Best FOREX Brokers in the UK for 2024

Best FOREX Brokers in the UK for 2024

Top Tips for Selecting the Best FOREX Brokers in UK

Top FOREX Broker in UK- Complete List

What is FOREX and Why Do We Need a Broker to Trade?

For every FOREX trader, it is good to know that the FOREX market is the largest financial market in the world with some six trillion dollars’ worth of deals taking place daily. In this decentralized market, currencies are bought and sold electronically over the counter (OTC). The FOREX market operates 24 hours a day, five days a week, excluding international holidays. This article will help you understand the implications of round-the-clock trading for market participants. Explore the pivotal role of FOREX brokers in the UK, facilitating clients' participation through trading platforms. The best brokers have accessible trading platforms that are accessible in both web and mobile formats.

How Do I Choose the Best FOREX Broker in the UK?

Owing to its excellent regulations, mature investing culture, and high levels of personal disposable income, the UK is home to an extensive range of brokers. In fact, many of the world’s most successful FOREX brokers cut their teeth in this market in the late 1990s.

Regardless of where they are based, you must first be satisfied that your FOREX broker is well-established and reliable. The best FOREX brokers are regulated by tier-1 regulators who will enforce stringent rules to ensure the safety of investor funds. Thereafter, you must assess the broker on important aspects, like how long they have successfully been in business, how well-managed they are, and the strength of their platforms and service offerings.

Concerning features, a broker must demonstrate that it has a robust trading platform, extensive access to markets, and rapid order execution. A good broker will normally tout its level of liquidity and the number of blue-chip financial partners with which it works. It’s important to check if your broker has a good customer service desk with client-friendly hours. Another important factor is to verify how easily you can transact with the broker in terms of deposits and withdrawals.

Regulation and Licensing in the UK

FOREX trading is entirely legal in the UK. Firms must be registered with the UK Companies House. Traders can check their broker’s registration details and information about the company directors on the Companies House’s Website.

UK FOREX brokers must be authorized and regulated by the FCA. This is a strong indicator that they are a safe bet for clients. As a member of the FCA, firms must offer investor fund protection to the tune of £85,000 through the Financial Services Compensation Scheme (FSCS). These rules also mandate negative-balance protection for traders and ensure that only suitably qualified people can run FOREX firms.

FOREX brokers also must keep client funds segregated from operating funds. Firms are also encouraged to be compliant with the European Markets in Financial Instruments Directive (MiFID), as well as MIFID II. This legislation is designed to increase transparency in financial markets through standardized regulatory disclosures.

The FCA is rightly considered as one of the best regulators around. Therefore, UK traders can rest easy knowing they are well-protected. If UK traders go in search of brokers in other jurisdictions – perhaps they are looking for higher leverage than is allowed in their home country – they should be careful to engage with brokers covered by fellow tier-1 regulators, such as the Cyprus Securities and Exchange Commission (CySEC). Even so, if this is not possible, as long as your broker is regulated by the appointed regulator in its jurisdiction, that is a good start.

While the FCA is the pre-eminent regulator in the UK, there are other major regulators around the world. If you want to read more about some of the best-regarded regulators, read our article on regulation here. When a broker is under the watch of a regulator, it undergoes stringent assessments to ensure transparency and fair trading practices. Opting for an unregulated broker brings with it significant risks.

Leverage

Depending on the regulator under which your broker works, you will encounter different policies relative to leverage. Key regulators have implemented specific rules to limit the leverage offered to retail traders as a means of consumer protection.

Here are selected leverage rules according to some key regulators:

FCA, UK: 

30:1 for major currency pairs

20:1 for non-major currency pairs, gold and major indices

10:1 for commodities (excluding gold) and non-major equity indices

5:1 for individual equities and other reference values

2:1 for cryptocurrencies

These limits are in place to reduce the risk of significant losses for retail traders.

Swiss Financial Market Supervisory Authority (FINMA), Switzerland:

FINMA has not set specific leverage limits. However, Swiss brokers must adhere to rigorous capital and risk management requirements, ensuring they don't offer excessively high leverage that could endanger their solvency or their clients' funds.

Australian Securities and Investments Commission (ASIC) Australia:

30:1 for major currency pairs

20:1 for non-major currency pairs, gold and major stock market indices

10:1 for commodities other than gold and minor stock market indices

5:1 for equities (stocks) and other underlying assets

2:1 for cryptocurrencies

It's worth mentioning that these rules mainly target regular individual clients. If you're a professional trader, your access to leverage might vary depending on both the rules in place and the policies of your broker. As you can tell, diligent regulators keep a close eye on how much leverage is allowed. Nevertheless, you can still use a regulator from your own country, even if it doesn't fall under the category of a top-tier regulator.

Stop Out and Margin

As a FOREX trader, it's crucial to understand the most important terms you'll encounter to avoid going into a negative balance. One of these terms is "stop out," which refers to a situation where a broker automatically closes some or all of your open positions to prevent your account from going into a negative balance. 

This is especially relevant for traders using leverage. The stop-out level is typically expressed as a percentage, representing the margin level at which the broker starts to close out open trades. Stop outs are bad news. It means something has gone awry with your planning. We will explain what we mean.

Here are the three most common stop-out levels:

0% Stop-Out Level: 

At this level, when the margin level of the account drops to 0%, the broker will automatically close all open positions. This is the most aggressive stop-out level, and it gives no room for your positions to recover, even if the market turns in your favor immediately after reaching this level.

Here's how it works:

Imagine you have a trading account with a balance of £1,000, and you've opened several positions in the market. Your broker has a 0% Stop-Out Level policy, which means that if your margin level drops to 0%, the broker will automatically close all your open positions to prevent further losses.

• You start with a £1,000 trading account balance

• Using 30:1 leverage, you can control £30,000 worth of currency with your £1,000 account

• You open a position in GBP/USD with a notional value of £30,000, and the margin required for this trade is £1,000 (3.33% of the notional value)

• The market moves against your position, causing your account balance to drop to £900

• If your losses accumulate, your account balance decreases and your margin level (account equity divided by used margin) drops accordingly 

• When it reaches 0%, the broker's 0% Stop-Out Level policy comes into play

50% Stop-Out Level: 

Here, if the margin level drops to 50%, the broker will start closing out positions. It offers a bit more flexibility compared to the 0% level. The broker will typically close the most unprofitable positions first, and if that's not enough to bring the margin level back above 50%, more positions will be closed until it's achieved.

100% Stop-Out Level: 

A 100% stop-out level means that when a trader's equity equals the margin required for the open positions, the broker will start closing those positions. It's important to know that this is similar to the 0% level, but might be worded differently, based on broker terminology.

Keep in mind that the specific percentage and the order in which positions get closed can vary from broker to broker. So, traders must know their broker's stop-out policy. It's worth noting that while stop-out measures are designed to shield traders from going into the red, they can also result in substantial losses, especially in volatile markets where positions are swiftly closed automatically, especially if the market suddenly reverses post-stop out. That's why you should always employ protective strategies, like setting stop-loss orders and avoiding excessive leverage.

Commissions and Fees

Trading fees can sometimes be difficult to track. Be sure to check how these fees compare with industry standards:

Spreads: There are two main kinds of spread, one is fixed and the other is variable. Generally, the spread refers to the difference or gap between two prices, such as the bid/ask rate in a currency exchange rate. An example of a good spread is 1.4 pips for the EUR/USD (the narrower the better, this means that a spread of 1.4 pips is better than a spread of 2 pips). This article explains more about this important concept.
Commission: This is nothing more than the service charge that brokers require for carrying out transactions on behalf of their clients.

Rollover fees: When you leave a trade open overnight, the broker normally charges a rollover fee for the facility of holding your trade open for that period. This is because they assume the risk of the market changing adversely.

Withdrawal and Deposit Fees: Some platforms might charge fees for depositing or withdrawing funds. Pay attention to this. It's important to be aware of these and any associated limits or conditions.

Subscription or Inactivity Fees: Certain platforms have monthly charges or fees for inactive accounts. Ensure you're aware of these potential costs.

Tradable Assets and Instruments

Online trading offers a wide range of financial instruments, each with its own opportunities and challenges. Here are some of the most common:

• FOREX: This is why you are reading this article. This type of trading involves buying and selling currencies from different countries on the foreign exchange market with the goal of making a profit. This is done through a broker with an online platform, like MT4 or MT5. FOREX brokers provide tools to traders for executing buy and sell orders in the currency markets.

• CFDs: CFDs allow traders to speculate on the future market movements of an underlying asset without actually owning or taking delivery of the asset. CFDs are traded on margin, meaning the broker allows investors to borrow money to increase leverage or the size of the position to amplify gains.

• Equities or stocks: These represent ownership in a company, and trading them involves buying and selling shares of publicly traded companies.

• Commodities: Items of value such as gold, oil, wheat and coffee can be traded through a broker or online trading platform.

• Indices: These are a measure of the performance of a group of stocks or other assets. Trading indices involves buying and selling a basket of stocks or other assets that make up the index. Some key indices include the UK 250 and the Germany 40.

• Bonds: These are debt securities issued by companies or governments to raise capital. When you buy a bond, you are essentially lending money to the issuer, who promises to pay you back with interest later.

• Options: Options are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and time.

• Futures: These types of contracts obligate the buyer to purchase an underlying asset at a predetermined price and time in the future. This is done through a broker or online trading platform.

Payments, Deposits and Withdrawals in the UK

FOREX Trading Customer Service

• Quick resolution of issues
• Educational support
• Assistance with queries during volatile markets
• Account security
• Customized advice (although not all customer service desks offer this)
• Technical assistance
• Regulatory compliance queries

Technical Aspects of the Broker’s Website

When it comes to sharing sensitive personal information online, such as a credit card number, cyber security is paramount. You should, therefore, always look out for SSL certification and two-factor authentication (especially when registering with a new site). Be sure to use a safe password.

Trading Platforms, Tools, and Features

FOREX brokers in the UK offer the same set of tools you can find in any developed market. The best brokers offer advanced algorithmic trading that can support large volumes of trades with high uptime and little lag. Brokers can also offer electronic assistance (EA) and high-end market analysis and insights.

When picking a trading platform, it's crucial to consider what works for both beginners and experienced traders. Here are some things to consider:

Customization and User-Friendliness: You should be able to tweak the platform to match your style. Within the MetaTrader product family, both MT4 and MT5 are known for their excellent customization features. Here’s a comparison between the two.

Platform Accessibility: Whether it's web-based or downloadable, a good platform should give you options to trade at your convenience, any time, on any device.

Technical Analysis Tools: Look for a platform that has solid technical indicators. They are useful for making smart trading decisions.
Risk Management Tools: Trading is risky. A top-notch platform should allow you to set stop-losses and take-profits to manage those risks.

Performance and Reliability: As a newcomer, you should be looking for a platform that runs smoothly when called upon.

Learning and Help Resources: It's a boost if the platform is not only visually pleasing and customizable, but also comes with guides and support to help you when you're stuck.

To choose the perfect trading platform, here's what you can do:

• Determine your trading style and needs.

• Research different platforms and compare their features.

• Test the platforms with a demo account to see which one suits you best.

• Choose a platform that offers the features you need and is user-friendly.

• Ensure that the platform is reliable and has a good reputation in the industry.

Remember that the trading platform you choose can have a significant impact on your trading success, so it's important to choose wisely.

Ask Other Traders on Our Network

Arincen’s Website features a powerful social network where traders can learn from each other in a supportive community. Every trader starts out as a novice, and it helps to be able to watch and study the trades of other, more experienced investors. This important feature has allowed many traders to make their learning curve less steep and expensive.

FOREX Trading Scams and How to Avoid Them

The anatomy of a FOREX trading scam involves criminals creating a clone FOREX broker website with basic functionality to dupe novice investors into thinking they are trading with a legitimate entity. These novice investors are lured to these websites on the promise of quick wins and handsome profits.
Traders may start “making money,” which is nothing more than a confirmation within the website that the traders have been successful in selected trades. When they try to withdraw their funds, they normally run into trouble, with nominated contacts becoming hard to reach and the website announcing that it is experiencing technical trouble.
The above example is a classic instance of one of the early trading scams. Over time, criminals have become more sophisticated and daring, not to mention that many scams are perpetrated by insiders working at FOREX brokers, often it is the owners themselves!
The best way to avoid being scammed is to check that the broker you are using is regulated by a trustworthy regulator. Any broker regulated by the FCA has had to undergo the most stringent vetting of their operations anywhere in the world.

Will Your Money Be Protected if Your Broker Becomes Insolvent?

The Dos and Don’ts of FOREX Brokers

1.  The FOREX brokerage firm cannot recommend a buy or sell;
2. The FOREX brokerage firm must not provide price or market expectations (rise/fall);
3. The FOREX firm cannot control your financial dealings (deposit/withdrawal);
4. The FOREX brokerage firm should not “manage” your portfolio under any circumstance;
5. The FOREX brokerage firm cannot grant a client a bonus unless there are clear terms guiding it beforehand.
6. The brokerage firm must not use bank accounts not under its name; and
7. FOREX brokerage firms cannot have or offer the service of account managers.

Which FOREX Broker Has the Best Platform?

Which is the Best FOREX Broker for Lowest Fees and Spreads?

After conducting thorough research, we can say with confidence that ICM’s ECN account offers the best low fees and spreads for any kind of trader.

Which is the Best FOREX Broker for the Most CFDs?

Which FOREX Broker Offers the Most Assets?

Which FOREX Broker is Best for Professionals?

What Is Arincen and What Do We Do?

Arincen’s Review Methodology

The team at Arincen collected more than 120 pieces of data covering more than 100 licensed FOREX brokers. Data collection was done in three ways:

1. Companies’ websites.

2. Other websites that have ranked FOREX companies.

3. A survey questionnaire (referred to here as Survey “1”) was sent to the companies invited to participate in the exercise. We have identified 13 criteria for our assessment, each containing several aspects and carrying its relative weight. These include licensing, deposits and withdrawals, number of assets, etc.     

Afterwards, we validated the data by:

1. Registering with FOREX companies as a secret shopper and/or as Arincen.

2. Survey number “2,” in which we asked these companies’ customers for important feedback and experience.

 The next step saw us evaluate and rank each company, relying on the hard work of 15 Arincen employees. We were very careful in ensuring the most accurate assessment possible, including considering different languages, as well as the various mobile-app operating systems, e.g., Apple, Samsung, etc.

To add credibility to our research project, we sent a final and third survey (referred to here as Survey “3”) to enable participating FOREX companies to evaluate our research and whether it accurately reflects the realities on the ground. We were fortunate enough to receive a mark of 9.9 out of 10! We have kept to a minimum the margin of error, which stood at a measly 1%.  To learn more about how we came up with the evaluation, please click here.   

Conclusion