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Bonds and other fixed-income instruments have always been particularly attractive for investors in times of market volatility because they offer a fixed source of income and a guaranteed rate of return. This is why bonds are among the most traded instruments in the world, either as a hedge or as a primary investment tool.

In this guide, we review the various bond trading platforms and go over best practices.

Best Bond Trading Platforms UK List 2022

While there are different bond trading platforms available in the market, some of the best bond trading platforms that you should consider have been reviewed below.

1. eToro – The Best Overall Bond Trading Platform

If you’re looking for a user-friendly and convenient platform to begin bond trading, then eToro is the perfect choice for you. It is the largest and most popular social trading network in the world and allows you to trade over 2400 assets, which includes bonds, ETFs, currency pairs, stocks, indices, cryptocurrencies, and commodities. An additional advantage that eToro has is that it offers CFD trades, which means that you do not have to pay any fees at all.

They also allow you to trade on leverage on a variety of assets. Their bond offering is unique in that you can trade on a variety of bonds at the same time through the use of their bond ETFs. they offer ETFs that were designed by a variety of organizations, such as Vanguard, PIMCO, and others. This allows you to invest in a diversified collection of bonds, which can be sorted based on their time to maturity, the industry they are located in, or their geographical location.

While trading through eToro, you can use their web portal or download their mobile app, allowing you to monitor your trading positions on the move. Setting up an account on eToro is a quick and easy process, and you not only get access to a social trading network with over 17 million members but also to the different CopyPortfolios. This will allow you to mirror the trades of more successful and experienced bond traders, including the most successful fast traders.

eToro is also highly regulated and insured by several agencies worldwide, making it highly trustworthy to trade financial assets. To get started, you need to set up an account and add a minimum deposit of $200, after which you can then begin trading right away.

Pros

  • Low to no fees
  • Tight spreads
  • Huge range of assets to trade – including stocks, indices, ETFs, cryptocurrencies, currencies, and commodities
  • Wide range of bond ETFs from several providers
  • Social trading and copy trading tools are available
  • Regulated by the UK FCA

Cons

  • Does not support signals for forex trades
  • Not suitable for traders who use advanced charting tools

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – The Best Low Spread Bond Trading Platform

new capital logo Another very popular trading platform among bond traders is Capital.com. It allows you to take on positions in bond ETFs as well as trade on the CFDs of bonds themselves. Therefore, while you are not entitled to coupon payments, you can make money off of the movements in bond prices.

Capital.com Trading Platform

Capital.com is also highly regulated by a variety of global regulatory agencies, such as the FCA in the UK. they have a very low minimum deposit requirement, just 20 EUR/GBP/USD depending on what country you’re located in.

Pros

  • Leverage of up to 100x
  • Low minimum deposit requirements
  • Highly insured and regulated
  • Uses AI technology for trading recommendations

Cons

  • Does not support signals

75.26% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

3. Libertex – The Best Bond Trading Platform Through MT5

Libertex Logo Libertex is easily among the oldest and most trusted fast trading platforms that support a variety of asset classes including stocks, commodities, and currencies. It is best known for being the best broker to trade with through the MT4 and MT5 platforms, therefore its automated trading strategies are regarded very highly.

Libertex Trading Platform Leveraged Trading User Interface

It allows you to trade several ETFs and bond CFDs with leverage as high as 30x. It is the ideal fast trading platform because it offers 0 spreads, which means you can buy and sell the asset instantly at the same price. On every trade you make, you only have to pay a commission of 0.006%, making it the ideal platform for fast traders.

Pros

  • Supports both MT4 and MT5
  • Very low minimum deposit – as little as 10GBP
  • Regulated and insured by CySEC
  • Very low fees and commissions

Cons

  • Execution times are slower than its competitors

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

4. AvaTrade – The Best Bond Trading Platform for High Leverage

AvaTrade If you’re an experienced trader who is looking for advanced trading tools, high leverage trading, and access to a variety of financial assets, then Avatrade is the right choice for you. Not only does Avatrade support MT4 and MT5 trading platforms, but it is also among the best bond trading brokers. It supports a variety of automated trading tools such as DupliTrade, AvaSocial, and ZuluTrade.

Avatrade Leveraged Trading Platform User Interface

However, perhaps the biggest USP of Avatrade is that it offers extremely high leverages for most trades. For example, on most currency pairs, it offers a leverage of 400x, making it extremely popular for experienced traders who are comfortable with the risk. It offers the opportunity to trade bond CFDs and a wide variety of bond ETFs, however, this offering is limited as compared to its competitors.

Pros

  • Regulated in 6 different jurisdictions and in compliance with UK regulatory requirements
  • Compatible with both MT4 and MT5 for advanced analysis
  • Tight spreads combined with low fees
  • Leveraged trading of up to 400x
  • Very low minimum deposits – as little as 100 USD/GBP

Cons

  • Has a comparatively limited choice of assets to trade on

71% of retail investor accounts lose money when trading CFDs with this provider.

5. Hargreaves Lansdown – The Best Bond Trading Platform for Maximum Variety

Hargreaves-Lansdown If you’re looking for a platform that provides a high level of variety for British traders to trade different bonds, then Hargreaves Lansdown is the perfect platform for you. The platform caters particularly to British traders and allows you to trade on government, corporate, and municipal bonds for different fees. Their bond offering includes 150 different bonds, starting at but not limited to the US treasury Bonds and the UK gilts.

HL Trading Platform

They also charge highly competitive commissions on bond trading. Some of their offerings are available online, while the others are limited to their telephone trading service, which usually costs higher than the standard online trading portal. Not only does Hargreaves Lansdown support MT4 and MT5 trading platforms, but it is also among the best bond trading brokers. It offers the opportunity to trade bond CFDs and a wide variety of bond ETFs, however, this offering is limited as compared to its competitors.

Pros

  • Designed specifically for UK traders
  • Provides access to a variety of assets such as cryptocurrencies, stocks, and forex pairs
  • Compatible with both MT4 and MT5 for advanced analysis
  • Leveraged trading of up to 40x
  • Very low minimum deposits – as little as 100 USD/GBP

Cons

  • Higher fees than its competitors

71% of retail investor accounts lose money when trading CFDs with this provider.

Bond Trading Platform Fees Comparison

Platform US Treasury Bonds UK Gilts Bond ETFs Commissions
eToro Yes Yes Yes Zero commissions
Capital.com No No Yes Zero commissions
Libertex Yes No Yes Variable (starting at 0.006%)
AvaTrade Yes No Yes Zero commissions
Hargreaves Lansdown Yes Yes Yes 11.95 GBP per lot

Bonds to Invest

If you are looking to invest in bonds, it is important for you to know the different kinds of bonds that you can invest in. Primarily, there are three types of bonds that you could choose to invest in, and these have been discussed below in detail.

Treasury Bonds

The most common form of bonds that investors choose to purchase are treasury bonds. They are preferred for a variety of reasons. The first is that if you choose to buy treasury bonds from a major country such as the US (called t-bills) or the UK (called gilts), then there is a very negligible chance of default. For example, the US has never defaulted on its bond obligations ever. Therefore, investing in treasury bonds is considered to be a risk-free investment. Another advantage is that you will have a fixed source of income in the form of coupon payments. You can buy treasury bonds for any period of time ranging from 1 year to 30 years, and the interest rate at which these bonds pay coupon payments changes every day.

There is another type of treasury bond that investors sometimes prefer to invest in. These are called TIPS, or Treasury Inflation-Protected Securities, and these are designed to be a hedge against inflation. In this case, the principal payment of the bond is pegged to an inflationary measure, and therefore the payments you receive are directly in sync with the inflation. This allows you to escape the effects of inflation on the bonds that you purchase. For example, if you buy a TIPS bond pegged to the CPI with a face value of $100 and a coupon rate of 3%, and the CPI increases by 2% during the year, then your coupon payment of 3% will be calculated on the inflation-adjusted face value, which is 102. You will therefore be repaid $102 with an interest payment of $3.06.

67% of retail investor accounts lose money when trading CFDs with this provider.

Municipal Bonds

Municipal bonds, also called muni bonds, are predominantly only used in the US, though they are sometimes used as a way of raising money in other countries too. Muni bonds are issued by states, cities, and other local government entities to finance public projects or offer public savings. This could include infrastructure projects or any form of development that is expected to be useful and beneficial to the public living in that area. For example, a city might decide to issue muni bonds in case they wish to build a new bridge or redo a neighborhood park.

Corporate Bonds

The last type of corporate bonds, which also happen to be the most diverse and popular form of bonds that investors can choose to invest in, are called corporate bonds. When a company wishes to raise financing, it can either do so through selling equity or taking on debt. If they choose the latter, then their options are to either take a bank loan or sell bonds. Since bank loans are generally more expensive than issuing bonds, companies might choose to issue debt in order to raise money. There are different types of bonds that a company can issue, and this has a direct impact on how safe these bonds are and how much coupon rate they carry.

For example, if a company chooses to issue bonds that are secured against its assets, then the bond is considered to be secure and the chance of default is quite low. Therefore, the coupon rate that this bond carries quill be quite low. On the other hand, unsecured debt carries more risk and therefore has to have a higher coupon payment to be attractive to investors.

How Can I Trade Bonds?

The steps that you should follow in order to begin trading bonds have been discussed below in detail.

Step 1: Select a platform

The very first step that you need to take is to select a platform that allows you to trade bonds. While there are several such trading platforms, it is important for the platform you choose to be suitable for your trading requirements. The different criteria that you should look at include the fee structure of the platform, the non-trading fees such as the withdrawal and deposit fees, the range of products that they allow you to purchase, as well as the general usability of the platform.

Some platforms, while providing low fees and a wide product variety, are designed in a way that makes them difficult to navigate. Therefore, you will end up spending several months just getting used to the platform and its navigation. If this is the case, it is important that the platform offer a demo account where you can practise trading strategies and understand how the platform has been made, to avoid mistakes with real money. In addition to this, it is preferable for the platform that you use to have a mobile app as well, so you can monitor and manage your positions on the move.

Step 2: Identify the type of bonds

The next step, once you have identified the platform that you will be trading bonds with, is to identify what type of bonds you wish to trade. Each of the bonds has a different form of investor that prefers them. For example, government bonds are generally more liquid than muni bonds, and thus it is easier to sell them on the secondary market. Corporate bonds sold by major corporations are also quite liquid and can be sold off easily. However, they carry a higher inherent risk than Treasury bonds, because a company is more likely to default than a government.

Another way in which the different types of bonds differ is the factors that affect their yields in the secondary market. For example, Treasury Bonds are affected by macroeconomic events such as high inflation, low GDP growth, or a high rate of unemployment. They are also affected by monetary and tax policies. On the other hand, corporate bonds are only affected by these factors to a small extent. The main factors that dictate their yield include industry and company events, such as a wider potential for default in the industry, or any event that might make it harder for the company to turn enough profits for paying off their interest obligations in a year.

Step 3: Identify assets based on your risk profile

The next step, once you have identified the type of bonds that you will be trading, is to select a group of bonds that you will be trading based on your risk profile. For example, if you will be trading Treasury Bonds, you should identify the countries whose Treasury Bonds you will be trading on. For corporate bonds, you should select a list of companies whose bonds you are comfortable trading or holding.

This is important for 2 reasons. One, it ensures that all your trades are within the same risk profile. There are two main rating agencies that you should look at while investing in bonds: Moody’s and Standards & Poor. they release ratings for each bond issue, that can let you know how safe a bond is. The higher the grating, the lower the chance that the issuer will default on their obligations, and therefore, the lower the coupon that is paid on the bond. While these ratings are not foolproof, they are a useful indication of how risky a bond is. Therefore, selecting bonds that have higher than a particular rating is a good way of ensuring that you minimise your risk and only trade within your risk profile.

Step 4: Begin trading

Once you have all this sorted out, all that is left for you is to prepare a strategy that you will use to trade, and then begin trading through the platform that you have selected. A variety of potential strategies that you could use for trading bonds have been detailed below in this guide.

67% of retail investor accounts lose money when trading CFDs with this provider.

Risks of Trading Bonds

There are several risks associated with trading bonds. Some of these are avoidable and others are not, however, as a bond trader you should be aware of them since they will help you either mitigate them or prepare for them. These risks have been detailed below.

  • They generally provide much lower returns than other asset classes such as stocks or currencies.
  • There is always a risk, no matter how small, that the issuer of the bond might default.
  • There is a very low level of transparency in the bond market, therefore there is no telling if the brokers that you trade through are charging higher prices than usual.
  • Bond yields are usually inversely related to the interest rates in an economy. Therefore, if the interest rates rise, then the bond yields will fall. This is especially a risk in the current macroeconomic climate.

Bond Trading Strategy

In order to trade bonds profitably, it is important for you to have a strategy that you can use. While there are several different strategies available that have been proven to be profitable, the most common ones have been discussed below.

Fundamental Trading

One of the most prominent strategies that traders or investors employ for trading bonds is the passive bond trading strategy based on a fundamental approach. Under this strategy, bonds that are rated higher than a particular level are bought in a fixed proportion. These bonds are bought in a way that they are well-diversified in terms of their geographical location, the industry in which the company is, and the general factors underlying the movements in their prices. The idea here, broadly speaking, is to create a diversified bond portfolio to reduce the idiosyncratic risk while also adhering to a certain risk profile and ensuring that the portfolio is not too risky.

Once the portfolio has been created, it then has to be rebalanced and modified after a specific period of time so as to ensure that the proportions in which the bonds had been purchased are still constant. This will avoid the portfolio being weighed too heavily in one direction or the other, which would increase the riskiness of the portfolio. Apart from this, since the portfolio is comprised of bonds with a minimal amount of risk, there is a fixed guaranteed cash flow that comes with these bond portfolios, and this can then be used for a variety of other investments.

Trading Interest Rates

Another very popular trading strategy that is used by bond traders is that of trading on interest rates. As mentioned earlier, interest rates have an inverse relationship with bond yields. This is because when interest rates in an economy rise, people sell off their existing bonds so that they can buy new bonds which have higher coupon rates associated with them. Therefore, bond yields fall as no one wishes to buy these bonds anymore.

Therefore, a bond strategy is to trade on interest rate announcements. This can be done in 2 ways. A risk-averse investor would normally wait until after the announcement has been made by the monetary policy committee to initiate a trade, whereas an investor who is comfortable with higher risks would opt for trading on the news before the announcement has been made using forecast tools. Therefore, exploiting the inverse relationship between interest rates and bond yields is a very profitable bond trading strategy.

Is Bond Trading Regulated in the UK?

Yes, bond trading is regulated in the UK just like the trade of any other financial instrument. The Financial Conduct Authority (FCA) is responsible for regulating the different brokers that provide access to bond trading. In addition to this, the trading of UK Treasury Bonds (also known as gilts) is regulated by the Bank of England. Together, these two agencies ensure that all bond trading is carried out in a legal and regulated manner so that the interests of both the traders and the government are protected.

How to Get Started with a Bond Trading Platform – eToro

The process of opening an account on the best bond trading platform, eToro, is relatively simple and straightforward and incorporates 4 steps. These have been discussed below in detail.

Step 1: Open an Account

eToro Sign Up

The first step is to open an eToro account. This can be done by simply heading over to their website and clicking on the “Join Now” button. You can either create an account from scratch or log in using your Facebook or Gmail account.

67% of retail investor accounts lose money when trading CFDs with this provider.

Step 2: Upload ID

eToro Identity Verification

Once you have created an account, the next step is to then verify your identity. Since eToro is a highly regulated broker, they require you to submit proof of ID and address proof before your account is verified. For ID proof, you can submit any government-issued ID such as a driving license or your passport. For address proof, you could either submit a utility bill or your bank statement.

Once you have uploaded the requisite documents, the eToro verification process is pretty quick. As soon as your account has been verified, you will be able to move on to the next step.

Step 3: Deposit Funds

eToro Deposit Funds

The next step is to deposit funds into your account. You can do so either via your debit/credit card, a bank transfer, or online wallets such as PayPal and Skrill. If you add money through an electronic waller or a debit/credit card, the funds show up in your account almost instantaneously, whereas a bank transfer might take as long as 2-3 business days.

Step 4: Trade Bonds

The next step is to search for the market of the bond that you wish to trade on. This is as simple as going to the search bar and typing the name of the bond. You can then select the bond you are interested in. alternatively, you can use the menu to select the fixed income asset class and find the bond you wish to trade in through that.

The last step is to place a trade. To do this, simply open a bond’s page, click on buy or sell, enter the amount you wish to trade, enter the leverage, set the stop loss, and then click on execute. The trade will be executed almost instantaneously.

67% of retail investor accounts lose money when trading CFDs with this provider.

Conclusion

In conclusion, if you’re looking to get started with a bond trading platform, the best option for you is to do so via eToro. It is one of the most reliable and safe trading platforms for investors and traders of all experience levels, and it also contains among the largest variety of bonds that you can trade on, alongside several other asset classes. Their trading platform and its functionalities are almost unparalleled in the industry, and it also has low spreads and fees on the trading of stocks and forex pairs. All in all, eToro is definitely a strong option to consider for your bond trading needs.

eToro – Overall Best Bond Trading Platform in the UK

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

Which are the best bonds to trade?

Some of the best bonds for you to trade include Treasury Bonds issued by the US and UK governments, alongside high rated corporate bonds.

What are the best bond trading platforms in the UK?

The best bond trading platform in the UK will differ based on your trading needs, but overall, the very vest platform is definitely eToro.

How much money do I need to trade bonds?

The amount of money that you will need in order to trade bonds will depend on the minimum balance requirements of the platform you choose to trade on, but it can be as low as $10.

Is bond trading legal in the UK?

Yes, bond trading is legal and regulated in the UK.

How can I open an account on a bond trading platform?

The process to open an account on a bond trading platform is as simple as creating an account, verifying your identity, depositing funds, and trading.

About Nishit Kumar
About Nishit Kumar

I'm a second year Accounting and Finance student at the University of Warwick, in addition to being an incoming Trading Analyst at Morgan Stanley. I'm passionate about the financial markets and all things finance.

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