UK Broker for trading US NASDAQ and OTC stocks

[kensingtonman]

Hi Everyone,
I am new to trading but I have been studying for over six months now and I am ready to start trading, however I need to find the right broker for my needs and I am hoping that someone on here may have the answer to my question.
I am looking for a broker that will let me trade on the NASDAQ and OTC, I think that a UK broker will be best as I am resident in the UK and I do not want to be restricted by the PDT rule as I only have £5000.00 capital so start with.
As my starting fund is small, I will be looking to trade on stocks with a share price between $1 and $10. It is important that I can trade both long and short and I must have access to Level 2 quotes which many brokers do not seem to have.
I would appreciate any suggestions that users may have, thank you for reading my post.:|

 

[hhiusa]

Hi Everyone,
I am new to trading but I have been studying for over six months now and I am ready to start trading, however I need to find the right broker for my needs and I am hoping that someone on here may have the answer to my question.
I am looking for a broker that will let me trade on the NASDAQ and OTC, I think that a UK broker will be best as I am resident in the UK and I do not want to be restricted by the PDT rule as I only have £5000.00 capital so start with.
As my starting fund is small, I will be looking to trade on stocks with a share price between $1 and $10. It is important that I can trade both long and short and I must have access to Level 2 quotes which many brokers do not seem to have.
I would appreciate any suggestions that users may have, thank you for reading my post.:|

You do realize that you will need USD to trade US stocks not pounds.

 

[malaguti]

You do realize that you will need USD to trade US stocks not pounds.[/QUOTE

the broker would normally convert the USD equivalent from the GBP account. no $ account required

 

[hhiusa]

the broker would normally convert the USD equivalent from the GBP account. no $ account required

Absolutely incorrect. If you are actually trading the physical equity in the US, you have to use USD. No broker is going to convert your cash to USD and back for free each time you trade. There are no GBP denominated products in the US. CFDs are not equities.

When I trade foreign equities or options, I have to buy the currency through the interbank before being able to purchase any securities in that country.

Which broker are you saying will do the conversion each time for free?

 

[malaguti]

Absolutely incorrect. If you are actually trading the physical equity in the US, you have to use USD. No broker is going to convert your cash to USD and back for free each time you trade. There are no GBP denominated products in the US. CFDs are not equities.

When I trade foreign equities or options, I have to buy the currency through the interbank before being able to purchase any securities in that country.

Which broker are you saying will do the conversion each time for free?

i trade US stocks. I use a GBP account, my broker converts for me to purchase the $ amount. it seems you are incorrect.

 

[hhiusa]

i trade US stocks. I use a GBP account, my broker converts for me to purchase the $ amount. it seems you are incorrect.

I highly doubt it. Who is your broker? Put your money where your mouth is.

 

[hhiusa]

Why would any broker take on the burden of currency conversion and possible currency translational losses so that you can trade foreign equities? If such a boutique brokerage firm exists, they must be charging you one hell of a commission.

 

[hhiusa]

US shares are not the same as the physical equities themselves.

It looks like it would be pretty hard to scalp trade or even daytrade with commissions like these. The lowest commission here is £5. If you were doing £5,000 per trade, the commissions would eat up 0.2%. The OP would have to make at least 0.2% per trade to break even. £5 per side = £10/5,000 = 0.2%.

If anybody's broker is not listed here that is in the UK, please tell me. I will investigate. There are others brokers, but they do not offer stock trading. Interactive Brokers is the only broker that I can think of that has a good commission structure.

 

[hhiusa]

Selftrade charges a whopping £12.50 per trade. That is £25 per roundtrip. That would make it impossible to scalp or daytrade equities. If you placed a trade for £5,000, you would have to make 0.5% before you made any money. If you were trading UK equities, you would have to make 0.75%. 0.5% roundtrip + 0.5% stamp duty on one side = 0.5 + 0.5/2 = 0.75%

 

[kensingtonman]

Thanks for the reply's,
I gather then that Using a UK broker is not going to be cost effective due to commission charges on currency conversion.
I can't use "Interactive brokers" in the USA as I do not have a big enough account (required $10,000)
the only other USA broker I can find that seems to be half decent and will accept UK clients is "Sure Trader". Has anyone used them and if so how did you find their service?

 

[kensingtonman]

i trade US stocks. I use a GBP account, my broker converts for me to purchase the $ amount. it seems you are incorrect.

Can you tell me which broker that is please?

 

[hhiusa]

Can you tell me which broker that is please?

His profile says that he uses Selftrade, which charges £12.50 per side.

 

[kensingtonman]

His profile says that he uses Selftrade, which charges £12.50 per side.

Ouch not good for a small account.

It seems that finding a decent broker is not an easy task.
I have been looking for about a month now but all I come across have one problem or another and so far I am at not convinced that I will ever find one that I can use to trade US pennystocks.
The problems I have come across have been,
Won't give UK residents an account
Need £25,000 to avoid Pattern Day Trading Rule (US stockbrokers)
Minimum account opening balances too high for my £5000 starting fund
Large commission on currency conversion (both in and out of a trade)
Brokers in the UK that don't trade Over the Counter stocks.

 

[hhiusa]

Ouch not good for a small account.

It seems that finding a decent broker is not an easy task.
I have been looking for about a month now but all I come across have one problem or another and so far I am at not convinced that I will ever find one that I can use to trade US pennystocks.
The problems I have come across have been,
Won't give UK residents an account
Need £25,000 to avoid Pattern Day Trading Rule (US stockbrokers)
Minimum account opening balances too high for my £5000 starting fund
Large commission on currency conversion (both in and out of a trade)
Brokers in the UK that don't trade Over the Counter stocks.

It is more complicated than people realize to trade OTC markets. Retail traders usually do not invest in those instruments. In the US, the listing requirements are a lot more relaxed as opposed to the main exchanges.

 

[malaguti]

Ouch not good for a small account.

It seems that finding a decent broker is not an easy task.
I have been looking for about a month now but all I come across have one problem or another and so far I am at not convinced that I will ever find one that I can use to trade US pennystocks.
The problems I have come across have been,
Won't give UK residents an account
Need £25,000 to avoid Pattern Day Trading Rule (US stockbrokers)
Minimum account opening balances too high for my £5000 starting fund
Large commission on currency conversion (both in and out of a trade)
Brokers in the UK that don't trade Over the Counter stocks.

I've responded via PM
selftrade are quite high, there are loads offering smaller charges. also almost all have pretty good concessions with regard to higher frequency. all the ones I've mentioned in the Pm also offer level 2 and currency conversion. selftrade is about £6.
but as I've mentioned, dont be concerned with the currency conversion, its a red herring spawned by the uninformed.
be more concerned with level 2 and also whether the charting aspect is something you really want to leave in the hands of the broker.

there is such a thing as spread betting as well. IG, ETX all offer US shares to trade, with much much lower costs. you may want to consider that option also. again, currency is taken care of
i've left my email, by all means let me know if you have any questions

 

[hhiusa]

I've responded via PM
selftrade are quite high, there are loads offering smaller charges. also almost all have pretty good concessions with regard to higher frequency. all the ones I've mentioned in the Pm also offer level 2 and currency conversion. selftrade is about £6.
but as I've mentioned, dont be concerned with the currency conversion, its a red herring spawned by the uninformed.
be more concerned with level 2 and also whether the charting aspect is something you really want to leave in the hands of the broker.

there is such a thing as spread betting as well. IG, ETX all offer US shares to trade, with much much lower costs. you may want to consider that option also. again, currency is taken care of
i've left my email, by all means let me know if you have any questions

How is anyone going to scalp trade with £6 per side for a commission. That is £12 per trade or $17 per trade. He said he has £5,000. £12 per trade is a 0.24% commission per trade. If you have to make 0.24% per trade just to break even how can you scalp trade?

 

[malaguti]

How is anyone going to scalp trade with £6 per side for a commission. That is £12 per trade or $17 per trade. He said he has £5,000. £12 per trade is a 0.24% commission per trade. If you have to make 0.24% per trade just to break even how can you scalp trade?

we are often only capable of displaying knowledge based on our own experiences. As your experience is lacking, so are your rather childish comments. if you don't mind i'd rather try and help the OP so I'll respond to his personal questions from now on. i have absolutely no time for you

 

[hhiusa]

we are often only capable of displaying knowledge based on our own experiences. As your experience is lacking, so are your rather childish comments. if you don't mind i'd rather try and help the OP so I'll respond to his personal questions from now on. i have absolutely no time for you

You are the only person I see here throwing a tantrum. Everything I wrote is based upon simple mathematics. If Selftrade charges £6 per side-which they do for active traders as I have checked with them-that costs £12 per trade. £12 per trade is very expensive. I am trying help the OP not lose money by paying exorbidant commissions. The only thing I see you doing is trying to get him to go with a price gauging broker.

Mudsling all you like. It is mathematically infeasible to daytrade or scalp trade when you have to pay 0.24% commission. That removes a lot of your gains per trade. The 0.24% commission is based upon him exposing 100% of his account per trade. That would be most unwise. If he exposes a smaller amount, the percentage in the form of a commission will be much higher. For £2,500, it will be 0.48%.

 

[hhiusa]

I would listen to @malcr001

It definitely sounds like a US broker is more suited to your trading strategy as it's more common to come across stockbrokers aimed at day traders and the commissions are much cheaper too.

In the UK spread betting is the most popular because its free from capital gains and stamp duty which means the price per trade is normally much lower in comparison to a stockbroking account however spread bet brokers normally only cover large cap stocks, indicies, commodities and forex. They might offer some small cap stocks but it's unlikely they will offer everything listed on the exchanges which might be a let down for you.

Your strategy is much more common in the US compared to the UK as they can't use anywhere near the same kind of leverage we can use here so they normally compensate by trading smaller cap companies. Perhaps consider adapting your strategy to trade large cap stocks with leverage on a spread bet account? This could just be until you save up that 10k minimum needed by interactive brokers.

I did also look at tradestation but it looks like they still impose the PDT rule as they require a $30k minimum deposit:

 

[kensingtonman]

I would listen to @malcr001

I am afraid to use leverage as I do not want to blow up my account when I have a losing trade, this could be on my 1st or my 10th trade but I know that it will happen.
I would rather trade small stocks and make lots of smaller gains to build up my account slowly over time, then maybe I can re size my position.