What is Trading 212?
Trading 212 started life in Bulgaria in 2005 but entered the UK market in 2016 as a forex trading app and was among the first to offer zero-commission share trading in 2017.
Its mobile app is now ranked number one in the UK based on around 15m downloads and more than 200,000 reviews. The app lets users invest in shares, exchange traded funds (ETFs), contracts for difference, gold, cryptocurrencies and an ISA all in one place. Additionally, if you are unsure about how well you would be at stock or CFD trading, there is an option to practice first with a virtual £50,000.
How does Trading 212 work?
There are three types of Trading 212 accounts. One for contracts for difference (CFDs), one for investing in shares and an ISA option. Users can switch between accounts in the app.
Trading 212 CFD
Trading 212 CFD lets you trade stocks, forex, commodities such as gold and oil as well as indices all without having to pay any commission. This is done using contracts for difference (CFDs).
It is important to remember that these types of products are best suited to the most sophisticated of investors who can afford to take more risks. A CFD is essentially a bet on whether an asset’s price will rise or fall. So for example with forex trading you can make a bet on the direction of a currency. There are plenty of risks as you can stand to lose a lot of money, and most people do, so it is important to understand the product.
Trading 212’s own figures show 76 per cent of its investor accounts lose money when trading CFDs. It tries to take some steps to protect users against the volatility of the product by blocking accounts from going into a negative balance, unlike some brokers, and letting users choose a point at which to take profits and stop investing once losses reach a certain point. This is known as a stop loss alert or take profit option.
There is a minimum deposit of £10 and no fees for withdrawals but there is a currency conversion charge of 0.5%. Users can trade in pounds, euros and dollars.
Trading 212 Invest
The Trading 212 Invest option offers more than 3,000 shares and ETFs that can be invested in from as little as £1. Shares can be purchased in companies listed in the UK, Germany, America, Netherlands, Switzerland and Madrid. This is a wider choice than its closest rival Freetrade which only offers shares from the UK and US. All trades can be done with zero commission unlike other platforms that can charge up to £12 for share dealing.
There is a minimum investment of £1 (£10 if setting up a bank transfer). Users can trade in pounds, euros and dollars.
Trading 212 ISA
Returns earned from these shares can be taken tax-free by using Trading 212’s ISA product. There are no charges for administration, commission or dividend investment, unlike other brokers.
There is a minimum investment of £1 (£10 if setting up a bank transfer). Users can trade in pounds, euros and dollars. Users can trade in pounds, euros and dollars across all accounts.
Trading 212 also says it will execute all withdrawal requests within two business days and this can be done both on the app and through its website.
Trading 212 Account type Summary
We have summarised the three different account types offered by Trading 212 below:
|Trading 212 CFD||Trading 212 Invest||Trading 212 ISA|
|Trade stocks, forex, indices, commodities and cryptocurrency using contracts for difference||Free investing in more than 3,000 shares and ETFs||UK users can hold shares and ETFs in a tax-free wrapper|
|Minimum £10 deposit||Minimum £1 investment||Minimum £1 investment|
|Negative balance protection||24/7 support||24/7 support|
|Stop loss and take profit options||Instant trades||Instant trades|
|Zero commission||Zero commission||Zero commission|
Main Trading 212 features
- Low minimum investment - Start share trading from just £1
- Practice portfolio - Trade with a virtual £50,000 to see how good you really are on the stockmarkets.
- Zero commission investing - Most of the main brokers or DIY investing platform charge a fee for buying or selling shares. This can be as much as £12 per trade, which is pretty costly for those trading regularly.
- Zero fee stocks and shares ISA - There is often a platform charge for stocks and shares ISAs on DIY investing platforms but Trading 212 has no fee for the tax wrapper.
- More than global stocks & ETFs - Large choice of shares in the world’s best known companies such as Google and Tesla as well as the opportunity to spot rising stars.
- Fractional shares - Rather than purchasing a full stock, you are buying a fraction of a share, which helps keep costs low and means you can slowly build up your holding.
- No foreign exchange fees - Trading 212 does pass on the currency conversion rate but there are no extra foreign extra charges.
- Unlimited instant trades - No limits on the number of free trades and they are made instantly so you get the price you want.
- 24/7 live support - Get questions answered using Trading 212’s live chat service any time of day
- Tutorials - Video guides help you learn the basics and terminology of investing as well as the more complicated strategies such as with CFDs.
How to set up a Trading 212 account
A Trading 212 account can be opened either through its website or smartphone app. This can either be completed instantly as a guest via a practice account or alternatively you can sign up with an email and password online.
You start by selecting either the invest or CFD account option and create a watchlist of assets such as stocks in popular companies. There is also a tab to build and monitor your portfolio and to search for specific stocks. You can view a company’s share price and financial details such as its market capitalisation, price to earnings ratios and revenues.
There is a handy economic calendar so you can keep an eye on events that may impact certain stocks. Users can also set price alerts and watch educational videos and tutorials on buying their first share or how to start investing as well as more technical guides on trading strategies and CFDs.
If you decide to sign up you can click a button that says switch to real money and you will need to enter your personal details and submit an identity document and a selfie to prove who you are.
The minimum age is 18 and you can start trading once your account is verified and approved.
Trading 212 fees
Trading 212’s big unique selling point is its zero-commission trading. There are no charges for share dealing or to hold stocks in an ISA wrapper. Trading 212 makes money through the spreads between the buy and sell price on their assets. There is also a 0.5% currency conversion charge and you will have to pay stamp duty for share and ETF purchases. The platform’s chief executive Ivan Ashminov has previously indicated that additional 'premium' services will be added to the platform, which users will need to pay to access.
Trading 212 Pro account
Experienced users can upgrade to a pro account so long as they meet 2 of the 3 following criteria:
- You need to have traded on CFD (or Forex in significant size) an average of 10 times in each of the previous 4 quarters with Trading 212 and/or other providers
- You need to hold an investment portfolio that exceeds 500,000 EURO
- You need to have worked (for at least 1 year) in the financial sector in a position that means you have proven knowledge of how CFD trading works
Upgrading to pro is free, but users will be waiving some of the features that provide protection for retail users, namely risk warnings and commission disclosures. Trading 212 pro should only be considered if you are an experienced trader.
Is Trading 212 safe?
Trading 212 is fully regulated by the Financial Conduct Authority so it must take steps to keep your money safe such as by holding it in a separate client account. Up to £85,000 of your money will also be protected by the Financial Services Compensation Scheme if Trading 212 becomes insolvent. It also has a range of security measures to highlight any bugs and ensure customers are protected. Remember, any investment decision you make are done so at your own risk and share prices are just as likely to go down as they are to go up.
How does Trading 212 make money?
Trading 212’s main way of making money is the spread between the highest or 'offer' price for an investor to buy an asset such as a share and the lowest or 'bid' price for them to sell it. Investors will generally pay closer to the high price to buy and sell nearer the low price. There are likely to be additional 'paid for' features added as time goes by which will be another source of revenue for the platform.
Alternatives to Trading 212
Trading 212 vs Freetrade
Freetrade is Trading 212’s closest rival. Both pride themselves on making share trading more accessible. Each offers a user-friendly app with details on shares and ETFs, but Trading 212 goes further with educational videos and guides to investing. It offers a larger choice of shares with more than 2,500 stocks listed in the UK, USA and Europe, whereas Freetrade only offers shares in the UK and US. Trading 212 also has specialist investing options with its CFD product. Trading 212 doesn’t charge for an ISA, unlike Freetrade which has a £3 monthly fee. Check out our independent Freetrade review.
Trading 212 vs Moneybox
Rather than free trading, another low-cost way to get exposure to the markets is by using apps such as Moneybox to invest your spare change. Moneybox links to your bank account and rounds up your spending to invest the ‘change’ in a Lifetime or Stocks and Shares ISA and a pension. Moneybox charges £1 a month for its investment accounts and there is a platform fee of 0.45 per cent of the value of your investments per year.
In addition, you will also pay the fund management charges levied directly by the fund providers, ranging from 0.12 per cent to 0.30 per cent. There is no monthly fee for its pension but you will need to pay the platform and fund charges. Check out our independent Moneybox review.
Trading 212 vs Plum
Similar to Moneybox, rather than actively trading, Plum regularly assesses your income and expenditure and decides how much you can afford to save. This money can then be put into either shares or a mixture of shares and bonds. Its ISA costs £1 a month and there is a management fee of 0.15% for funds. There will also be fund charges to pay, ranging from 0.08% to 0.9%. Read our independent Plum review.
Trading 212 customer reviews
Trading 212’s app has a rating of 4.7 out of 5.0 on the Apple Store and 4.5 out of 5.0 on Google Play. It is the most downloaded trading app, which suggests it is very popular with its customers.
Reviews cite the good design and that the app makes investing fun.
It is rated as 'Excellent' on Trustpilot, with a score of 4.3 stars out of 5.0 from more than 9,000 reviews. Users say it is easy to use and a great tool for beginners.
Of the few bad reviews, most complain about account verification issues and not being able to withdraw funds.
Pros and Cons of Trading 212
- Free trading
- Large choice of assets
- User-friendly app
- Video guides
- No funds
- Not suitable for beginners
Share trading is traditionally more expensive than funds on DIY investment platforms and the level of downloads and reviews suggests there is a market for low-cost dealing. Trading 212 presents share and CFD dealing in a user-friendly way. It is quick and easy to sign up and you can get exposure to anything from shares to gold and cryptocurrency by easily switching between its invest and CFD account. There are even video guides and tools to help you understand and monitor the market. But there is a big risk as there is no-one to check that users are actually understanding what they are watching or doing.
This means there is a risk of losing money by failing to build a diversified portfolio or by backing the wrong shares. The easy accessibility of CFDs is also dangerous as these are products more suitable for sophisticated investors rather than beginners as losses can be huge. Tax-free earnings via an ISA is attractive but you are limited to shares and ETFs with no option for funds which can be more diversified and you also can’t use other tax wrappers such as a pension.
Trading 212 is definitely a good option for experienced and dedicated share traders but if you are just starting out it would be wise to utilise the practice £50,000 portfolio first so that you understand just how risky shares and CFDs can be.
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