All You Need to Know About Commission-Free Trading in the UK

  • Trading

Thanks to the increased competition, more and more online trading platforms are now offering commission-free trading in the UK.

At the turn of the millennium, when Wall Street digitalized their trading mechanisms, other big exchanges quickly followed suits. Since then, trading or investing in stocks and other securities became more accessible than ever. As the internet became more and more widespread in the 2000s, more and more brokers also started offering their service through online platforms.

Today, there are several online trading platforms that offer trading and investment opportunities in the UK. As more brokers are joining in now and then, the competition to attract the greatest number of investors is also heating up. Online brokers are coming up with ingenious ways to grab the interest of potential investors; one of which is to offer commission-free trading in the UK.

In this article, today, we discuss all you need to know about this relatively new, yet a highly attractive trading opportunity.

What is commission free trading?

Just like any traditional brokers, online brokers normally used to charge a fee to open and manage a trading account on their platform. Depending on the platform, the cost could vary – both in terms of the amount charged and the reasons behind such charges. One of those charges used to come in the form of commission, a percentage that a trader has to pay for the dealings of a particular trade.

In commission-free trading, the fee is supposed to be totally waived. It means that you don’t have to pay a fee to open a trade, making frequent trading as affordable as ever.

Isn’t commission free trading too good to be true?

Well, in a way, having to pay no dealing fees do sound like something too good to be true. After all, how can a platform survive without an income! However, if you read the phrase commission-free trading in the UK, you would realize it doesn’t say income free trading.

There are several ways a platform makes money. It includes dealing with commissions, spreads (the difference between buying and selling price), deposit and withdrawal fees, premiums subscriptions, etc. The majority of these platforms also offer CFD trading with leverage, and usually charge an interest fee for borrowing. When you factor in all these incomes, it doesn’t seem as unrealistic anymore does it?

How to trade without paying a commission?

As mentioned before, the unique selling point of an online trading platform is to make it as accessible as possible. Therefore, just about anyone living in the UK can take advantage of commission-free trading. All you have to do is to find a reliable platform that offers it and sign up with them by opening a trading account. The rest would be taken care of by itself.

However, to stay safe from getting trapped in a shady online scam, make sure the platform is accredited by an appropriate financial regulator like the FCA.