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Microsoft is worth more than the whole stock market of Brazil. 

Shares are all about perceived value. They’re units of ownership in a corporation; pieces of that firm’s value, which could rise or fall in the future. When you buy a share, you’re normally hoping it’ll grow, so you can reap profits, as a stakeholder.

In this guide, we’ll cover the top stock brokers for that.

Table of Contents:

Stock Broker

Our Top Pick of Stock Brokers (UK) ๐Ÿ‡ฌ๐Ÿ‡ง

Considering trading stocks? When crunching your Trading Data, take time to learn your strategy. Adapt to your chosen provider. And use good financial common sense.

But a few key things to know when understanding how you make money in stock trading:

  • Stocks can chosen according to a sliding scale of your risk appetite, with the highest having the potential to reap greater rewards. Stock traders and investors make money by two main methods:
  • When the value of stock climbs during the period that they own it, they can sell it off for more than they paid (including day trading). 
  • And dividends reap regular earnings to shareholders. While not all stocks provide dividends, the companies who do usually pay out each quarter.

Top Stock Brokerages โ€“ Reviews 2022 ๐Ÿ“˜

Service ProviderRating
1. eToroโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
2. AvaTradeโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
3. Interactive Investorโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
4. Plus500โ˜…โ˜…โ˜…โ˜…โ˜…Open Account
5. Hargreaves Lansdownโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
6. CMC Marketsโ˜…โ˜…โ˜…โ˜…โ˜…Open Account

Your capital is at risk.


1. eToro โ€“ Best Overall Stock Broker

You’ll probably already know that eToro has a number of sponsorship and advertising deals worldwide featuring tons of personalities, celebrities, and professional sports teams, which it’s used to build up brand awareness.

But its base offerings are down-to-earth… A key reason to use eToro is the collaborative community numbering in the millions who leverage each other’s knowledge, and the CopyTrade feature that lets you mirror the positions of popular investors who have good track records. 

etoro logoVisit eToro

 

Your capital is at risk. Other fees apply. For more information, visit eToro.

Second is security. The threat of malicious bad actors operating on the platform are reduced because eToro (review) makes it more difficult for these untrustworthy players to use its platform by requiring account verification, otherwise known as know your customer (KYC) – before any access to markets, engagement in communities, or trading can begin. 

Together with things like two factor authentication and minimum account funding, this makes eToro the ultimate passive awesome my passive stock trading platform on the market. Untrustworthy parties tend to pray on free and anonymized platforms. But on the actual asset front, you get exposure to an impressive number of trading types.

Because eToro has such a strong worldwide infrastructure, you’ll be able to jump into over 2,700 stocks with 0% commission, ranging from healthcare to technology, Hong Kong to New York – including fractional shares, so that you can fill your portfolio with brands that vary in size and region, without any caps on trading volume. You can open an account fast. What’s more to ask?

PROS

  • Great for beginners
  • Great news
  • Great social & education features
  • Auto-copy the top traders

CONS

  • No virtual private server

2. AvaTrade โ€“ Best Custom Stock Orders

AvaTrade is something like the advanced version of eToro. While there are automation capabilities, these require a fair bit of technical experience to unlock and use skilfully.

AvaTrade stands out for letting traders customise their orders in a way that is focused on negotiating deals and personalising communications to specific buyers and sellers.

This feature isn’t always offered by training apps, so gives the advanced users more flexibility – over time, you’ll establish unique trade routes. 

As the company was founded in Ireland, they’re regulated by its central bank. But they’ve global branches and therefore good market access for these connections – links include in Australia, South Africa, the British Virgin Islands, and Japan.

Other than just stocks, also trade bonds, ETFs, indices, commodities, and more. There are a bunch of different integrations via third-party platforms you can choose to use, including MetaTrader 4 or the proprietary AvaTrade platform – these all work on mobile (iOS and Android). But note that many of these are more appropriate for seasoned traders, and that includes the negotiation capabilities.

PROS

  • Tons of social integrations
  • Top research
  • Fast account setup

CONS

  • Not beginner-friendly
  • Some currency conversion charges

3. Interactive Investor โ€“ Best Discount Stock Broker

Interactive Investor sprang organically to life in 1995 – beginning as a communication platform for investors, but it’s since evolved into a top discount stock broker for the UK. 

They’ve served over 300,000 investors in that time. Traders choose them when they want a fixed-fee investment broker, in order to minimise uncertainties of trading expenses.

This is around a tenner a month covering multiple counts, with each plan allowing at least one zero-charge trade per month.

Functions are execution-only: within this is lots of bang for your buck, with a focus on straightforward, transparent fees, profit-to-expense ratios, platform intelligence, and competitive pricings. For instance, there’s no charge for transferring between accounts, signing up, or exiting.

On the security front, Interactive Investor has more than two decades of industry performance. They’re fully regulated by the Financial Conduct Authority. Customer trades are stored electronically, with  users being insured by the Financial Services Compensation Scheme (FSCS). Cash holdings are insured up to FSCS limits, with natural segregation of user balances from company finances. 

In short, Interactive Investor doesn’t have access to your funds. What’s more, all electronic transactions are encrypted and organised to strict standards of P&P for ensuring accuracy. With pretty extreme-level customer support, which is why you’ll notice that it’s difficult to find an online trading broker for the UK with as high a volume and average trust score as this company.

PROS

  • 19,000 positive user-reviews
  • 4.7 stars out of 5.0
  • High-trust discount stocks
  • Super clear pricing

CONS

  • Monthly fee

4. Plus500 โ€“ Best CFD Stock Broker

Plus500 specialises in contracts for differences, which means you’ll be speculating on changing prices of stock equities as opposed to directly buying shares in stocks.

The advantages of contracts for differences are several-fold: for instance, you’re able to make profitable positions on stocks regardless of its direction, and leverage is often applicable, so that you can amplify profits.

But the major downside include that the majority of CFD traders lose; furthermore, leverage is a double-edged sword and can also amplify losses – it’s recommended that any nonprofessional CFD traders ensure Plus500’s ‘Negative Balance Protection’ feature is activated.

This very important hedging feature came into play in 2018, under ESMA rules, aimed at protecting retail investors, making it impossible or much less likely for you to lose more money that your account contains. By comparison, stop-losses can sometimes fall behind the speed of the market and lead to positions being closed after the cut-off point. And guaranteed stop-losses incurred in extra charge. So if there are any big moves in the market, happening to churn your position into the red, your losses should never exceed your deposit.

Lastly, they are fully regulated by the FCA, offering much of their services for free. Grab over 70 forex CFDs. But note that they directly connect to the London Stock Exchange (LSE), so your starting position will be oriented from the perspective of European assets and instruments London is most exposed to.

PROS

  • No minimum funding
  • CFD focus
  • Great interface
  • Great user reviews

CONS

  • Commissions
  • Okay-ish education portal

5. Hargreaves Lansdown โ€“ Major Savings and Investment Platform for Stocks

 

Used by the professionals as well as retail investors managing their own retirement and investment portfolios, Hargreaves Lansdown is one of the UK's top performing savings and investments brokers.

Their history traces all the way back to 1981 – they’ve since grown their client-base to more than 1.2 million, and brokerid almost £100B in savings and investments for those clients. This broker is so large they’re even listed among the Financial Times Stock Exchange 100 (FTSE 100) companies.

So it’s safe to say they’re very well-established and trusted. What’s more, their mission statement is to simplify the financial lives of their clients so that it’s easier for them to manage their pensions, savings, and investments – all from a single portal. 

This portal exposes you to a voluminous range of investment opportunities, which include but are not limited to over 3,000 of the best index funds, investment trusts, ETFs, and UK, US, Canadian, and European shares. And despite its prestige, Hargreaves Lansdown is still considered among the best investment portals for traders looking for discount stock broking in the UK. 

In short: a low-cost, expansive and popular stock broker offering tons of funds, government and corporate bonds, and UK and overseas stock equities.

PROS

  • Very well-established since 1981
  • Focused on simplicity
  • Good rates
  • Great index funds

CONS

  • Currency conversion fees

6. CMC Markets โ€“ Best Low Fee CFDs

CMC Markets was founded in 1989, and like Plus500 doesn’t let you directly trade on stocks. Instead, you’ll be speculating indirectly on stock price-changes through contracts for differences.

Which makes for greater potential upside, but on the other hand explosive downside potential.

Once again, it’s therefore crucial for most users to keep ‘Negative Balance Protection’ features enabled, which limits how much your losses can climb, for instance during heavily volatile market periods, and this is more reliable then using standard stop-losses, which can sometimes lag behind in execution then the speed of the actual market.

CMC Markets are of course fully regulated by the FCA, with a strong track-record for serving as clients wellcome up with competitive fee structures and mostly commission free stock trading. Keep in mind that there are two options for the platform – to either use the modern proprietary CMC Markets version (cool and powerful search bar filter functions), or MT4, which is industry-standard. Either way, get pretty good access to the latest research, however the proprietary site is still missing out on two-factor authentication.

PROS

  • Low overall fees
  • CFD focused
  • High user trust

CONS

  • Fees for CFD stocks moderate
  • No 2FA

Best Stock Broker โ€“ Buying Guide ๐Ÿ“Š

Shares offer lots of investment flexibility, which means they can be approached as a short-term investment strategy, long-term for retirement, or even for full-time professional day trading.


Stocks Explained

Whenever you buy underlying stocks in a company, you become a shareholder and therefore eligible to claim a portion of that firm’s earnings and assets (in the event that they go bankrupt).

Shareholders are sometimes called stockholders. And the term “stock” itself is sometimes interchangeable with “equity” and “shares” in modern financial speak.

Most professional finance careers directly handle or relate to stocks in one form or the other, either as a direct bidder, adviser, or stock issuer. More on that last point:

Stock Issuers - Why Companies Offer Stocks

The stock market itself is made up of multiple exchanges where traders and investors can exchange individual shares of firms. But why do these shares and stocks exist?

Companies go about issuing stocks in order to boost the amount of capital needed to grow their business operations or to undertake new ventures.

Up

When company stocks are sold, investors are invited to gain partial ownership in the firm. Early investors in the company can gain an advantage later down the line as the company grows and their stake increases in its market valuation.

“Equity” is one term often used to indicate ownership, meanwhile “equities” are commonly used to describe stocks. (Bonds are sometimes issued in order to raise capital, however purchasing these make holders creditors, without ownership claims.)

If stocks are indeed purchased in a company, claims that can be made according to the form of shares that are owned, include the following:

  • โ˜‘๏ธ Voting claims: Shareholders can vote during the firm’s annual shareholder meetings. 
  • โ˜‘๏ธ Dividends: A fraction of the company’s revenue and assets may be shared with you.
  • โ˜‘๏ธ Capital gains: The most typical motive for investing in stocks; if a company’s value rises, your shares also grow in value (the reverse is also true, if the stock declines so does the value of your shares). 

Being a shareholder doesn’t give claims to influencing everyday operations. And actual influencing annual board beings is usually small or negligible. Owning shares is a mark of trust and/or an investment portal.

What is the Initial Public Offerings (IPO)?

When you hear about an initial public offering (IPO), this means a private limited company has chosen to go public by selling shares of stock to the general public.

Where it is said that a firm is “going public,” this means they are going through an IPO wherein shares are becoming available to buy on the primary investor’s stock market. 

The initial public offering process includes the company announcing the volume of stocks that will be issued and the IPO price point. Revenue gained from this public sale goes straight to the company. After the IPO is being conducted, shares go live on the secondary market – which we call “the stock-market” – and share prices are no longer fixed or fluctuate according to market conditions and other factors.


Market Cap Explained

Market capitalisation is often shortened to “market cap,” and is a measure of a corporation’s gross market value – which itself is rooted in cash-backed market opinion.

This is calculable from the stock exchange. A company’s market cap is the total value of every share of the corporation stock currently held by shareholders.


Market Cap

For instance, a corporation with 10 million shares, valued at £100 per share, would have a market cap of £1 billion.

Market capitalisation is a key financial model that allows investors to make comparisons between corporations, based on gross revenue. It’s a fundamental measure of a company’s size on the market: current supply and demand patterns and leverage – and it’s a concrete metric: what traders and investors have actually put up in cash in that company.

  • โ˜‘๏ธ Large-cap corporations – normally have a market revenue of £7.5 billion or more. These are usually blue-chip corporations, featuring robust reputations for operations, goods and services, steady growth, and a history of predictable cash-dividends. You find a lot of industry leaders in this collection, touting household names consumer audiences recognise on a national level. As a result, large cap stock investments are typically steady trains, with less extreme upside potential, and more resilience to risk then small or large-cap stocks. 
  • โ˜‘๏ธ Mid-cap companies – commonly weigh-in at between £1.5 and £7.5 billion. There is often more upside potential than is inherently found in large-cap corporations. Companies found at this stage of growth have established themselves, but there may be lots of industry-level competition and expansion. Some medium-level companies may be competing for larger market shares, which means upside and downside potentials are higher. 
  • โ˜‘๏ธ Small-cap firms – typically somewhere between £200 million and £1.5 billion. Companies found at this level are typically younger and provision for niche segments or emerging markets. This level of business typically has the most aggressive upside potential and largest risk of the three market levels. But because there is less supply and demand, smaller companies are less resilient to economic or business hits. There is less market predictability, as competition is fiercer. Emerging industries may have more untested components. But the most significant upside potential is found here, for long position holders with a large enough risk tolerance to sudden market slumps in the short term.

Difference Between Stocks & Bonds

Stock vs Bond

Companies issue stocks in order to raise funds for expanding their business or undertaking new ventures. However, the benefits of owning these substantially differ according to whether shares in company stocks are purchased immediately from the company - once it is issued during an IPO - or if shares were bought from a shareholder (via the other secondary public market). In either case, corporations issue stocks in exchange for an investor’s money.

By comparison, bonds differ in a few ways. Firstly, bondholders become creditors, not part owners, of the corporation; receiving entitlements to interest and principal repayment. Creditors have legal precedents over shareholders in cases of bankruptcy and will be reimbursed ahead of them if a corporation has to liquidate its assets to repay debts.

Stockholders, however, are last in the line and typically get no reimbursement, or a few pennies, if a company goes bankrupt. Which in this sense makes stocks naturally more risky investment than bonds. Although shareholders do get dividend privileges and other theoretical part-ownership claims, such as influencing annual board meetings.


FAQs

How Do Stocks Work?

Financial investors issue stocks on behalf of a corporation, in order to raise funds for growing their business or expanding in some way. Holders of stocks (shareholders or stockholders) legally own a fraction of the company and, according to the type of shares bought, have eligibility to claim some of their revenue and assets.

The amount of ownership a shareholder has depends on the amount of shares held in the company’s stock. For instance, if a company releases 10,000 shares of stock outstanding and an individual owns a thousand shares, this gives them a claim of 10% to the corporation’s revenue and assets. There are some key differences between shares purchased on the primary (IPO) and secondary (public) market.

What Types of Stock Exist?

There are two main categories of stocks, common and preferred. Common shareholders are eligible for dividends payouts can also fall in annual shareholder meetings, whereas before shareholders have little to no voting rights. However, preferred shareholders also have dividends and often receive greater payouts, with a larger claim to assets than common stockholders do, in the event of bankruptcy.

How Are Stocks Bought?

Typically, stocks are purchased and sold through stock exchanges, such as the FTSE 100 or the London Stock Exchange (LSE). These become available once a company “goes public,” so that its stock can be exchanged directly. Most commonly, traders and investors use brokerage accounts in order to buy stocks on exchanges, which detail the buying price (bid price) and the selling price (ask or offer price). Share pricing is determined by market liquidity, and other factors.