Broker to Trading

The comparison table has a list of prominent brokers in the UK offering trading in Contracts For Difference (CFDs). CFDs allow the trader to trade a market without owning it. CFDs reference the value of the market, providing a way for the trader to speculate on changes in the value of the market.

Since there is no need for the trader to own the market, leverage can be available. Increasing leverage increases risk. The value of a trading market can be volatile and can move against the traded position.

With leverage a trader can take a position by putting up less than the full cost. However they are still exposed to the effect of the full value of the trade on the account as it moves in or opposite to the traded position.

With high leverage a trader can trade a market without having sufficient capital in their account to withstand fluctuations in the value of the market. No matter what the size of the account increasing leverage can accelerate the rate of losses in the account as a position moves against the trader. With this in mind, maximum leverage has been limited in the EEA, as well as a stop-out level set at 50% of the account value.

Thus at UK brokers the trader can trade with a series of protections, from knowing the percentage of retail traders losing money at the broker, to protections on the capital in the form of limiting leverage and increasing the stop-out level as well as negative balance protection, which prevents the trader from being responsible for account balances which go negative.

The trader is still exposed to the risks involved in trading markets. The brokers in the table provide online trading platforms which offer tools to enable the trader to analyse markets. However no market analysis allows the trader to predict the value movement in the future, as it is typically based on repeated patterns which have happened in past market data. The patterns may well still repeat, but it is unknown when they will repeat. Thus trading is speculation on value movement, which may be incorrect.

Trader may wish to use a platform like MT4, which allows the trader to trade CFDs using automated trading strategies, but it needs to be borne in mind that while robots may have an advantage in terms of speed and accuracy of placing trades, they will not necessarily perform better than a human trader.

Any trading system which works in the past will not necessarily work when actually run in the live market, for reasons related to why a trading plan (or rules) based on analysis performed by the human will not necessarily produce the expected outcome. This said analysis is worthwhile as it provides a rationale for making a trade and can help produce entry and exit points as well as helping to manage a trade.