Best stock trading apps for beginners

Best stock trading app for beginners

Other stock trading apps for beginners

Best stock trading app with an ISA

Our criteria for comparing the best trading apps for beginners

We’ve reviewed all the best trading apps for beginners in the UK, so that you can start trading stocks quicker!

Here’s the criteria we’ve used to determine the best:

• Range of investments (assets, like stocks and shares)
• Trading app experience
• Costs
• Trading features (such as limit orders)
• Customer reviews

That’s pretty much everything you’d want in a trading and investing app.

The stock trading apps (also called stock brokers) we’ve listed above are the ones we believe are the best out there. They’re ones we recommend to our friends and family too. Rest assured, whichever one you decide to use, you’ll be using one of the best.

What’s the best trading app for beginners?

You’re in the right place if you’re a beginner. All of our recommendations above are perfect for beginners, although to varying degrees. 

However if we had to choose one we'd recommend getting started with XTB¹. Their platform is great for beginners and people who aren’t quite sure how to actually buy stocks or shares yet, or which stocks and shares to buy. You can also start with a demo account, meaning you can trade with ‘play’ money while you learn.

Plus, there’s a huge range of educational resources to learn more about trading.

What’s the best free trading app for beginners?

Who wants to pay fees these days?! The great thing about online stock brokers and trading apps, well some of the more modern ones, is that they’re super low cost. They’re often commission-free (that means no fees to buy and sell investments), and have zero or very low account fees (that’s the fee to hold your investments).

The best stock trading apps we’ve listed above are all low cost.

With modern brokers, the largest cost you’ll actually have to pay is a currency conversion fee, to convert your Pounds to Dollars (or other currencies) when you want to buy shares from a different country (more on this later). Although it’s a fee, you’ll pay this with all brokers.

What is stock trading?

Stock trading and investing is where you buy shares and other investments on stock exchanges (places to buy and sell investments, often called the stock market).

However we like to define stock trading a bit differently to investing. Investing is often seen with a long-term view, so you might invest in some stocks and shares now and not sell them for many years.

However with stock trading, it’s more about the short-term. You might buy some stocks today, and sell them by the end of the week, or the end of the month, hopefully for a profit. 

Sometimes you might even sell them on the same day, which is called day trading. This is pretty popular, and many people make a career out of it. However, it’s definitely not for beginners!

If you’re looking to invest, rather than trade, we’ve got a guide to investing for beginners, and check out our best investment platforms.

Trading is also super popular with cryptocurrencies. If you’re interested in crypto trading, check out the best crypto exchanges.

What’s a stock exchange?

A stock exchange is a place to buy and sell shares of companies. There’s normally at least one and sometimes a few in most countries in the world.

For instance in the UK, we have the London Stock Exchange (LSE), and in America they have the New York Stock Exchange (NYSE) and a few others.

Shares on a stock exchange are from companies who have decided to sell their shares to the public (so people across the world, sometimes these are called retail investors). 

This is normally done as a way of raising cash and to allow their shareholders (people who own the company and shares), to sell some of their ownership and realise the value of the business they have been building. 

When a company first issues shares on a stock exchange, it’s called an Initial Public Offering (IPO).

What’s a fractional share?

When you want to buy shares of a company, traditionally you’d have to buy a whole share, i.e. you buy 1 share, or you might buy 10 shares. However with fractional shares, you can buy less than 1 share – you can buy a small portion of 1 share, a fraction of a share.

This is great because some shares are pretty costly! Some can be well over £1,000. This is often a bit too much money for most investors and often doesn’t make sense to invest that much in a single company if you don’t have a big portfolio (the total value of your investments).

And that’s where fractional shares come in. You can invest as little as you like into a company, and you don’t have to worry about buying a whole share.

Let’s take Netflix as an example. It was $600 per share at one point. Quite a bit! Maybe you only want to invest $100 in Netflix. So, you can buy a fractional share of Netflix with your $100, and you’d have ⅙ of a share. As simple as that.

It acts exactly the same as a whole share. You’ll still get dividends if a company decides to pay them (which is when a company pays out its profits to its shareholders). They’ll just be at the same rate as the fraction of the share.

Note: you can’t buy fractional shares with every stock broker. Only some of the modern ones (all of the ones we recommend).

Types of investments

Here’s what you can typically trade (buy and sell) on a trading app:

Stocks and shares

Stocks and shares are where you own a tiny part of the company, a share of the company.

A company can be made up of billions or shares if it’s a public company listed on a stock exchange – which is where shares are freely bought and sold to the public.

Or if it's a private company, where it's not listed on a stock exchange, and the public cannot buy shares. Then there are sometimes just a few shares, and sometimes even just 1 if there’s only 1 founder (the owner).

Exchange-traded funds (ETFs)

An ETF, or an exchange-traded fund, is a group of shares combined into one single investment. How good is that? They’re super popular because they make investing easy and cheaper.

A great investing strategy is to buy a wide range of investments, called diversification, or simply not ‘putting all your eggs in one basket’. And this is where ETFs come in.

Buying an ETF means you don’t have to go and buy all the individual shares from all the different companies that you want to invest in, they are effectively pre-packaged investments. Which means you save on fees and time researching and buying stock and shares yourself.

ETFs are grouped together in many different ways, there’s thousands of ETFs out there! 

Common types are ones that represent a whole stock exchange or a part of one, such as the top 100 companies in the UK (listed on the London Stock Exchange), which is called the FTSE 100. You can simply buy a share of an ETF that tracks the value of the FTSE 100. Pretty cool.

ETFs can also be grouped by themes, so they could be companies in the electric vehicle industry, or green energy or even things like artificial intelligence. The possibilities are endless!

If you only want to invest in ETFs, check out InvestEngine¹. They only offer ETFs, but there’s no fees! Sounds too good to be true, but it’s real.

Foreign exchange (forex)

With some trading apps, you can also trade currencies, such as Pounds (GBP) and Dollars (USD). Simply to try and profit as much as possible. They often reflect whole countries' economies (how rich a country is), and so move around constantly with big news stories and things that happen across the world.

Trading forex is super popular and the trading volume is huge (the amount of people trading and how much money is actually traded).  

By the way, if you want to convert currencies, check out our handy currency converter tool.

Stocks & Shares ISA

Now here’s where things get interesting. A Stocks and Shares ISA lets you save and invest money completely tax-free!

That means everything you make inside a Stocks and Shares ISA account won’t count towards any tax bill, everything you make is all yours. The tax people won’t get any of it.

Note: the tax you might have to pay if your money wasn’t inside a Stocks & Shares ISA are Capital Gains Tax, Income Tax and Dividend Tax (more on those below).

However, you can only add up to £20,000 each tax year (April 6th to April 5th the following year), a nice problem to have!

This is called your ISA allowance, and actually applies as a total for all of your ISAs. For instance, you might have a Cash ISA and a Lifetime ISA too, and so can (only) add up to £20,000 across all of them.

A common strategy, and great for beginners, is to use your Stocks and Shares ISA with an expert-managed investment platform. This way the experts will grow your savings over time in a responsible way. You can just sit back and relax and watch your money grow over time.

And then for your trading, where you are making the decisions, use a General Investment Account (GIA), which isn’t tax-free, but you might not have to pay any tax anyway (more on that below).

If you’re not sure where to get started, here’s the best expert-managed investment platforms.

Self-Invested Personal Pensions (SIPP)

Another great idea is to invest within a personal pension. This is similar to a workplace pension, which is what your employer would have set up for you if you are employed. Except, you set it up, and decide which pension provider you want (the pension company who manages it).

So you could choose to open a pension with a stock broker, such as a trading app. (You can have as many personal pensions as you like.)

Then you can buy and sell investments within the pension itself, and would then benefit exactly the same way as a Stocks and Shares ISA, and pay no tax on your investments when they grow! How great is that?!

On top of that, you also get a bonus from the government on everything you put in. A massive 25%. And if you’re a higher rate taxpayer, or additional rate taxpayer, you can actually claim the tax back that you’ve paid at those rates too (40% and 45%). You do this via a Self-Assessment tax return.

Why does the government give you a bonus? Well, pension savings are intended to be before you pay tax, that’s why the government adds money straight into your pension, to refund the tax you’ve already paid on your income. It’s all handled automatically by the investment platform too.

There are some restrictions however, you can only pay in as much as your income each year, or £60,000, whichever is lower. These figures are a total of all your pensions. And you can’t access your pension until you are 55 (57 from 2028) – it’s meant for retirement.

Note: you may end up paying tax when you retire. Taking money from your pension would count as an income, and so you might have to pay Income Tax on some of it (more on Income Tax below).

You can also let the experts manage your personal pension too.

Here’s the best personal pension providers in the UK for both expert managed and self-managed pensions.

Note: if you want to know how much your pension will be, check out our pension calculator.

Capital Gains Tax

Capital Gains tax counts when you make a profit on your investments. So when you buy something, such as a share, and it increases in value over time, and then you sell it. The tax applies to the profit only. If you lose money, it doesn’t apply.

However, you might not have to pay it. Everybody gets a Capital Gains Tax allowance each tax year, which is £3,000. So, you’ll only pay Capital Gains Tax on profits above this figure.

The rate you’ll pay depends on how much income you make each year. If you’re a basic rate taxpayer (earn less than £50,270 per year), you’ll pay 18% Capital Gains Tax, and if you’re a higher rate taxpayer (earn more than £50,270), you’ll pay 24% Capital Gains Tax.

Here’s where to learn more about Capital Gains Tax.

Income Tax

Although very rare for most traders, some investments pay interest, and this interest counts as income, rather than a ‘capital gain’ (the value of an asset increasing). And so you may have to pay Income Tax on it.

It’s exactly the same as your salary if you earn one. Simply add all your income together to work out what you’ll pay:

Dividend Tax

Sometimes companies pay out their profits to their owners (its shareholders) and this is called a dividend.

You are allowed to earn £500 in dividends each tax year before you start paying tax on them.

The amount of tax you pay depends on how much income you make each year (e.g. from your salary). So simply work out which tax band you are in by adding up your total income (see above), and then check out how much you’ll pay from the table below:

If you do have to pay taxes, don’t worry. It’s pretty easy, and all handled online via a Self-Assessment tax return, but if you want help try TaxScouts¹, their service is low cost, quick and 5* rated.

Key stock trading terms

Shares outstanding

Public companies (companies listed on a stock exchange), often have a lot of shares. Sometimes in the billions (such as Apple).

The total amount of shares a company has is called ‘shares outstanding’.

The number of shares can actually change over time, companies can issue new shares to raise more money, which reduces the price of existing shares. And, they can buy shares back to reduce the number of shares in circulation, which increases the price of existing shares.

Market capitalisation

One way of valuing a company is to work out its market capitalisation (market cap). This is done by multiplying the total number of shares (shares outstanding) with the price of one share.

So, if a company has 1,000,000 shares outstanding, and the price of 1 share is £1. Its market cap is £1,00,000, which you could say is how much the company is worth.

Companies with large market caps are often seen as safer investments as they’re typically more established businesses which make large amounts of revenue and profit each year.

Earnings per share (EPS)

The earnings per share (EPS) is a measure to provide investors with a quick idea of how profitable a company is.

It is the company’s net profit (how much a company makes after all its costs each year), divided by the shares outstanding (the total number of shares there are).

For instance, if there are 1,000,000 total shares and the net profit is £10,000,000 per year, then the EPS (earnings per share) is £10.

The higher the earnings per share, the more profitable the company is. It’s a great way to compare similar companies against each other to see which is more profitable and performing better.

What are CFDs?

With trading platforms (such as trading apps), they can offer CFDs to trade too. These stand for ‘Contract For Differences’ and are very similar to buying stocks and shares on the surface, but slightly different behind the scenes. Let’s run through them.

They’re super popular with traders who trade regularly (such as day traders), as the fees can be lower, and they give you the option to trade with more money than you have (margin trading), and also trade both price directions (so you can make a trade on the price of a stock going down).

Instead of buying an asset directly (e.g. a share), with a CFD you enter into an agreement with the trading platform (a contract), about the price of the asset in the future, and then agree to pay the difference in the price from when you buy the asset to when you sell the asset. As simple as that.

However, you can trade the price of an asset going down too, called ‘going short’. For instance, if you had a contract with the price going down, and bought the CFD for a stock when it was £100, and now the stock is valued at £90, you’d have made £10 profit. Nice!

You can also trade with more money than you have, called margin trading or leverage trading. This works by using your money as a deposit (called collateral), to make a trade (sometimes called open a position) for more than you would be able to normally.

For instance, let’s say you have £50 and think that a share will go up in price. You could effectively borrow 5x that amount, and buy £250 worth of shares rather than £50.

This means that you could make significantly more than you could otherwise. Let’s say the share price goes up by 10%, you’ve now made 10% on £250, so £25 profit, rather than 10% on £50 (£5). Pretty cool right?

However, it also increases the potential to lose more money too. If the stock price actually dropped 10%, you would have lost 10% of £250 (£25), rather than 10% of £50 (£5). And so you would have actually lost 50% of your cash. Not great.

It’s a great tool to enhance your trading, but you need to be sensible!

We don’t recommend beginners start by trading CFDs, but if you want to, the best trading apps for CFD trading is XTB¹ .

Currency conversion fees

When you buy shares from another country, for instance buying US shares like Apple and Google, they’ll be in another currency, US Dollars in this case.

So in order to buy the shares, you’ll have to convert your Pounds into Dollars, and this is where the currency conversion fee comes in.

Your stock broker, the trading app, will automatically convert your Pounds into Dollars when you buy the stock, it’s all handled automatically. You’ll just see the foreign stocks that you now own inside your account, and they’ll be priced in Dollars instead of Pounds.

However when a broker does this, they include a currency conversion fee. This can be cheap, for instance 0.15% with Trading 212¹, or it can be expensive, such as 1.5% with Interactive Investor. It all depends on which trading app you use.

Stamp Duty

There’s also Stamp Duty to consider when you buy shares in the UK. This is a tax on shares that are listed on the London Stock Exchange (LSE), called Stamp Duty Reserve Tax (SDRT).

It’s 0.50% when you buy shares. You don’t pay this when you trade CFDs as you aren’t actually buying the shares themselves.

Note: it’s just UK shares, not any foreign stocks, such as US or European companies.

You also don’t pay this on ETFs, IPOs, or on smaller companies listed on the AIM exchange (which is the stock exchange for smaller companies, related to the London Stock Exchange).

Conveniently, it’s all handled automatically by the trading app too. You don’t need to do anything. They’ll let you know how much it is when you buy the shares.

That’s it for trading apps for beginners

We hope that’s made investing and trading a bit clearer. It’s a great idea to learn about investing, it can only help with your future finances. 

Our tip is to focus primarily on long-term investing, and do that by using an expert-managed Stocks & Shares ISA to build up your savings. Then you can use a trading app to make trades yourself alongside the experts working hard for you.

Thanks to modern technology, you can get started trading almost entirely for free. Commission-free trading, with no accounts fee, and just low fees when you buy investments (currency conversion fees and sometimes Stamp Duty). It’s pretty great and free trading apps are perfect for beginners (and the pros).

If you want to learn more about investing, or find even more options for stock brokers, check out our best investing platforms. Good luck trading!