Best Day Trading Platforms in the UK 2024 | Koody (2024)

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What comes to mind when you hear the term “day trading”? You probably picture an investor sitting in front of four computer screens covered in charts, frantically buying and selling stocks across three different trading software, fuelled by coffee and Deliveroo, so as not to miss a minute of the market action.

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The reality might not be quite as dramatic for many, with the types of investors who pursue a day trading strategy as varied as you’d find across any other kind of investment plan.

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Day trading can be an incredibly complex and dynamic way to approach investing, but as with any form of investing strategy, it can be implemented in many different ways. While it takes a solid base of knowledge on the fundamentals of markets, it is possible to make money from day trading for those with the right education and temperament.

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The temperament, or mental approach, to day trading is one of the critical aspects. Anyone can learn day trading principles, but only some have the discipline to stick to the plan when the markets throw out curve balls.

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In this article, we are going to break down exactly how day trading works in the UK and everything you need to know to learn day trading. We will also share some of the best day trading platforms in the UK, so you know the best places to start your trading journey.

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Best Day Trading Platforms in the UK

We’ve compiled a list of the best day trading platforms in the UK. These are our top day trading apps for buying and selling UK and overseas stocks and shares, exchange-traded funds (ETFs), investment trusts (ITs), contracts for difference (CFDs), foreign exchange (forex), options, and other trading products.
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Please remember that when you trade, your capital is at risk. More than 65% of retail investor accounts lose money when trading CFDs with most of the providers below. You should consider whether you can afford to take the high risk of losing your money before moving forward.
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The platforms listed below are authorised and regulated by the UK’s financial watchdog, the Financial Conduct Authority (FCA).
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Here are the best day trading platforms in the UK:

What Is Day Trading?

Day trading involves actively buying and selling securities within the same day, with the goal of profiting from short-term price changes. It is possible to day trade many different assets, but not every type of investment makes it possible to day trade.

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The most common types of investment for day traders are the public stocks in companies like Apple, Tesla, BP and HSBC. Other investors will day trade markets such as foreign exchange as well as more complex investments such as options and warrants.

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The key factor is that day traders do not hold their positions past the close of the day. Regardless of whether they have made gains or lost money, they will cash out all of their holdings by the close of day and move all of their funds back to cash overnight.

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Because of this, day traders stick to assets with a high level of liquidity. This means that there are always lots of buyers in the market for the investments, so they can always sell them when needed.

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For the purpose of this article, we’re going to focus on day trading stocks, but the concepts are the same for other investments like options and foreign exchange. Some organisations, such as banks and hedge funds, also employ day traders, but we will only be talking about day trading your own money for your own gains.

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The aim of day trading is to take advantage of the daily fluctuations in a stock price. By doing this, traders can make gains even if the overall movement of the stock is down over the course of the day.

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How to Become a Day Trader

You are officially a day trader if you buy a stock in the morning and then sell it before the market closes that day.

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While that is technically true, when most people ask about becoming a day trader, they are referring to using it as an ongoing strategy to make gains and potentially even generate a full-time income from the practice.

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Becoming a full-time day trader requires a high level of education, experience, focus and mental strength. It can be difficult to generate consistent returns over the long term with this strategy, and it comes with a high amount of risk. That is not to say it is not possible, but it is difficult.

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To day trade properly, there are several different steps a would-be Wolf of Wall Street needs to take.

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1. Learn the Markets

Simple to say, challenging to do. Day traders need to be able to understand and analyse a huge amount of information in a very short space of time. To be able to do this, they need to have a deep understanding of markets and how they behave.

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This can allow traders to identify patterns, focus on important information and dismiss unimportant details. Learning the markets to this extent takes time and practice.

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You can learn day trading in many different ways. Articles like this are a great place to start, as well as reading investing books and watching online videos. You can begin to learn day trading with small amounts of money, too. Some platforms, such as eToro, allow you to trade with virtual money if you’re not yet ready to commit your real money.

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2. Decide on Your Trading Strategies

Once you are confident in your abilities, you should start to see which trading strategies work best for you. There are many, many different strategies that can be utilised for day trading.

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Some of these will focus purely on technical analysis, which bases investment decisions on the movement of the stock price on a chart. There are well-known patterns which can form through a stock’s price movement, which can give clues to a trader as to what might happen next.

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Other traders focus more on fundamental analysis, keeping a hawk-eye on social media and the news cycle in an attempt to take advantage of news and announcements that could impact a stock price.

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Finally, some traders use a combination of these strategies or something else entirely, such as AI-based algorithmic trading. We cover trading strategies in more detail below.

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3. Find Sources for Technical and Fundamental Analysis

To become an excellent day trader, you need to be on top of both the technicals and fundamentals of each stock you are trading.

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The best places to find charts for technical analysis are on charting websites such as TradingView, Investors Business Daily, and Nasdaq.

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The best places to find data for fundamental analysis and macroeconomic updates include news sites such as CNBC, The Financial Times, and Investors Business Daily.

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Twitter accounts such as Watcher.Guru, Unusual Whales, and Market Watch are also very helpful.

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Finally, email newsletters such as the daily one by Stocktwits are simply excellent.

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4. Choose a Trading Platform

Now that you have the knowledge and the strategy, you need to get the right tools. For day traders, this is all about speed. In order to be able to execute trades in the most efficient way possible, you need a platform that provides the most up-to-date pricing information and one that can process trades very quickly.

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Depending on the strategy that you are looking to use, a trader will most likely have additional requirements from their trading platform. For example, the best platform for day trading with a strategy focused on technical analysis will benefit from the ability to create detailed charts with trend lines and other notations.

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The best day trading platform for UK day traders will also be different from the best day trading platform for US day traders or those in Europe. It all comes down to the individual trader and what they need, but luckily, there is a wide range of platforms which should provide something for everyone.

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5. Stick to the Rules

Once a trader has done all this and has their strategy in place, the key is to stick to it. Investing can be highly emotional at the best of times, and this is particularly true with an intense, high-paced approach such as day trading.

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It is important to review the success or failures of the strategy being implemented, but this should be done outside of trading hours when emotions can be somewhat removed from the process.

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Best Markets for Day Trading in the UK

You can technically day trade any asset that allows you to buy and sell it on the same day. That rules out investments such as buy-to-let properties, but there is a wide range of other, highly liquid markets to choose from.

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Here are some of the best markets for day trading in the UK:

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1. Stock Market

As we have already mentioned, the public stock markets are where the majority of day trading occurs. Particularly for beginners, the stock market is relatively straightforward to understand, and analysing price movement is simpler than other markets, such as the foreign exchange market.

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Companies trading on the London Stock Exchange make the most sense from a time perspective, but many UK day traders like to also operate in the US markets. With the time difference, this can make for some pretty unsociable working hours.

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You can day trade individual companies, like BP, Tesco or Apple, or you can day trade total indices, such as the FTSE 100 or the S&P 500. This allows traders to make a call on the overall movement of the market rather than a few specific companies.

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2. Foreign Exchange (Forex) Market

Forex markets are very liquid and are a common market for advanced traders. The forex markets operate 24 hours a day (five days a week), so they aren’t specifically able to be “day traded”. However, most traders will simply ensure they do not keep any positions open for longer than 24 hours.

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Forex can be very volatile, and analysis can be more complex than the stock market. This is because, in order to predict the movements of a currency, a trader needs to take into account the whole economic picture of a country rather than simply the impact of the economy on a single company.

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3. Derivatives Market

These are investments whose prices are ‘derived’ from another asset but do not involve investment in the asset itself. Some of the most common examples are options, futures, and contracts for difference (CFDs).

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These are all different contracts which are based on the price of assets such as stocks or commodities. They will move in relation to the underlying asset and often involve some amount of leverage or borrowing. You can also use derivatives to profit when an asset goes down in value, in what is known as ‘shorting’.

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Derivatives can be very complicated, and this, combined with the use of borrowing, means that day trading options and CFDs can be a very risky investment. In the right hands, they can also be very lucrative, but trading this form of asset should be reserved for the most advanced day traders.

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Below is an example of how a CFD works, which shows how day traders can profit from both long or short positions, depending on what they buy.

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Day Trading Strategies

There is no right or wrong strategy when it comes to day trading or any other form of investment plan. Different people will have varying levels of success using different strategies, with the important point being to find which is the best day trading strategy for you.

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Here, we explain a number of the most commonly used day trading strategies:

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1. News Trading

This is a form of fundamental analysis because it relies on carefully watching the news cycle to see how new announcements might impact a company or a market. Even with the pace of media, it can take several hours between when something happens to when it becomes live on news websites, TV and radio.

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It can be possible to react to the news quickly before it spreads mainstream. This requires lightning-fast decision-making, with the most impactful news likely to spread like wildfire.

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Seasoned traders may even be able to predict news that is due to be announced. Certain data or details, such as central bank interest rate decisions or company earnings announcements, have a release date which is announced ahead of time. This can give news traders a chance to make a call on what they think the news is going to say.

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For example, if Microsoft is expected to announce a quarterly loss, but the news trader has conducted extensive research and believes they will actually report a profit, they can take their position before the news is announced.

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2. Swing Trading

Day traders who use swing trading love market volatility. They aim to buy and sell throughout the day as the stock or index moves up and down. This strategy can allow traders to make profits in any market because prices seldom move only in one direction for the entire day.

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Even on the stock markets’ worst days, there are generally short periods of recovery when the prices rebound, even slightly.

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Most swing trading is conducted using technical analysis. This type of research does not consider any fundamental information about a company but rather considers typical patterns that an investment price can follow.

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A simple example is a stock bouncing off psychological levels, such as £100 a share. If a stock price is rising within the £90 range, it will often meet what is known as ‘resistance’ at the £100 mark. This is because it is a psychological barrier for many investors, who will set their maximum purchase price at £99 or £100. There is no fundamental reason for this other than the fact that humans prefer round numbers.

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3. Momentum (Trend) Trading

This form of trading looks to ride longer-term trends within a particular stock or index. While the minute-to-minute pricing of an investment can fluctuate very randomly, over longer periods of time, there are definite trends that develop.

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Longer periods of time do not necessarily have to mean years, months or even days, with day traders able to ride hour-to-hour trends before closing out their positions at the end of the day.

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Technical analysis plays a big part in short-term trend trading, with day traders needing to keep a close eye on the movement to ascertain whether a trend is continuing or reversing. At any time, an upward trend can break downwards, and a downward trend can break upwards.

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4. Money Flow

This trading strategy looks not only at the price action of a particular security but also at the level of volume being traded. Volume is simply the number of shares changing hands, and it can give an indication as to how sustainable a price move might be.

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Money flow is a specific formula that takes the average of the high, low and closing prices and then multiplies that by the daily volume.

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A positive number can suggest that the stock price has the potential to move higher, with a negative number indicating that prices could fall. Essentially, it distils demand for the stock based on whether more purchases were made as the price rose or more were made as it fell.

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This gives some interesting clues on the overall sentiment of the stock or investment. As with all indicators, money flow should not be taken as gospel and is just one tool that can be used to build an overall strategy.

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5. Mean Reversion

The mean reversion trading strategy is a form of day trading where stock traders try to capitalise on extreme changes in the pricing of a particular asset, assuming it will revert to its previous state.

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It is based on the theory that stock prices or any other measure of value, such as price-to-earnings (P/E) ratio, will always eventually move back toward the historical mean. The goal is to use technical analysis, such as moving averages, to discover assets whose recent performance has deviated significantly from their historical mean. Traders using the mean reversion strategy will then look to profit from the return back to the asset’s normal trajectory.

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Day Trading Terms

To succeed in day trading, you need to understand the terminology. Here are some important day trading terms to get you started:

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1. Day Trading: Buying and selling an investment such as a stock or a CFD and then selling it before the end of the day.
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2. Bullish: Positive sentiment that suggests prices are going up.
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3. ‍Bearish: Negative sentiment which suggests that prices are coming down
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4. ‍Going Long: Buying a stock or investment in order to profit if the price goes up.
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5. ‍Going Short (Shorting): Buying a derivative linked to an investment in order to profit if the price goes down.
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6. ‍Scaling In/Scaling Out: Making a move in or out of a position in tranches rather than all at once. This can help manage risk.
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7. ‍Margin Call: If a trader’s position goes against them and they are using leverage to invest (such as with CFDs), the lender may request further security (extra cash) to shore up the position. If the trader has no cash to meet the margin call, the lender will sell down the investment at a loss.
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8. ‍Short interest: The percentage of short positions against the total shares on issue. If a company has 10 million units of stock on the market, and there are two million stocks shorted, the short interest is 20%.
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9. ‍Bid Price: The current best offer to purchase a security. Like at a housing auction, the bid is the current best price to purchase the asset.
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10. ‍Ask Price: The current lowest sale price on offer to sell a security. It is also called an Offer Price.
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11. ‍Spread: The difference between the bid price and the ask price. The larger and more liquid a market, the narrower the spread as there are more buyers and sellers.
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12. ‍Market Depth: The typical level of volume for a stock or investment. Small volumes can make buying and selling difficult because there are fewer traders looking to complete the other side of the deal.
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13. ‍Slippage: The difference between the price you place the trade at and the price you actually receive. For example, if you place an ‘At Market’ buy order on a stock at £10, the market price may move as your trade is being completed. The average price you end up getting may be slightly different, such as £10.02. The extra £0.02 you paid is called slippage.
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14. ‍Stop Order: An automatic sell order when a stock hits a specific price. It can help avoid massive losses by automatically closing a position when it is down a certain amount, for example, 10%.
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15. ‍Limit Order: This is a buy order which sets a maximum amount you are prepared to pay. It limits the amount of slippage but also may mean your total order is not filled.

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Pros and Cons of Day Trading

As you have probably seen by now, there are some interesting opportunities for profits within a day trading strategy, but they do not come without risks and downsides. Here are some of the key pros and cons of day trading in the UK:

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Pros of Day Trading in the UK:

1. The potential to generate profits in any market, no matter whether it is going up or down.
2. Small individual returns can add up to sizable profits if traders are making multiple trades each day.
3. The ability to use personal skills and knowledge to generate returns.
4. Day trading is often a fast-paced and exciting way to invest, particularly when compared to pound cost averaging into index funds.
5. The ability to control your own financial future if you are successful.

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Cons of Day Trading in the UK:

1. Day trading can be a high-risk investment strategy with a significant potential for losses.
2. Multiple trades a day will require high brokerage costs, which can eat into profits.
3. Access to the best data is often expensive. Many brokerage platforms will provide data that is delayed, with real-time information requiring additional subscription fees.
4. Someone classed as a professional trader may have to pay income tax on profits in the UK, not capital gains tax (CGT). Income tax is charged at a higher level than CGT.

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Day Trading Costs

Day traders make money by acting quickly on information or trends before the rest of the market has had a chance to catch up. In order to do this properly, they need access to real-time data and pricing information and the ability to make trades instantly.

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All of this comes at a cost, which can be significant. The gold standard for professional traders at hedge funds and investment banks is a hardware and software combination known as a Bloomberg Terminal.

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A standard licence for a Bloomberg Terminal will cost users over £21,000 per year. Obviously, this is not a requirement in order to day trade, and there are plenty of lower-cost options available that offer a similar level of data and features. TradingView, for example, gives individuals access to similar information at a much lower cost.

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Would-be traders should, however, expect to have to pay for some form of data and analytics tools, as free versions are not likely to offer everything a day trader requires for success.

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The other major cost involved with day trading is brokerage charges. Every day trading platform in the UK will offer a different fee schedule, though many follow a similar pattern. Generally speaking, day trading platforms will charge a percentage-based fee, which reduces as the volume of the trades grows, with a minimum fee for smaller trades.

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Some trading apps or platforms will even offer free trading, but it’s important to understand how those platforms generate revenue. Some will recoup their costs through wider spreads, others will only offer a limited number of stocks or markets, and others will charge different fees for more complex investments like CFDs or forex.

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Day traders should take careful note of how these fees will impact their returns and build trading costs into their strategy and trading rules.

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Frequently Asked Questions

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1. What are the best day trading brokers in the UK?

Here are the best day trading brokers in the UK:

1. XTB - 0% Commission on real stocks and ETFs; 5,600+ Instruments
2. eToro - 0% Commission on real stocks; 4,500+ Instruments
3. Pepperstone - Low cost; Speedy execution; 1,200+ Instruments
4. CMC Markets - Wide product range; 330+ FX pairs; 12,000+ Instruments
5. Saxo - Diverse product range; 71,000+ Instruments
6. Interactive Investor - One free trade per month; 40,000+ Instruments
7. AJ Bell - Low cost; Lots of research; 15,000+ Instruments

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2. Is day trading legal in the UK?

Yes, day trading is legal in the UK, and most UK trading platforms will allow you to trade as frequently as you want. Some of the biggest platforms even reduce their brokerage fees as the volume of your trading increases and provide the tools, support and education you need to become a successful day trader in the UK.

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3. What is the best day trading platform for beginners in the UK?

Here are the best day trading platforms for beginners in the UK:

1. XTB - 0% Commission on real stocks and ETFs; 5,600+ Instruments
2. eToro - 0% Commission on real stocks; 4,500+ Instruments
3. Interactive Investor - One free trade per month; 40,000+ Instruments
4. Hargreaves Lansdown - Lots of research; 15,000+ Instruments
5. AJ Bell - Low cost; Lots of research; 15,000+ Instruments

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4. What software do I need to day trade?

You do not need any particular trading software other than a day trading platform or app. With that said, it is highly recommended to subscribe to a data and analytics platform in order to gain access to real-time news and pricing information. Most elite day traders use a sophisticated software for day trading called Bloomberg Terminal. Others use tools less sophisticated but just as applicable, such as TradingView.

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5. Can I make money day trading?

Yes, it is possible to make money day trading. However, to become a successful day trader, one must take time to develop the right skills, knowledge and experience.

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6. How much money do you need to start day trading?

There is no set minimum amount required to start day trading in the UK. Many platforms will allow you to open an account with less than £100. With that said, day trading takes a significant time commitment, and in order to make a full-time income, you will likely need capital in the hundreds of thousands of pounds.

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7. Do day traders pay tax in the UK?

Yes, day traders pay tax in the UK. Depending on whether they are classed as investors or professional traders, they may pay either income tax, capital gains tax, or a combination of both.

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8. How difficult is day trading?

It is very difficult to generate consistent, long-term profits from day trading. It requires significant amounts of time, knowledge and expertise, which can take years to build.

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9. How many hours a day do day traders work?

The amount of time day traders spend trading on a daily basis will vary widely depending on the strategy being used by a day trader, as well as their target returns and trading volumes. Some traders will work from the minute the market opens to the minute it closes, while others will be able to trade for just 1 or 2 hours a day.

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10. Why do most day traders fail?

Day trading is a deceptively difficult task. One of the main reasons day traders fail is that they allow their emotions to get the better of them. For example, it can be very difficult to watch a portfolio lose potentially tens or hundreds of thousands right before your eyes. This can lead day traders to sell, even when their strategy suggests that they should not.

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