UK Forex Brokers

Dealing desk brokers usually do not charge a commission but make their money from spread between bid and ask price of currency which is usually a few cents. Brokers offer different leverage to their clients. Leverage can vary from 1:100 to 1:500. This makes forex market highly leveraged. Leverage can act both to trader's advantage and disadvantage. It can be very profitable if trade is going in your direction, but losses can also be magnified. Forex trading instruments trade in large lot sizes e.g. standard lot is made of 100,000 USD. 1:100 leverage means your broker will lend you 100 USD for every dollar you deposit towards trading this currency lot. Also forex markets are highly liquid and opening and closing positions are very easy.

Some UK Forex brokers allow you to hedge your open position in the currency market. Hedging is usually done either by using options, futures or opening a position in the direction opposite to the already open position. For example, you are long EUR/USD and your position is showing a loss which usually means that EUR/USD is selling off. Some UK Forex brokers will allow you to open a short position in EUR/USD pair, effectively hedging the original long EUR/USD position you had. So your short EUR/USD position will now show a profit which will cover the losses shown by your long EUR/USD position.

Not all brokers allow hedging capabilities; hence it is important to check before opening an account. Some Forex brokers offer Islamic accounts to their customers. The central bank of different countries set different short term interest rates. For example, the interest rate set by Federal Reserve in the USA is different than that set by the bank of England. Hence the interest rate paid by USD is different from that paid by GBP. The ratings of brokers can be verified through UK Forex broker reviews.