The number of leveraged traders who trade margin forex, contracts for differences (CFDs), and financial spread betting in the United Kingdom went down to 173,000 at the end of May, a decline of 5 percent over the previous 12 months. The figure has been declining since May 2021, when the number of active leveraged traders hit 275,000.

According to the 2024 UK Leverage Trading Report published by Investment Trends, the decline was attributed to subdued new client acquisition and modest reactivation of dormant clients.

Improvement in Client Quality

However, on the positive side, the overall client quality, meaning those who continued to trade, jumped to 124,000 from 110,000 over consecutive years. Further, the number of dormant accounts also improved to 58,000, from 95,000 and 145,000 in the previous two consecutive years, respectively.

“The rise in continuing UK traders highlights a positive trend towards more experienced and committed participants,” said Lorenzo Vignati, Associate Director at Investment Trends, commenting on the trends of leveraged traders. “This signifies a maturing market of increasing quality—a clear opportunity for providers to capitalise on."

Indeed, the UK has always been one of the top markets when it comes to trading margin forex and CFDs. Another instrument that is popular in the country is financial spread betting, as gains from these instruments are tax-free. First introduced by IG, almost every leveraged trading brokers in the country are offering financial spread betting products.

Although many retail brokers have operated from the UK for many years, running their operations in the country and also in continental Europe, following the seal of Brexit in early 2020, brokers were compelled to establish their presence in the EU as well.

Currently, 44 percent of the UK’s leveraged trading market is captured by only three trading service providers. However, they have conceded some ground.

“As the UK trading market evolves and provider competition intensifies, financial robustness and a diverse asset offering are becoming the key differentiators for provider selection,” Vignati added. "Clients are looking for security and variety in their trading platforms, making these attributes more critical than ever."

Client Engagement Is Important

The report further outlined that education and client engagement are two critical areas for sustaining trading activities. Interestingly, there is a massive demand for educational resources among novice traders, while 20 percent of inactive traders are also willing to resume trading if better education is provided.

“We have seen a growing willingness among UK traders to invest in their financial education, regardless of their experience with leveraged products,” added Vignati. “The next wave, those intending to start in the next 12 months, are the most willing to do so. Providers who keep a sharp focus on education will be in a prime position to attract a more resilient and engaged trading community."