The FX market is one of the largest trading markets in the world with a total value of $5 trillion which cannot be matched by any other trading market in the world right now. It has been in existence for a long and has seen a lot of good and bad traders over many decades. It has managed to live on despite some stiff competition from the stock market over the long term and the crypto market in recent times.
It continues to hold interest for many traders all around the world and the fact that the market is open 24X5 has contributed to the interest and the growth in its userbase. Most of the FX activity happens around the economy of every country as a result of which many banks play a central role in the FX market-clearing trades and also making decisions that may impact the FX rates of specific countries. The major regions of economic activity are in New York, London, Singapore, and Hong Kong as well with each of them in a totally different timezone.
With London being one of the main centers where la ot of FX activity takes place, it assumes an important place in the FX market map which makes the entire UK also achieve an important place as most of the economic activity in Europe is centered around London. This makes many of the FX brokers set up their shop in London as it is a matter of prestige and it also gives them access to a very large market throughout Europe. Most of such brokers are regulated by the FCA and so they are required to have a presence within the UK and so an office inside London gives such brokers and platforms a variety of advantages. This is why we are seeing a lot of FX brokers conducting their business from within London and this gives a wide choice of FX trading platforms for the users as well.
It would be difficult to rate the brokers mainly because there are simply too many of them in the UK and also, what appears important for one trader may not be important for another. So, it becomes difficult to get an objective view of every broker and each of their features and then give them an overall rating. For example, for one trader, the spread in each FX instrument in the platform would be the most important factor while for another, the ease of deposit and withdrawal is likely to be a very important consideration. So, there cannot be any fixed criterion to classify a specific FX broker as being good or bad which is why we have chosen to not rank the brokers but just let the readers know what is good and what is bad in some of the selected brokers. Please note that this is in no way a comprehensive list of brokers and their features but it is more like a list of brokers that are available and what are the factors and the features that you, as a trader, should be looking for in a broker.
One of the most prominent UK FX trading platforms is Pepperstone which started as an Australian broker way back in 2000 but has since grown and branched out into many other regions so much so that it is one of the most recognized FX brokers in the world right now. Currently, it is being regulated by both the FCA and the ASIC which means that it is licensed and regulated by two of the largest FX regulators in the world which gives it a lot of creditability, and many traders, big and small, have been able to send in their funds with no second thoughts and trade with a peace of mind knowing at the back of their mind that their funds are being well taken care of.
One of its biggest new features that have been a hit among its users is the copy trading facility from among 20 million traders. Copy trading is a kind of social trading as well and this has earned it a good reputation as even newbie traders would be able to pick and choose the traders that they want to copy their trades from and make some good profits. For the traders, they would get paid for the service that they give to the other traders and so it turns out to be a win-win situation for all.
It has great tools for new and advanced users and this makes it one of the favorite platforms for beginners as they find it very easy with a wide variety of trading platforms to choose from and also a variety of other tools which they can use in their trading and ensure that they have a success rate. They also have good customer service which is very prompt in their replies and this is also something that the beginner traders look forward to, in the platform of choice.
The only bad thing that can be said about the platform Pepperstone is the fact that it is still only USD-based while many other brokers offer deposits and withdrawals in a wide variety of currencies. For reasons best known to the broker, such options are not being given at this point of time at this platform and this is a drawback for those from other countries as it means that every time they make a deposit or withdrawal they have to convert their local currencies into dollars which could lead to a lot of conversion and FX charges. The fees that the platform charges, apart from the spread, is also quite high in certain types of accounts that they offer and this could also put off certain traders but once they see the value of the service and features within the platform, they may be forced to change their mind in the long run.
As far as spreads are concerned, Pepperstone offers spreads on most instruments that are very low and comparable to any other broker in the world. Of course, it is not a discount broker and so it may not be right to compare its spreads to those of discount brokers like City Index but among the more famous and user-friendly brokers, we can safely say that the spreads at Pepperstone are pretty good and loved by the traders.
The next brokerage that we will be seeing is City Index which is basically a discount broker. A discount broker is one where the charges are minimal and the broker can achieve this by cutting corners and using some innovative tools and methodologies which help him to cut costs. For example, the broker may not offer very good and valuable research materials; or may offer only a limited set of instruments and trading platforms. Like this, the broker would be able to save up on the costs which wi=ould then be passed on to the user in the form of low spreads and discounts.
One of the major advantages of this broker is the fact that the spreads are very low for FX pairs and also for many of the index CFDs. This is why it is called a discount broker as all the savings that it manages to make are passed on to the users. It also has a very good and easy account opening process which is smooth and seamless and any user, even those who are new to brokers and the FX world would be able to easily and smoothly open an account with this broker. On the other hand, City Index does not have a very user-friendly desktop trading platform and this is probably one of the cost-cutting measures that they have chosen to undertake and it is worth a gamble at this time with most of the users and traders preferring to trade on their mobile. But whether this is going to affect their business, in the long run, is something that they need to evaluate and decide at some point in time but so far the traders do not seem to worry too much about it. The fees charged for stock CFDs are also very high on this platform which is also likely to affect that part of the business as it is likely that the traders who are looking to trade a lot of st6ock CFDs would rather choose another broker who offers lower fees and spreads.
The platform has around 84 trading pairs on FX and all of these have very tight spreads starting from 0.5 pip. Apart from this, it has thousands of stock CFDs from around the world but it is in this that the spreads are very high and so this is unlikely to be preferred by the traders in the long run. The broker also has strong research and customer support desk and it is pretty much clear that it has not compromised on these 2 aspects as these are pretty much customer-facing and hence like to either attract or drive away from the customers depending on how these 2 sections function together.
Do Forex Brokers in the Uk also Facilitate CFD Trading?
The answer to this is a resounding yes as a lot of FX broker platforms in the UK also allows CFD trading. The CFDs can be based upon commodities or on the stock market indexes as well. Many FX brokers allow 1000s of stock CFDs to be listed on their platforms and each of these can be traded with leverage as well, something that is not allowed in many of the stock exchanges. What’s more, many of the stock CFDs are for stocks from different parts of the world and these are from exchanges that would not be accessible under normal circumstances for most retail traders. So it is indeed a blessing in disguise for the retail traders that the Fx brokers allow CFD trading for stocks from different parts of the world and that too with leverage as well.
Of course, leverage can work both ways and so the user needs to understand the risks associated with leverage and ensure that he practices good risk management and trades the stock CFDs in the right manner. One of the disadvantages though could be the fact that in many of the brokers, the spread for the stock CFDs is very high probably due to the lack of liquidity on the platform. As a result of this, many of these CFDs are not traded by the users at all and they are just there for display purposes. This is likely the only drawback as far as the offering of CFDs by brokers is concerned.
What is the Best Time of Day to Trade Forex?
This is likely a question that is uppermost in the minds of most of the traders and especially those in the UK as they sit in a specific time zone that can be said to be a kind of middle time zone for the entire world. As far as the UK traders are concerned, the London opening is one of the most active trading times not only for the UK traders but around the world as well. So, unless there is some major news in some part of the world, the UK traders do not need to stay awake at odd hours of the day in the hope of catching up with some volatility. They are likely to get ample volatility at normal times of the day and they just need to make sure that they are up and about during the normal London market opening hours and they are likely to get a lot of volatility which will be useful for their trading. Of course, this can work both ways for the traders as the large volatility can lead to large and quick losses as well unless the trader practices proper money management in the long run.
Also, the other important part of the day as far as volatility and good trading opportunities is concerned is during the New York market opening time. But this is good for the UK traders as it is around mid-afternoon in their time zone which means that they are available at that time as well and it is a good time for good trading opportunities. What’s more, the 3-4 hour time window when both the NY and the London markets are open are witness to some of the most volatile market action daily and this is also the time when most of the news from the US FX markets get released which promises a lot of action almost daily. This is the ideal time for trading both for small and big traders as there is a lot of volatility and a lot of action as well as liquidity which is what the traders love in general. So, these are usually the times of the day that the FX market is very active and hence are considered to be the best trading times of the day.
Of course, everything is a matter of perspective and while most of the traders would prefer volatility and a lot of market action, some of the traders prefer the calm and the quiet and so for them, the slow-ranging markets are best for their trading and also for their strategies. For such traders, the Asian trading session is likely to be the best for them as they can slowly trade the markets and they don’t need to deal with volatility on most of the days. The slow ranging markets also provide a different kind of trading opportunity for each type of trader and so if you like this kind of market and you believe that making slower and measured decisions and waiting for the trade to hit your take profit is something that is your cup of tea, then the Asian trading session is likely to be the most suitable one for you. Again, for those who take trades for the medium and long term, these trading times and specific times during the do not matter as their trades come to fruition after many days and so any kind of intraday volatility is unlikely to affect them.
Economic Turbulence and the Forex Market in the UK
A lot of the forex rates depend on the economy of every country and so any kind of economic news or major economic activity is likely to affect the value of the respective currencies in the FX market. Any economic announcement, any rate change, any kind of economic data released by various countries all have the capacity to affect the value of the currencies and so the FX traders must keep a tab of all the important economic news that gets released in various parts of the world. We live in an interdependent world and so what happens in one part of the world is likely to affect what happens in the other part of the world which is why it becomes very important to keep a tab on happenings everywhere as it could affect that pair that we are trading or the commodity and CFD prices that we are trading.
There is a variety of economic turbulence in each country and there is no country that does not go through this at least once in a decade and these have a profound effect on the markets. For the US, the most recent was the crash in 2008 when many of the banks went bankrupt and had to be saved by the government while in Europe, we could say that Black Swan events and the unpegging of the euro and the Swiss franc as well as the Brexit news as some of the events that did cause a lot of economic turbulence in the markets. As said before it is not like only one pair or only a few markets get affected by such major events but such events likely trigger a lot of action in most of the major economies around the world. How they affect each country would depend on the action and the economic decisions that follow such events but this is the reason why the traders need to keep an eye out for such happenings and keep themselves updated about the changes happening, at least in the major economies of the world so that they can understand how it is likely to affect different FX pairs and the markets that they trade, in the short term and the long term as well.
Why the UK Forex Brokers are so Popular
If you have been in the FX trading world for some time one thing that you would not have failed to notice is the fact that the FX brokers that have a presence and are licensed in the UK are considered the top dogs in the broker industry. A broker may have multiple licenses in different jurisdictions but their regulatory job is not complete unless and until they have a license from the FCA in the UK. Also, many of the HNIs and major companies and traders that deal with FX generally go with the brokers that have a presence and license in the UK. Just a single license from the UK FCA is considered to be worth much more than multiple licenses in different jurisdictions around the world which begs the question of why it is so.
One of the major reasons is the fact that the UK FCA is one of the largest and most strict regulatory bodies that you can come across as a broker. The extent of financial laws and legal items that are covered by them is highly exhaustive and this has been worked on and upgraded several times over the last many many years. Their high experience in regulatory matters stems from the banks that they have been regulating and watching over for many years and using this experience, they have been able to extend their regulatory purview to other products in the financial services space. Their experience overall and their way of dealing with different entities and situations is unmatched and this has helped to build a lot of trust in the FCA and its regulations. Many of the large traders around the world subscribe to this view and they trust the FCA and its regulations and the way it imposes them on its licensed entities. This enhanced reputation of the FCA, as compared to the other regulatory bodies is the main factor why brokers find it to be a big challenge to get regulated by the FCA.
The checking and the auditory review that they need to undergo, not only during the process of licensing but also every year after that as well, is so vast and wide-ranging that every aspect of their process is looked over and analyzed, and maintained at the highest standards that are possible. This licensing process is not only very vast, time-consuming, and thorough but it is very costly as well which means that only those brokers that are prepared to do some serious business over the long term would be ready to undergo this full cycle to achieve the licensing and continue to maintain the standards year on year.
This is by far the major reason why the FX brokers in the UK are looked up to and this is the reason why very few brokers have been able to achieve and maintain such standards every year. Of course, getting regulated is one thing but maintaining the license and ensuring that the broker sticks to all the rules and regulations surround =ing the license is a completely different cup of tea as many of the regulations have very restricted sales practices associated with them and this severely restricts the sales and marketing teams of brokers with regards to what they can and cannot do as part of the FCA license. Many of the brokers do not wish to have such tight controls as it affects their business, especially their retail business, a great deal which is why they choose to either not get licensed at all or are always trying to push the boundaries of the license, must to the chagrin of the FCA.
Can You Scalp with Forex Trading?
This is one of the main questions that many of the new traders do always ask. First of all, scaling is not a very easy FX trading strategy to master. It requires a lot of studies as well as a lot of practice as well. It also requires a lot of time and a lot of precision as the right scalping opportunities happen only 3 or 4 times a day and for that, the trader needs to keep watching the market for more than 7 to 8 hrs a day. It is very easy to get tired and jump the gun at various points of time especially when you are expected to be at the top of your game day in and day out for the long term. So, the trader needs to make sure that he understands all the challenges that are involved in scalping and makes sure that he does want to do scalping after understanding all these obstacles.
If he does continue to feel so and has practiced and mastered it enough, then he can go ahead with his scalping trading and like any other market, scalping can be done in the FX markets as well. There are periods of ranging markets and also periods of volatile markets and it is up to the trader to decide which one he is comfortable with, as far as scalping is concerned, and then chooses the right instruments with the right spreads and the right time of the day to make his scalping trades. The FX markets are open 24 hours a day and depending on which part of the world the trader is in, he will be able to trade at any time of the day and be able to execute his trading strategy. Again, like any other form of trading, the scalper should be very careful and ensure that he has a stop-loss, at least a mental one, for each trade that he puts in so that he can be in the game for many more traders which will give him a much better chance at success in the long term.
The Bottom Line is Forex Trading Right for You?
This is a question that you need to be asking yourself before you delve into the world of forex trading. FX trading is a form of business where you make an investment, work hard at the business, and hope to get profits out of it in the long term, just like any business. So you need to decide on whether this is the right business for you. Of course, the fact that FX trading is a business where you don’t need to rely on anyone else for your success is something that sounds very attractive to a lot of traders but again, this is true for any kind of trading.
Nowadays the traders have a very wide choice of instruments on which they can trade. They have FX and stocks and in recent years the crypto trading has also gained a lot of followers.
Forex Brokers Providing a Suitable Environment for Beginner Forex Traders
For those who are beginning to start forex trading, it appears that the biggest ally, as well as the biggest enemy for them, is the broker and the trading platform. The importance of this has grown several-fold over the last few years and they have the capacity to make or break a trader. If the broker provides a very good and user-friendly trading platform and supports the trader as well as has enough material which can help to guide a trader in the right direction, then the trader is likely to gain a lot of confidence due to this and may be able to make use of this confidence to analyze and trade in a better manner.
On the other hand, if the broker is only interested in leads and sales, and marketing and does not provide the right facilities for the trader, then it could lead to losses and loss of confidence for the trader which then becomes a downward spiral leading to a total loss, of confidence and funds, for the trader which may ultimately force them to give up trading altogether. This is something that everyone seeks to avoid which is why the beginner trader needs to choose the right trading platform. We do not want to go into details of which are the right platforms in such a case as this is very subjective but our general advice would be to ask around, review, read the feedback online about all the traders which fit into your criteria of a good broker and choose the right trading platform for yourself.
This may not be a straightforward task and might involve you trying out many trading platforms before you come to the right conclusion and this may lead to loss of funds as well. So, be ready for such losses and such testing at the early part of your trading career and this knowledge and testing would help you in the long term. Try to choose a broker who has a user-friendly trading platform, who is not generally involved in any scams, who has been in the business for long, and who also has a lot of educational material which you can use to learn from. This rule of thumb is likely to keep you in good stead in your search for the right trading platform.
Traders based in the UK have a wide variety of choices when it comes to trading platforms. They also have the full support and backing of the FCA who have been regulating and licensing many of the broker platforms. As long as the traders stick to the licensed entities and do not get tempted by various marketing strategies and go for unknown brands, they are likely to be safe and be provided a very good platform to trade-in. Of course, the FCA also restricts a lot of trading practices and also ensures that KYC and other legal requirements are adhered to but what should matter to the traders the most is the fact that their funds are safe and the broker provides a level playing field.
This can be easily ensured in a country like the UK where the laws are pretty strict when it comes to trading and they are comprehensive as well. The timings of the day when the volatility is high and there are many trading opportunities are also something that is favorable to the traders in the UK and so they should be able to devise the right trading strategies to ensure that their trading is according to their plan. Like anywhere else in the world, risk and money management is going to be the key to separate the best from the rest, and as long as the traders keep that in mind while trading, they should be in good hands. Start with a small account, try out the platform, and once you gain confidence then it is easy to pump in additional funds and make optimal use of the leverage provided by many brokers to be able to get the desired profits out of the market in the long run.