How do I Legally Start Forex Trading in the UK?

Is Forex trading legal in the UK?

The short answer to this is yes, Forex trading is legal in the UK. There are only a small number of countries where Forex is actually illegal, including North Korea, China, Cuba, and Iran – none of which are countries widely known for their free market principles. The UK on the other hand, as the 7th richest country in the world with an open market economy, allows the exchanging of currencies completely legally, albeit with some regulatory considerations.

Throughout the United Kingdom, in England, Wales, Scotland, and Northern Ireland, traders can freely engage with the Forex market without breaking any laws.

The presence of rather strict financial regulations on Forex brokers in the UK makes it an ideal environment for Forex traders. The Financial Conduct Authority (FCA) regulates the Forex market in the UK, ensuring brokers adhere to rules and traders’ funds and transactions are protected.

All Forex brokers operating in the UK must be authorized and regulated by the FCA. They are also required to segregate trader funds from operational funds, provide accurate and clear information to traders, and inform traders clearly about the risks associated with Forex. The FCA also regulates how brokers handle customer complaints, how much capital brokers need to operate legally, and brokers’ compliance with Anti-Money Laundering procedures. All of these regulatory measures ensure that the UK is a particularly safe environment for Forex traders, who can exchange currencies knowing that they are protected.

FCA advice for consumers (fca.org.uk)

The FCA recommends that UK-based traders stick to Forex brokers who are registered with and authorized by the FCA. By following this advice, traders can rest assured that their capital is legally protected. However, the FCA is not without its limits. It can regulate Forex brokers operating in the UK but lacks the power to oversee and protect Forex trading conducted with internationally regulated brokers. Some traders may wish to trade through a broker that is regulated in the UK, while others might want to seek out pastures new and trade with brokers around the world. It’s important to know the differences between each option.

Forex trading through a broker that is regulated in UK

If you settle for a Forex broker regulated in the UK, it will be registered with the UK’s FCA if it’s an authorized broker. You would be protected as a consumer under the Financial Services Compensation Scheme (FSCS), which provides compensation to eligible clients if the broker suffers from financial difficulties. On top of this, FCA-regulated brokers typically have well-established customer support services and effective dispute-resolution mechanisms, meaning that any issues you run into should be resolved swiftly.

Forex is legal in Great Britain

FCA-regulated brokers are required to comply with high standards of transparency and disclosure so you would have peace of mind when it comes to assurances over the status of your transactions and capital. You are also prevented from spending above your means using too much leverage because, as a trader with a UK broker, you’ll likely be restricted in your leverage options as the FCA imposes leverage limits to manage risk for retail traders.

Trading through an internationally regulated Forex broker

There are several regulatory differences when trading with a Forex broker that is subject to regulation by a financial authority outside of the UK. Those differences will depend largely on which country the broker is based in, so be sure to do your research into each broker and the regulations in the country it’s based in.

Some jurisdictions may have robust regulatory frameworks, while others may have less stringent standards. For example, Panama does not require international brokers to obtain a license to accept Panamanian residents, whereas the USA requires all brokers to register with the SEC. Protections of investor capital will also vary depending on the broker’s home country, as will compliance and transparency standards. Leverage limits can also vary across jurisdictions. Some international brokers may offer higher leverage, but this also comes with increased risk.

Overall, it’s crucial to make sure that any international broker you consider is regulated somewhere or is registered in a country that has tight regulations in place if you want to be able to trade comfortably knowing your capital is protected. Be careful not to deal with fake or unlicensed Forex brokers, as you will not be protected if you get scammed. We at Traders Union believe Forex should be a safe space where traders can invest safely. We compiled a list of fake Forex brokers in the UK to help you know which ones to look out for and avoid.

Best Forex brokers in the UK?

1

9.4/10

Go to broker

Your capital is at risk.

Minimum deposit:

$100

Bonus for deposit:

0%

Regulation:

ASIC, SCB, CySEC, FCA

Review

Eightcap offers more than 800 trading instruments, namely CFDs [contract for (price) differences] on currency pairs, cryptocurrencies, indices, stocks, commodities, and precious metals. The broker has a minimum deposit of $100, a free demo account, and two live account types, which differ in trading costs. One account type has standard spreads without a fee, and the other has raw spreads that carry a brokerage fee. The maximum leverage is 1:500. Traders can use any strategy with minimal restrictions. Trading is carried out through MetaTrader 4, MetaTrader 5, and TradingView. Eightcap has two main features. First, the broker has a powerful training and analytical base. Second, the platform offers a number of unique tools, for example, Capitalise.ai, which provides automated trading with minimal risk. At the same time, there are no options for passive income, not even a referral program.

Pros/Cons

•The broker is registered in the Bahamas and Seychelles, and is regulated by the Securities Commission of the Bahamas (SCB, SIA-F220), ASIC (391441), FCA (921296), CySEC (246/14). Also, it partners with many proprietary firms;

•Traders need to deposit only $100 to open a live account, and the broker imposes few trading limits on its clients;

•Hundreds of the most popular CFDs are available, and the pool is constantly expanding;

•Eightcap provides one of the most profitable trading costs with really tight spreads;

•Almost all options for depositing/withdrawing funds are available and the broker does not charge a withdrawal fee;

•The broker’s clients can work through any of the three top trading platforms, including mobile versions of the MetaTrader solutions;

•The company provides high-quality training, extensive analytics, and its own developments for automated trading.

•No joint accounts, copy trading, referral program, or other options for passive income;

•Eightcap has some regional restrictions. For example, some services are not available in Australia;

•The broker's technical support is efficient and competent, but it is not available on weekends.

Study Review

2

9.2/10

Go to broker

Your capital is at risk.
76.5% of retail accounts lose money when trading ᏟᖴᎠs with this provider.

Minimum deposit:

€10

Bonus for deposit:

100%

Regulation:

CySEC

Review

FBS (fbs.com) is an international broker operating in 190 countries. The brokerage company has been on the market for over 10 years, and during this time it has earned about 40 international awards. It is regulated by the CySEC under license number 331/17 and provides flexible conditions for Forex trading. In addition to classic currency pairs, the company's clients can trade indices, futures contracts, exotic currencies, and metals. FBS is especially popular in Asian countries such as India, Malaysia and Indonesia.

Pros/Cons

•negative balance protection;

•a large selection of trading instruments;

•the support service works 24/7.

•no cryptocurrency;

•auto copying is not available;

•no PAMM accounts;

•not suitable for short-term trading, such as scalping;

•the support service works in a limited number of languages;

•only two real accounts.

Study Review

3

9.1/10

Go to broker

Your capital is at risk.

Minimum deposit:

$10

Bonus for deposit:

100%

Regulation:

CySEC

Review

TeleTrade was established in 1994. The company won 2018 Traders Union Awards as the Best Broker in Europe. The brokerage company is a member of the Association of Forex Dealers, a self-regulatory organization in the financial market. The company is also regulated by the Cyprus Securities and Exchange Commission (CySEC, 158/11). The European branch of TeleTrade has adopted the brand name Earn.
The broker provides access to trading various currency pairs, as well as metals, stocks, cryptocurrencies, indices, and energies.

Pros/Cons

•detailed analytical section;

•informative educational section.

•no PAMM accounts or other money management options;

•a small range of trading instruments;

•few withdrawal options;

•support is available 24/5;

•withdrawals delayed;

•technical support responds slowly;

•sometimes it takes a long time to verify data.

Study Review

Your location is United States

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How to get started with Forex in UK

So you’ve decided to stick with a UK-based broker - the next step is to begin trading Forex. First, you’ll need to take several important steps to get you off the ground.

1. Choose a Broker: Research Forex brokers regulated by the FCA in the UK, and compare them. Focus on brokers with a solid reputation, competitive spreads, and a user-friendly trading platform. Also, consider factors such as regulatory compliance, which currency pairs are available, and trading fees. Ensure the platform aligns with your trading preferences and financial goals

2. Install Software: After settling on a broker, install their trading platform program or app. Brokers might use popular platforms such as MetaTrader 4 (MT4) or MetaTrader 5 (MT5). Familiarize yourself with the platform's layout, charting tools, order execution capabilities, and risk management features

3. Develop Strategy, and Risk Control Rules: Before diving right into live trading, create a well-thought-out trading strategy. Define your goals, risk tolerance, and preferred trading style (e.g., day trading, swing trading, or position trading). Establish risk management rules and your risk-reward ratio. You could practice on a demo trading account before using real capital if your chosen platform offers this feature

4. Trade and Improve: Monitor your trades closely and analyze both successful and unsuccessful trades, using your successes and failures to continuously learn. Stay updated on market news, economic indicators, and geopolitical events that can impact currency prices, adjusting your methods accordingly. Keep refining your strategy based on your experiences and the ever-changing market conditions

How to choose the best Forex brokers in the UK?

When selecting a Forex broker to trade with, it’s important to carefully consider all aspects of the trading experience they offer. After all, you may be trading with them for the foreseeable future, so the decision should not be made lightly. Research and assess these attributes of each broker before choosing one:

• Fees: Be aware of any fees charged by the platform, as they can eat into your overall profit margin. Understand the broker's spread structure, as this is a primary cost in Forex trading. Look out for any hidden fees or charges that may apply to certain account activities

• Commissions: Check if the broker charges additional commissions on trades and understand how it might affect your overall trading costs

• Platform Stability: Evaluate the broker's trading platform for user-friendliness, stability, and the availability of essential tools. Consider the broker's order execution speed and reliability, as delays can impact the outcomes of your trades. Also, keep an eye out for a mobile-friendly version of their platform if you prefer trading on the go

• Customer Support: Check the availability of customer support, including hours of operation and responsiveness. Assess the various communication channels offered (live chat, email, phone) and the effectiveness of each, and research those communication channels and their effectiveness

You can use online reviews and customer feedback to gather up-to-date information on each platform. Trading forums can also be a great tool for finding out about the experiences of other traders with each platform. However, sifting through all of that information and trying to find a clear answer can be time-consuming. Traders Union conducted in-depth research into the many Forex brokers in the UK, and compiled a list of the 30 best ones.

Popular Trading Software in UK

There are almost too many options for trading software in the UK. There are dozens of platforms to choose from, and finding the best one will largely depend on your goals. You may be looking to make money from trading but without having to make an investment - there are options for this. For example, you could try to generate income by signing up for a broker’s affiliate marketing program, where you get paid to bring new traders to their platform to earn a commission. Or, you might prefer to enter trading competitions, in which brokers offer generous rewards for successfully demonstrating your trading abilities. Alternatively, you may want to become a funded trader through a broker’s prop trading program. Whichever path you want to take, there are multiple opportunities available. If trading without investment in the UK is what you’re looking for, see our article: Best Apps for Trading Without Investment in the UK.

Another approach to trading that you may be interested in is copy trading. Copy trading allows inexperienced traders to mimic the trades of more seasoned traders on the Forex market using the tools offered by trading platforms. Any trade that the seasoned trader enters or exits, along with their take-profit and stop-loss orders, is automatically duplicated by the copy trader. Many UK trading platforms contain copy-trading as a primary feature, but not all. Traders Union has combined the six best copy trading platforms in the UK into one handy list, which you can read here: 6 Best Copy Trading Platforms in the UK.

Tips for beginner Forex traders in UK

If you’re a beginner trader traversing the Forex landscape for the first time, it’s important to know what you’re doing first. Learn all that you can and familiarize yourself with the terminology, trading platforms, market behaviors, and trading strategies beforehand. You can more smoothly ease yourself into Forex trading by following these steps:

• Start Small: You should consider practicing with a demo account using virtual capital before risking real money. Familiarize yourself with your chosen trading platform, test strategies, and understand how the market behaves. When you’re ready, you can invest a small amount of capital that you can afford to lose. As you gain experience and confidence, you can consider increasing your investment

• Learn Everything: Take the time to learn the basics of Forex trading, including market terminology, trading strategies, and risk management. Numerous online resources, courses, and educational materials are usually available on each platform. Continue your learning throughout your trading journey, by keeping abreast of market news, economic indicators, and geopolitical events that can influence currency prices

• Exercise Caution: Stick to your trading plan, avoid emotional decision-making, and don't chase losses. Be cautious with leverage and understand its implications, particularly as a beginner. Implement a solid risk management strategy, only risking a small percentage of your trading capital on each trade

These general rules could also be easily applied to other financial markets too! If you’re eyeing up alternative markets to Forex, consider trading options, cryptocurrencies, or ETFs. Each offers unique trading experiences and opportunities and involves very different learning curves.