Online trading is experiencing a massive surge in popularity, and you can comfortably take part in it if you are living in the UK.
When the stock exchanges started to go digital just before the turn of the millennium, the need to be physically present in the stock exchanges to trade or invest started to get replaced too. Yes, an investor could always skip being present in the exchange and assign a financial broker to conduct the trading activities on their behalf, but it’s not quite taking control of their money.
Thanks to the introduction of online trading platforms, it is now possible to avoid leaving the home entirely, yet performing all the trading-related activities. All you would need is an online platform, a trading account, and an internet connection. The rest would happen at the palm of your hands.
So, let’s find out what online trading is all about and how you can do it from the UK with a trading account from below.
What Does Online Trading Refer To?
Trading refers to the act of buying and selling goods and services, while online refers to ‘on the internet’. Hence, online trading is a term that refers to the act of buying and selling on the internet. In financial terms, however, the goods and services get replaced by securities and other financial instruments traded on the capital and currency markets.
It is a straightforward process, using which, any individual with some initial capital can open an account and start trading. Many financial institutes including online brokerage firms and banks offer trading account services, which are then used to perform trading activities on the internet.
How Does it Work?
Online trading entirely replaced the open outcry system traditionally used by stock exchanges for investing and trading. Today, instead of having to be present in the exchanges, a trader can buy and sell assets and securities over the internet. All the activities happen via a dedicated online platform, which is managed by a brokerage firm and allows the users to open an account for trading.
The brokers are usually regulated by different financial governing bodies. The platforms need to fulfill certain criteria set by a government authority, which largely depends on the nation it operates in. As a result, different online train platforms in different countries may often have different features, account opening, and management procedures, different instrument availability, etc.
Carrying Out Online Trading in the UK
Online trading UK platforms need to comply with all the local laws, which are regulated under the FCA. So, the prospective trader must find a platform that is legally eligible to offer trading services in the country.
To open a trading account in the UK, the user also needs to be a resident in the country and have a valid bank account. While the rest are pretty similar to other nations, the UK may also have certain restrictions on certain assets and securities.