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Interested in forex trading but don’t know where to start? You’re in the right place. We’ve put together a handy guide with our top tips on how to trade forex in the UK.
What Is Forex Trading?
How To Trade Forex In The UK
Choose Your Forex Trading Style
Choose Your Forex Trading Strategy
Select Your Currency Pair
What Are The Forex Regulations In The UK?
Will I Need To Pay Tax On Forex Trading In The UK?
Start Forex Trading In The UK
Key Points
The foreign exchange market, more commonly known as forex (FX), is the largest financial market in the world. According to the Bank of International Settlements, its average daily trading volume was $5.2 trillion as of April 2020 — and more than 40% of forex trading volune comes from the UK alone.
The truth is that it’s relatively straightforward to start trading forex. All you need is an internet connection and some know-how, which is where Trading Education comes in. But if you want to learn how to trade forex successfully, it can take years of experience and research.
Are you keen to gain access to this global market? Read on. Our guide, how to trade forex in the UK, has all the information you need to get started, from finding your preferred trading style to whether or not you’ll need to pay tax on your profits.
What Is Forex Trading?
Forex trading is the process of converting a particular currency into another currency — for example, the British pound (GBP) into American dollars (USD). Firms such as banks and importers need to do this every day as part of their business. However, a large proportion of FX trade in the UK is carried out by individuals who want to take advantage of currency price movements to make a profit.
Individual traders trade forex online using specialist trading platforms or software. These platforms act as their gateway to the interbank market — a network which allows financial ins***utions around the world to exchange money.
Because forex has such a huge daily trading volume, the market can be volatile. This means that although FX trading can be incredibly risky, it also has the potential to bring about huge returns, which is an attractive prospect for many traders.
Traders make a profit when they correctly anticipate a change in price, enabling them to sell an asset for more than they paid for it. In trading, this is known as closing the position.
How Does Forex Trading Work In The UK?
Some of the top popular currencies pairs include:
EUR/USD | GBP/USD | AUD/USD | USD/JPY | USD/CAD
Every transaction that occurs on the forex market concerns a currency pair. This is the name that’s given to a pair of currencies which are bought and sold simultaneously: the base currency and the quote currency.
Let’s take a look at some examples. The most commonly traded currency pair in the world is EUR/USD (the euro and the US dollar). The second most common is USD/JPY (the US dollar and Japanese yen) and the third most common is GBP/USD.
The price of the base currency, which is the first currency in each pair, is known as the bid price. The price of the quote currency, which is the second currency, is known as the ask price. These are usually given to four decimal places, as variations between prices can be very small.
The difference between the bid price and ask price is referred to as the spread. You can work out the spread by subtracting the bid price from the ask price. Spreads are often incredibly narrow, but because FX trading can concern such huge sums, these tiny spreads can quickly add up to massive profits or losses.
How To Trade Forex In The UK
Before you can start trading forex in the UK, you’ll need to open an account on your chosen FX platform. The best platform for you will depend on your trading style and risk management strategy. Examples of widely used forex platforms include MetaTrader 4 and 5.
Your choice of platform will be closely linked to your choice of forex broker. Most brokers will either connect you to the platform they use, or offer their own proprietary platform. Once you’ve set up your account and funded it with a deposit, you’re able to start trading.
That’s the short story. However, to boost your chances of trading successfully, there are a number of key considerations you’ll have to make before selecting your forex broker and platform. To break them down, we’ve created an introductory step-by-step guide on how to start forex trading in the UK.
What Is Forex Trading?
How To Trade Forex In The UK
Choose Your Forex Trading Style
Choose Your Forex Trading Strategy
Select Your Currency Pair
What Are The Forex Regulations In The UK?
Will I Need To Pay Tax On Forex Trading In The UK?
Start Forex Trading In The UK
Key Points
The foreign exchange market, more commonly known as forex (FX), is the largest financial market in the world. According to the Bank of International Settlements, its average daily trading volume was $5.2 trillion as of April 2020 — and more than 40% of forex trading volune comes from the UK alone.
The truth is that it’s relatively straightforward to start trading forex. All you need is an internet connection and some know-how, which is where Trading Education comes in. But if you want to learn how to trade forex successfully, it can take years of experience and research.
Are you keen to gain access to this global market? Read on. Our guide, how to trade forex in the UK, has all the information you need to get started, from finding your preferred trading style to whether or not you’ll need to pay tax on your profits.
What Is Forex Trading?
Forex trading is the process of converting a particular currency into another currency — for example, the British pound (GBP) into American dollars (USD). Firms such as banks and importers need to do this every day as part of their business. However, a large proportion of FX trade in the UK is carried out by individuals who want to take advantage of currency price movements to make a profit.
Individual traders trade forex online using specialist trading platforms or software. These platforms act as their gateway to the interbank market — a network which allows financial ins***utions around the world to exchange money.
Because forex has such a huge daily trading volume, the market can be volatile. This means that although FX trading can be incredibly risky, it also has the potential to bring about huge returns, which is an attractive prospect for many traders.
Traders make a profit when they correctly anticipate a change in price, enabling them to sell an asset for more than they paid for it. In trading, this is known as closing the position.
How Does Forex Trading Work In The UK?
Some of the top popular currencies pairs include:
EUR/USD | GBP/USD | AUD/USD | USD/JPY | USD/CAD
Every transaction that occurs on the forex market concerns a currency pair. This is the name that’s given to a pair of currencies which are bought and sold simultaneously: the base currency and the quote currency.
Let’s take a look at some examples. The most commonly traded currency pair in the world is EUR/USD (the euro and the US dollar). The second most common is USD/JPY (the US dollar and Japanese yen) and the third most common is GBP/USD.
The price of the base currency, which is the first currency in each pair, is known as the bid price. The price of the quote currency, which is the second currency, is known as the ask price. These are usually given to four decimal places, as variations between prices can be very small.
The difference between the bid price and ask price is referred to as the spread. You can work out the spread by subtracting the bid price from the ask price. Spreads are often incredibly narrow, but because FX trading can concern such huge sums, these tiny spreads can quickly add up to massive profits or losses.
How To Trade Forex In The UK
Before you can start trading forex in the UK, you’ll need to open an account on your chosen FX platform. The best platform for you will depend on your trading style and risk management strategy. Examples of widely used forex platforms include MetaTrader 4 and 5.
Your choice of platform will be closely linked to your choice of forex broker. Most brokers will either connect you to the platform they use, or offer their own proprietary platform. Once you’ve set up your account and funded it with a deposit, you’re able to start trading.
That’s the short story. However, to boost your chances of trading successfully, there are a number of key considerations you’ll have to make before selecting your forex broker and platform. To break them down, we’ve created an introductory step-by-step guide on how to start forex trading in the UK.
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