There are many Forex brokers operating in the UK, and choosing the right brokerage will have an impact on your trading success. Each trader has a unique personality and will have different needs when it comes to education material, expert analysis, and trading tools.
We have conducted our research by trading with and analysing the most popular Forex brokers since 2008. When comparing brokers, we consider the reputation of the broker and how they compare to each other. Below are our findings which will help you find a regulated and reliable Forex trading platform.
Our reviews focus on comparing the main aspects of the brokers which include their financial regulation, reputation in the industry, trading conditions, account types, and deposit requirements.
Top Regulated Forex Brokers in the UK
Avatrade Broker Review
For their streamlined onboarding and trading experience, AvaTrade has earned themselves the FX Empire Best Trading Experience 2018 award, while holding FX Empire Best Broker of the Year honour continually from 2011 to 2017.
Regulated first by the Central Bank of Ireland in 2009, they acquired ASIC regulation from Australia in 2011 and the South African regulation from the FSCA in 2015. With over 200,000 active traders around the globe, on both the MetaTrader 4 and AvaGo platforms, the award for Best Trade Execution by the African Finance Expo in 2016, AvaTrade is a good trading choice for UK traders. Continue reading.
|100% bonus on first deposit|| FSCA|
easyMarkets Broker Review
Founded in 2001, easyMarkets (then EasyForex) was one of the first brokers online. They quickly became regulated by ASIC in 2003 and CySEC in 2007 to add trust to a largely distrusted investment market. The easyMarkets company values of simple, honest and transparent are reflected in the recognition that they have recently received from the industry. Being awarded the Best Trading Platform and Most Transparent Broker awards in 2017 from FX Empire and Forex-Awards respectively, showed that the industry agreed that easyMarkets lives up to these values.
easyMarkets has always innovated, introducing tools like negative balance protection and guaranteed stop loss back in 2001 – these tools have now become industry standards. This innovation continued with the unique Freeze Rate tool (2005) and dealCancellation (2016) which were both intended to support beginner traders and keep trading transparent and simple. In 2018, easyMarkets won the Most Innovative Broker of 2018 at the World Finance Markets Awards, which was another sign that they are respected as the innovators among their peers. Continue reading
|50% Bonus up to $2000|| CySec|
XM Forex Broker Review
Rapid growth since 2009 has landed XM upwards of 1.5 million clients from 196 countries. XM is considered to be the broker with the most extensive experience and in-depth knowledge of the global financial markets with an operational philosophy that is by ensuring client satisfaction; they earn client loyalty through 24/5 personal customer service, varied account types and competitive trading conditions.
From their start, XM set out to create an MT4 setup with high-speed market execution and a no re-quotes policy. While that policy still exists today, XM has continued to improve trading conditions further by offering accounts with no hidden commissions on trades, tight spreads as low as 0 pips on all major currency pairs, and fractional pip pricing.
XM’s pioneering trading infrastructure earned XM the Best Forex Execution Broker by Shares Magazine’s at the UK Forex Awards 2017, the Best FX Broker Europe at the World Finance Forex Awards 2018, and Best Trading Support for 2017 Award from the Capital Finance International Magazine. Continue reading.
|$30 No Deposit Bonus and then 50% up to $500 and 20% up to $5000 of bonus|| CySec|
How We Compare Brokers in the UK
Since starting Fx Scouts in 2010, we have signed up and traded with 30+ brokers, and turned away more than double as many. To find the best Forex trading broker, we compared them on the following criteria.
- Regulation is trust in the investment business. There are major regulators and minor regulators, and we took all of them into account.
- Trading conditions are the details of the product the broker has to offer the trader, and we compared them.
- Platforms are the software a broker offers traders to trade on and tested each of them.
Forex Broker Regulation
What is a regulated Forex broker?
A regulated Forex broker operates within the boundaries set by governmental regulatory bodies like the FCA, FSCA, CySEC & ASIC that they have signed up with. These regulatory agencies ensure that the broker maintains a fair trading environment while offering strict auditing oversight and protection of funds. A Forex broker which is regulated by more than one International agency is perceived to have more trust and integrity.
Who are the major regulators?
These are the International recognised regulators which are respected the world over for their commitment to protecting client funds. FCA is the national regulator in the UK.
- USA – National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- United Kingdom – Financial Conduct Authority (FCA UK)
- Europe – Cyprus Securities and Exchange Commission (CySEC).
- Australia – Australian Securities and Investments Commission (ASIC)
- South Africa – Financial Sector Conduct Authority (FSCA) – All FSCA Regulated Brokers Here
Forex Broker Types
STP Forex Brokers
A Pure STP (or Straight Through Processing) broker, will never interfere or even see the details of your trade, and the liquidity comes directly from the market. This will mean that if there is no liquidity in the market, a trade will have slippage, and you will get a requote. Pure STP brokers are completely free of conflict of interest with your broker but expect continuous requotes and slower execution speeds.
ECN Forex Brokers
Just as with Pure STP brokers, True ECN (Electronic Communications Network) brokers send your orders directly through to the liquidity providers. But in the True ECN environment, traders have direct access to the Interbank market prices, and thus have an accurate picture of the entire trading environment.
STP/ECN Forex Brokers
An STP/ECN Forex broker is both an Electronic Communications Network and a Straight Through Processing broker. Depending on the trader profile, or the trade itself, the broker will decide which of the execution methods should be used. If there is liquidity in the market for a particular trade, then STP could be used, but if it is better for liquidity to be taken from within the network, then ECN will be used. This combination of execution types is intended to be able to help traders get access to liquidity pools faster, without the broker needing to become the market.
Market Maker (Dealing Desk) Forex Brokers
Market Makers (also called Dealing Desks) provide their client’s trades liquidity by taking the counter-party of the trade and becoming the market. This means that Market Makers are continually trading against their client base, and it opens up a conflict of interest, as when the client earns, the broker loses.
Forex Broker Reputation
Can You Trust A Forex Broker?
There are three things that should be considered to understand if a broker should be trusted – regulation, trade execution method, and client fund management.
The more major regulators a broker has is a strong indicator of the level of oversight the broker, and thus an indication of the level of trust the government regulatory agencies have of them. How the broker is executing your trades, and if a dealing desk is involved in the execution or if there is any conflict of interest between traders and the brokers is also a key component of trust. If there is a financial incentive for your broker to have you lose your trades, this could be seen as making the broker less trustworthy. Finally, if all the client funds are segregated in different accounts at major banks in the local jurisdiction, this is a good indicator of trust. This means that client funds are protected against the broker going bankrupt, and thus more trustworthy.
Do Forex Brokers Trade Against You?
In the case that your broker is a Market Maker then the broker is the market and is trading against you by taking the other side of your transaction. The market maker is simply taking the other side of your position since it’s assumed that most retail FX traders lose money, and they can manipulate the market by trading with larger volumes.
STP and ECN brokers do not have any conflict of interest and do not trade against you.
How do Forex Brokers Make Money?
Depending on the type of broker you are trading with, there are different ways that your broker is making money from you. Forex brokers will charge their clients either a commission or the spread.
STP and ECN brokers will make money from commission, which is calculated on a per lot amount. Since they do not see the details of any of your trades that a trader is making on the market, they can only see volumes traded, and charge you accordingly.
Market Makers will make money from the spread – the difference between the buying and selling price of the currency pair. A Market Maker will also take the other side of your trade, and thus turn a profit when a client’s trade is lost.
Forex Broker Platform Choice
A minority of brokers have proprietary trading platforms while others use platforms like MetaTrader4 and cTrader which are independent platforms which brokers can offer to their clients. If you do choose MetaTrader 4, we have a guide to setting it up here as it can be complicated to get going.
When it comes to choosing a broker, finding the right platform can be a good place to start. If you are an experienced trader with a particular software choice in mind, or if you are a beginner seeking to learn more about brokers and platform options, we have put together a list of the best forex trading platforms available to traders.
Most brokers also have forex trading mobile phone apps available for trading while away from your desktop setup. Some brokers will have developed this own priority software, but many brokers rely on the MetaTrader software for IOS and Android.
Forex Broker Trading Conditions
Spreads are considered either wide or tight and are measured in pips. This is an indication of the buy and sell price for any currency pair are far from each other, or close to each other. If the spread is 15 pips wide, that is considered a wide spread, where a 0.4 pip spread is considered tight. Different brokers will have different spreads on their FX pairs, but to maximise profits, a trader will always find a broker which has the tightest average spreads on the pairs they trade.
Leverage is an amplifier used in trading Forex pairs. This is important because the movements in the market are so small that, if there were no way to amplify the size of the trade, it would be near impossible for individual retail traders to participate in the business. Leverage is presented in a format like 300:1 – in this case, a trader can increase the size of the trade by a maximum amount of 300 times. Leverage varies between brokers, and brokers may also reserve the right to limit a client’s leverage based on their experience
A good broker is going to have 50+ FX pairs, cryptocurrency pairs, commodities, ETFs, and other CFDs to trade. Traders don’t have to settle for FX pairs alone just because you’re seeking a Forex broker, as most FX brokers are CFD brokers.
Forex scalping is a strategy where a trader seeks to profit from the small currency exchange fluctuations. Usually, a scalper enters and exit trades several times a day and the trade holding period is very small (generally few minutes).
Currency hedging is a way of attempting to protect yourself against a negative event that can send the market moving against your initial position. You can think about hedging as a form of insurance if something goes wrong with your trade. Direct hedging is when you buy a currency pair and then at the same time you sell the same pair. If you are looking for brokers that allow hedging, we have a list here.
Forex Broker Account Types
Each broker will have a varying amount of account types, but there is a trend in the industry to have fewer account types available that in years past. The major distinction between account types is between the Live or Real accounts, the Demo accounts, and Swap-free account. Managed accounts are available, but rare.
Live or Real Accounts
These accounts use real money to trade the markets. Everything that you do in this account could affect your account balance.
These are accounts where the funds in the account are fake, and so does not expose a trader to any risks. This gives the trader an opportunity to try the trading platform, customer service, research area, and trading conditions. Some demo accounts are time limited but are usually easy to reactivate, and others are unlimited in how long you can use them. For more on demo accounts, and the best ones available to traders, read here.
Some brokers will do operate a managed account for you, but it is rare. There are also independent money managers who will be able to manage your trades while they are trading for themselves. It is important that you read our piece on managed accounts, and understand the risks involved. It goes without saying that you would look into the performance of the trader, but this is something they are very transparent about.
Conclusion: Which Forex Broker Should I choose?
Traders have different requirements on Forex brokers, and thus there is no single best broker. Above is how we compare brokers and we offer insight into our choices. At the top of the article, there is a list of six top brokers for your consideration.