Over the past two years, an increasing number of novice traders have been drawn to online trading platforms in the UK. If you have little to no knowledge of trading in the UK, here we will explain how to get started.
How to get started trading in the UK
The first question many ask is: how much money do you need to get started trading in the UK? Luckily, you don’t need any money to begin practising and honing your skills. Start by focusing on learning how to trade and avail of demo accounts, which allow you to trade with a paper trading account or fake money, which means you simulate trades and get used to the interfaces, graphs, markets and terminology without the risk of losing money.
Once you have familiarised yourself and built up some skills, the next step is to take a closer look at your finances: have an emergency fund set aside of at least three to six months of savings, and look at any debt or credit you owe. Eliminate as much of this as possible, especially those with the highest interest rates, before you start opening and trading on your account.
Next, you need to find your trading strategy or approach. There are numerous strategies that you can adopt when trading. Most traders, especially beginners, are not in a position to buy one share in one of the top performing companies, such as Tesla. It is more attainable to buy a fraction of top-performing shares through one of the popular indexes.
In the UK, the most popular and steady index is the FTSE 100, which is a share index of the 100 companies with the highest market capitalisation on the London Stock Exchange. Other popular indexes include the S&P500, the Dow Jones and the Nikkei 225.
There are now many online brokers in the UK with which you can invest in numerous indexes and assets. Keep in mind that the system in the UK is different from those in the USA or other countries, as regulation in each country is distinct. Whatever your strategy, a key element should be diversification. Diversification basically means putting your eggs in numerous baskets to mitigate risk and potential losses.
You can also invest in a variety of assets, including property, cryptocurrency and stocks, to achieve diversification, but this will realistically take some time to achieve. For beginners trading with an online broker in index funds will naturally provide a good source of diversification. Once you have established that you have stable finances, it is never too early or too late to start investing, even if it means starting with a small amount such as £100.
Resources for beginner traders
Once you have decided on a strategy and approach for your trading, the next step is to avail yourself of the best trading resources. A reputable broker is the first resource you should make use of. When deciding which broker to start your trading journey with, you need to consider your long-term goals and your trading style. It is vital to take some time to invest with a broker that is, of course, legitimate and reliable. UK Brokers for beginner traders offer a wide range of assets, including forex, cryptocurrencies, shares, and stocks. As with any other service provider, there are differences between the various brokers, so taking some time to understand what each offers and which would work best for you is worthwhile.
Don’t go for the first one you see or the most popular one. Make an educated decision.
Take into consideration what regulations each broker adheres to, the costs and fees charged, and what platform is provided. Nearly all brokers in the UK offer MT4, which is the industry standard, as it is the leading platform. Many now offer the option for beginners to copy the trades and strategies of experienced and successful traders online, the ultimate way to learn to trade and build some confidence. There are also some must-read trading and investing books, including Rich Dad Poor Dad, The Four Pillars of Investing, and Buttetology. When it comes to online resources and trading advice, be very cautious. Unfortunately, social media and other forums pressure inexperienced beginner traders to make risky trades and investments.
Conclusion
For beginners looking to start trading in the UK, it can take some time to get used to all that trading terminology, charts, and graphs. Taking time to educate yourself and to find a broker with a user-friendly application, low fees, and demo accounts will pay off in a big way in the future.