Thank-you for the replies -they were most helpful. I take it that IB is a good starting point unless someone suggests an alternative. It does seem that there are only a limited number of UK stocks that have sufficient liquidity so I think I will probably concentrate on the major european stocks. As for the US stocks -is there an issue speedwise? My experience with the US is limited to ecbot which in my opinion is far too delayed in busy markets. I had a look at cfds but they appeared to lack volume, have wide spreads and be costly to trade -are they worth looking at again? Also are there any good european ETFs I should be looking at? I haven't had much success in my research so far. As for taxes on futures -unless this is a new wheeze -futures traders pay taxes like anyone else in the UK, be they income or corporation taxes. Thanks again.
If you are trading UK equities don't trade real shares trade CFD's. There are 2 type of CFD providers, direct access and quote driven. Direct access is the most flexible and what all the professionals use. Some brokers are GNI, IGMarkets, E-Trade, Global. They will charge you between 6-15bps per trade. No stamp duty on CFDs. Margin ranges from 5-15% of the trade value. With a direct access broker you can work your order in the LSE book as you wish. They do all the legwork in the backoffice converting it to a CFD for you. Quote driven is usually for smaller traders and does not allow you access to the order book. Rather the broker will quote you a price based on the bid/offer and volume at the time. E-Trade are the best example, £9.95 flat fee per trade. They will refer you to a dealer if your size is above a certain level though. £100k's worth will usually go through ok though on top tier shares. If you find you are trading liquid FT30 shares in modest size and more often than not at MKT then quote driven can be a good way to keep costs down. For everything else Direct Access is the only way to go. I traded CFDs successfully for 6 years until I just got fed up of paying an obscene commission bill each year. Now I trade futures.
I dont know where the figure of 0.25% for stamp duty came from but the actual figure is 0.5% paid by the purchaser which is why cfd's and sb's and other derivatives are so popular. You only really want to be paying stamp duty if you are interested in the physical for an investment. For traders in the US they can trade ADR's of UK stocks which are subject to a 1.5% stamp at creation but are free from stamp duty after that. ADR's are traded in dollars thus avoiding currency risk. There is sufficient liquidity in the top 350 stocks and yes the spreads are comparably wider especially as uk investors favour stocks lower than £10 causing stock splits and thus increasing the spread. But increased spread is out-weighed by the tax free nature of some of the derivative trading vehicles.