your eggs in one basket) is sensible. You might have picked up a hot tip you’re convinced is going to result in a huge payout and is, therefore, worth the risk. But if you’ve invested everything in a stock that doesn’t live up to the hype, or wider economic conditions see the stock market suddenly nosedive, you could be left with nothing. Spreading the risk between different markets and different asset classes reduces the risk that your investment could be wiped out because not all asset classes and markets respond the same way to events.

Thinking long-term also helps to mitigate some element of risk. While past results are certainly no guarantee of future returns, historical data does suggest that, if you leave your money in long enough, you’re likely to see positive returns. Hence the old adage that ‘it’s time in the market, not timing the market’ that leads to good results. Remember, however, that all investing involves some risk, including the risk of the value of your original investment falling, not rising.

If you don’t like the thought of exposing your hard-earned money to any risk, then investing might not be for you, and a A Cash ISA (Individual Savings Account) is a tax-free savings account where you earn interest without having to pay tax on it, allowing you to grow your savings more efficiently. cash ISA might be a better match. A cash ISA will simply allow you to deposit cash and the interest is tax-free. As with other types of ISA, you’ll have a limit of £20k per year.

Although some platforms will help you figure out what kind of risk profile you have, you may need to seek independent, professional advice to identify the kind of risk level you should be looking for with your goals and needs.

• Your experience level

Some trading platforms are tailored to the needs of those just starting out, while others are no-go-zones for beginners.

When we talk about platforms being geared towards less experienced investors vs highly experienced investors, we’re usually talking about how easy or complex the user interfaces are to navigate, the number of tools and advanced features available, the number of different trading platforms available, and the provider’s education offering.

This is just a guide, however. You may feel your skillset in other areas of your life equips you to tackle a more advanced platform from the start. Equally, I know of very experienced traders who use platforms aimed at less experienced traders because of cost. So, it’s horses for courses.

• The assets and instruments you want to trade

As a rule of thumb, the more sophisticated the trading experience, the greater the number and range of assets and instruments available.

This comparison table gives some sense of the size of different platforms’ market offerings for retail traders. (Some instruments are available for professional traders only, in which case I haven’t included them here).

It might also be important to you that you have access to Fractional shares are portions of shares (or ETFs) that are smaller than one whole share. They are designed to make ownership of large, expensive shares more accessible.
fractional shares. If so, your shortlist can immediately be narrowed down to the following platforms:

Interactive Brokers
Trading 212
eToro
Freetrade (only US stocks can be bought as fractional shares)

• Do you want to manage your own investments or have them managed for you?

If you’re an active trader, or looking to become an active trader, then you’ll most likely want to pick and choose your own assets to trade. However, if you’re new to trading/investing, or you don’t feel you’ll have the time to research and keep on top of the management of your investments, then a product like a fully managed ISA could appeal. You’ll need to pay for the additional service (visit our Best stocks and shares ISA page to see cost comparisons if it’s an ISA you’re interested in), but it can free up your time and give you some reassurance that your investments are being managed by the professionals.

If you do choose the managed route, pay particular attention to the performance of each providers’ funds. While it’s important to remember that past performance does not guarantee future performance, you’ll see that there are big differences in the investment strategies used by different companies, which have resulted in very different returns for customers over the last few years. We’ve undertaken independent analysis on past performance data which you can view here.

Once you’ve asked yourself these five questions, you’re ready to choose a provider. And your thoughts are bound to turn to cost. So how do the platforms compare on fees?

Which trading platform offers the lowest fees?

Coming up with straightforward cost comparisons for trading platforms isn’t easy. While most platforms charge via some combination of platform fees, commission/spreads, and A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees, costs can vary hugely depending on the size of your portfolio, the type of account you have, and the instrument or asset you’re trading.

Using the free General Investment Account Fee Calculator tools we provide will help you get tailored answers to this question.

Day trading is a short-term trading strategy that, as the name suggests, involves frequent buying and selling of securities during the day. Instead of waiting for the price of assets to rise over a long period of time, and benefiting from compound interest, the goal for day traders is to beat the market and generate immediate profits. Day traders attempt to do this by anticipating price changes that could happen within the trading day. Ideally, day traders want to have exited all their trades by the end of the day so they aren’t holding securities overnight (something which usually incurs an ‘overnight charge’).

This might sound like an exhilarating way to make a living – and for some people it certainly is – but day trading comes with high potential risks. For that reason, it takes someone with the appropriate appetite for risk as well as sufficient tolerance for risk, to make it work. It’s also a strategy that requires considerable experience and skill to master.

In the past, if you weren’t a professional trader you’d need to put a call into the dealing desk of your chosen brokerage to make a trade. Now, online trading platforms, and all the data we can consume at our fingertips, makes it possible for retail traders to execute trades themselves from the comfort of their own homes.

Interactive Brokers, Saxo Markets, IG, Trading 212 and eToro all offer excellent day trading experiences at reasonable prices. However, the platform you choose should be largely dictated by your experience level: less experienced traders will find eToro and Trading 212 offer a more gentle introduction with a great deal of support in the form of social trading features, copy trading options and a more user-friendly interface. The trade-off (excuse the pun) is that you’ll not have access to quite the scope of assets, tools and advanced trading features you’ll find on those platforms designed with more experienced and advanced traders in mind, namely Saxo and Interactive Brokers. These two offer a serious trader greater possibilities and advantages, within platforms that may be too overwhelming for those still learning their craft.

IG and Saxo are rare in that they offer something for all experience levels groups.

A significant amount of research goes into selecting the platforms on this list. Some of them have made the grade because they represent good value for money; some have been included for the exceptional service they offer, whilst others have been included due to the historical performance of their portfolios.

We delve into considerable detail on each of the following categories:

• Platform and usability
• Customer service
• Safety
• Education
• Research
• Tools
• Markets and products
• Fees
• Deposits, transfers, and withdrawals
• Account opening
• Managed fund performance

Each category has a strict scoring system. As an example, under ‘Fees’ we would score each platform out of five for the following:

• Platform fees
• Spreads
• Commissions
• FX fees
• Inactivity fees
• Fund management fees
• Withdrawal fees
• Deposit fees
• Subscription fees
• Trading fees
• Minimum deposit
• Interest
• Fees for closing account

In this way, each platform is assessed using the same criteria. For more information on how we review the platforms, click here.