Choosing an Online Stockbroker in the UK

Have you ever thought about trading or investing in stocks? Perhaps you were put off, concerned that it would require too much initial capital, or that transaction fees were too high. This article explores how much more accessible the stock markets are to the average person in the 21st Century.

The internet has massively leveled the playing field when it comes to access to stock markets. You used to have to phone up a stockbroker everytime you wanted to make a trade, and that broker and his firm would charge horrible fees each time you bought or sold shares in a company. This meant that unless your account was pretty high in the 5-figures range, it wasn’t worth it. This is no longer the case.

There are now dozens of firms offering online “execution only” accounts, which charge MUCH lower trading fees. You no longer have to talk to a person in order to trade, and many online accounts come with user-friendly interfaces to help you place trades online.

As the name implies, execution-only accounts come with no advice. No expert will be there to hold your hand. This means it is even more important to educate yourself before you begin investing or trading. I would recommend that before investing in stocks -as an absolute minimum- that everyone should read the classic The Intelligent Investor (LLB book summary coming in the next few weeks), and make sure they understand the concepts of a sell-stopand an index fund .Another useful bit of preparation is to try trading “virtual stocks” for a few months: These accounts reflect real-life market prices and fluctuations, but the money is fake. There are plenty of sites offering this service. I used Wall Street Survivor before investing real money, and found it a helpful exercise.

Once you feel confident, it’s time to pick a broker! Here in the UK there are loads from which to choose. I’ve put together a brief (and by no means exhaustive) list of firms with their price per trade, and a few other notes:

In fact, there’s actually a sharedealer comparison site for the UK:http://www.sharedealing.org.uk/

The purpose of this article is not to recommend one broker over another – you should do your research and make that decision. Instead, it’s just to alert you to the fact that there are LOADS of online accounts out there that will charge you less than £10 per trade. There is no need to get ripped off by your high street bank, or pay stupid quarterly fees.

Welcome to the 21st Century.

We are not finance experts. Please don’t take our advice and then try and sue us. Thanks