Many people seeking to maximize their earnings within the financial market have flocked to sectors like the futures trading market. However, some individuals struggle to find a suitable platform that provides them with the services they need. If you’re in the quest for the UK best futures brokers, this is your final stop.
This article discusses everything you should know about the futures market and the best futures brokers to use. Whether you’re a newcomer to the futures trading market, a seasoned trader, or an enthusiast seeking UK-accessible platforms, you will find the information discussed in this article valuable.
How does futures trading work in the UK?
Futures are financial contracts that allow traders to buy or sell an underlying asset at a predetermined price on a specified future date. These underlying assets can include agriculture, cryptocurrencies, rates, energy, stock indexes, foreign exchange (forex), metals, and exchange-traded funds (ETFs). Those trading futures do so to maximize their earnings from calculated speculations and to hedge against risks.
Like other trading activities, futures trading takes place on trading platforms, such as those discussed in this article. They also occur on futures exchanges like the Chicago Mercantile Exchange (CME) and platforms like the MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Although most features are the same across all futures brokers, some platforms offer advanced tools and features (like higher leverage) that enable users to boost their earning opportunities.
Most futures contracts are traded on margins, allowing users to control large contract positions with a small amount of capital. Margins allow futures traders to harness the power of leverage, a feature that determines the potential gain or loss a trader can achieve from their trade.
Regardless of the futures broker you are using in the UK, the working principle behind how futures trading works is the same.
After selecting the desired futures broker, the trader will analyze the market to identify trading opportunities. Next, they are to choose the futures contract that aligns with their trading target. If the trader believes that prices will rise, they can go long. Conversely, if they believe that prices willl decline, they secure a short position. Next, the trader sets the stop-loss and take-profit levels to manage risks and control possible losses. After executing the trade, the trader can monitor the trade and make needed modification based on current market conditions.
Are there any specific features of futures trading in the UK?
Yes. Futures trading in the UK has some unique features. Most brokers that operate from the UK or target UK clients must be regulated by the Financial Conduct Authority (FCA). This provides a level of investor protection and oversight.
However, some offshore brokers also accept UK traders. These brokers are not regulated by the FCA, which means less protection if something goes wrong.
Tax is another important factor. Profits from standard futures contracts are usually subject to capital gains tax. But some UK traders prefer spread betting. It works like futures trading but is treated differently under UK law. The major benefit is that it is tax-free, at least for now. But keep in mind that tax rules can change and depend on your personal situation.
The UK also has access to major futures exchanges. One of the biggest is ICE Futures Europe. It offers contracts for commodities, interest rates, and stock indices etc. Many UK traders also trade US futures through FCA-regulated brokers.
Top 5 brokers for trading futures in the United Kingdom
Here are the top five brokers for trading futures in the UK:
- eToro
- IG
- Interactive Brokers
- Saxo Markets
- CMC Markets
eToro
eToro ranks among the top-rated futures brokers used by traders in the UK. It is reputable for its wide range of supported futures contracts. Futures contracts available on eToro are listed on the Chicago Mercantile Exchange (CME). Users can trade futures contracts on the platform every five business days, Monday through Friday. The platform is registered with the UK’s Financial Conduct Authority (FCA), making it a go-to option for those seeking a regulated interface for trading futures.
The futures broker charges a flat fee between £2.20 and £3.66. It also features educational materials to onboard newcomers to futures trading seamlessly.
Minimum deposit: £36.62.
Deposit & Withdrawal methods: eToro Money, credit/debit cards, bank transfer, Skrill, iDEAL.
KYC: Requires KYC
Level of security: The broker received a SOC 2 Type II Compliance Certification, indicating a high level of security.
Best for Individuals Looking for Regulated Futures Brokers
IG
IG is another platform for futures trading. It allows users to trade futures contracts across over 15,000 markets within the UK market and even U.S.-listed futures. Users can trade index futures for 24 hours every day. The futures broker crowns it all with commission-free and low-commission transactions. Its services are available via its web version and mobile app. The platform also offers a diverse range of media for customer support.
Minimum deposit: No minimum deposit.
Deposit & Withdrawal methods: Credit/debit cards and bank transfers.
KYC: Requires KYC
Level of security: High security level.
Best for a Diverse Range of Supported Futures
Interactive Brokers
Interactive Brokers is a futures broker that enables users to trade futures across more than 30 market centers. It also features various sophisticated tools for advanced traders, including ComboTrader, SpreadTrader, and Index Arbitrage Meter. It attracts users with its “no platform fee” and low-commission policies. The platform has the IBKR Campus, which educates traders on how to understand futures trading.
Interactive Brokers prides itself on being a recipient of various awards as the best futures broker on different platforms.
Minimum Deposit: No minimum deposit is required to open an account. However, a minimum deposit of £1464.61 is required for Margin accounts.
Deposit & Withdrawal methods: Bank transfers and Wise.
KYC: Mandates KYC.
Level of security: High security level.
Best for Sophisticated Futures Trading Tools
Saxo Markets
Saxo Markets is a futures trading platform that enables users to trade over 250 futures contracts from 25 global exchanges. These futures span multiple sectors, including energy, metals, agriculture, forex, and more. The platform allows users to trade with as little as £1 for each lot size. Among the platform’s top trading tools are Depth Trader, Time and Sales, and Futures spread trading. Saxo Markets also offers top-notch customer support to enhance the trading experience for its users. The futures broker has three tiers for users to pay commissions, ranging from Classic to VIP.
Minimum deposit: It has no minimum deposit.
Deposit & Withdrawal methods: Credit/debit cards, bank transfers.
KYC: Requires KYC.
Level of security: The platform adopts a 2048-bit asymmetric key algorithm to protect users’ funds.
Best for Futures Traders Seeking Ultra-Competitive Pricing
CMC Markets
CMC Markets is a UK-based futures trading platform that enables users to trade futures contracts. The futures broker allows traders to trade with leverage up to 1:200 for retail users. Users can trade as small as one-hundredth of a standard lot. The platform offers 12,000 financial instruments. Users can access these services through MT4 or MT5 platforms, as well as the platform’s web interface on mobile devices and desktops.
Minimum deposit: It has no minimum deposit.
Deposit & Withdrawal methods: Credit cards, wire transfers, and electronic fund transfers.
KYC: Requires KYC.
Level of security: High security level.
Best for Micro Lot Trading
6 tips to choose the best futures broker
Here are six tips to bear in mind when selecting the best futures trading platform to use:
- Available trading tools
Trading futures contracts is a complex aspect of the financial market. Hence, each trader needs every tool they can lay their hands on to maximize their earning potential. Some futures brokers have more sophisticated tools than others. When selecting a platform, consider the available trading tools and features.
Notably, some platforms implement a pricing tier on some services or tools, implying that users must pay a fee before using them. It is also vital to consider this when choosing a futures trading platform.
- Customer Support
Another factor to consider when selecting a futures trading platform is the responsiveness of the broker’s customer support team. Most futures brokers will claim to offer 24-hour customer support. However, many tend to fall short of that expectation.
A primary way to assess the quality of a platform’s customer support is to review the comments of other users on websites like TrustPilot. Another approach is to have actual interactions with the customer care team via chat or phone calls, and assess their responsiveness.
- Educational Resources
Futures trading brokers ought to make their platforms as intuitive as possible, especially for beginners. As a result, educational resources are vital to make the onboarding process as easy as possible for newcomers. Most futures brokers have a dedicated section for educational materials to keep users informed about various tools and procedures that may be difficult to understand at first glance. You can keep this in mind when looking for a futures broker to use.
- Regulation
It is vital to ensure that the futures trading platform you choose to use is regulated within the country where you reside. In the UK, for instance, the FCA regulates such platforms. Hence, be sure to confirm if your desired futures broker is registered under the regulatory agency or any other UK regulatory body. Most platforms mention at the end of their website the countries under which they are registered.
- Trading fees
Most trading brokers incorporate fees as a way of generating revenue to keep the platform running smoothly. Still, the trading fees vary from one platform to another. While some may adopt a near-zero or even zero trading fee, others embrace an exorbitantly high fee for trading activities. Some platforms may also include hidden fees or “overnight fees” that reduce traders’ earnings. Hence, it is vital to research the applicable fees when choosing a futures broker platform.
- User interface
Even the best futures brokers will see little usage over time if their user interface is not intuitive enough for average users to understand and use efficiently. Whether the futures trading platform operates on a mobile or web interface, it is vital to consider factors such as the accessibility of the trading tools, the platform’s execution speed, and its reliability. Platforms that are frequently plagued with bugs have a lower likelihood of garnering users’ interest.
FAQs
Is futures trading legal in the UK?
Yes, it is legal in the UK. Various companies, such as eToro and IG, have secured a regulatory license from the UK’s FCA to offer futures trading to clients in the country. However, these futures brokers must offer futures contracts to UK customers in accordance with existing laws.
Which futures trading broker is best for beginners in the UK?
eToro is the best futures trading platform for beginners in the UK. This is due to the ease of creating an account, using the platform, and trading futures contracts on it. It also facilitates seamless navigation through the platform through educational materials. The platform is accessible via mobile apps and a web interface.
What’s the minimum deposit to trade futures in the UK?
The minimum deposit required to trade futures in the UK varies from one platform to another. Futures brokers like CMC Markets have no minimum deposit for trading futures. On the other hand, others, such as eToro, mandate users to deposit a fixed minimum amount into their accounts before trading futures.
Can I trade US futures contracts from the UK?
Yes. Platforms like IG allow you to trade U.S. futures contracts from the UK. Notably, the U.S.-listed futures contracts are denominated in U.S. dollars.
Conclusion
Futures trading is one of the top investment choices for traders seeking to make profits from financial instruments. This article spotlighted five futures brokers that can provide users with the tools they need to maximize their earning potentials. It also highlighted various factors to keep in mind when choosing a futures trading platform. This way, traders can make well-informed financial decisions after careful research.
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