How to choose a broker in London

When choosing a financial broker your decision will be influenced by a wide range of factors. The first of these of course will be cost and accessibility. On the second point, the internet means that all major brokerages have a global reach, and where the company is based is of less concern than it once was. However, some brokers are only licensed to operate in certain territories, so when choosing an online broker one of the first things you should do is check whether they are able to trade in your country.

There are also advantages to having a broker based in your home country though, and even in the city where you live. London is one of the main financial centres of the world, and London-based trading companies have a reputation for fairness, competiveness and honesty. Even if you are not actually based in London there are many good reasons to choose a broker that is based there.

Brokers based in London (and indeed the rest of the UK) must adhere to strict regulations and meet stringent standards, which means that your money is safer with them than with companies based elsewhere in the world where the rules may be more lax. A genuine financial broker in London will be approved by the UK’s Financial Conduct Authority (FCA).

London financial brokers are also close to where the financial action is, particularly if you are trading on the London Stock Exchange. London is also a centre for forex trading and for markets in a wide range of commodities and assets. As such it has a wealth of different brokers to choose from when you’re looking to buy and sell on one of the different financial markets.

Multiple markets

Exactly which market you are looking at will certainly affect your choice of broker as not every company deals in every form of financial asset. One of the leading multi-asset brokers in London is City Index, which offers forex trading, CFD trading and spread betting. Their custom trading platform can be accessed via your City Index login and offers many unique specialised features, including price tolerance, HTML charts and research tools.

London Capital Group has been trading out of the city for over 20 years and allows a wide-range of asset trading on its custom platform, LCG Trader. With relatively low fees and minimum spreads they are understandably popular, though online reviews suggest that their customer service has room for improvement.

Levels of service

Brokers can be divided up into categories according to the level of service they offer as well as the markets they trade in. Financial brokers can be described as either discretionary, advisory or execution only. A discretionary broker has the ability to buy and sell on your behalf and also to make investment decisions for you without your prior approval; in other words, they offer a full portfolio management service in return for a regular fee. As well as costing more this option requires you to put a large degree of trust in your broker. Nevertheless this may be the best option for a novice investor with a significant amount of capital.

An advisory broker will buy and sell according to your instructions and will also provide financial advice, usually for a fee. Smaller firms are more likely to offer individual advice than bigger ones, although it’s worth noting that expert advice is one of the extra features offered by City Index, above.

Finally an execution only broker will simply execute your instructions to buy or sell and will not offer advice, although their website may still include educational resources and how-to guides. This is the most common form of online brokerage and the most popular, as it costs the least and is simple and easy to access.

Frequency of use

Another question you should ask when choosing a broker is how often will you be using their services? Many brokers in London and elsewhere charge an inactivity fee, while frequent traders are generally charged at a more favourable rate. That said, you should choose your broker according to your needs and not try to adapt your trading habits to what your broker encourages. Over trading in the hope of avoiding fees could be a false economy if you invest more than you can afford or eat into your returns.

London is one of the best cities in the world for choosing a broker, and the list of options is very long. Large, well-established companies are generally safer but every investor’s needs are different. You are sure to find the broker that’s right for you in London if you ask the right questions and research thoroughly.