You can’t afford to begin using the Trading 212 app without first reading this painstakingly comprehensive review. While it’s highly unlikely you’re risk-averse (seeing as you’re open to trading volatile securities online), some risks just aren’t worth it if the platform isn’t legitimate.
So in this review, you can expect to learn the following;
- the company behind this app as well as its compliance with the law,
- how it fares when compared with similar online trading apps,
- its pros and cons and lastly,
- positive and negative reviews from customers who have actually used it.
If you’re in a hurry, you can just skip to the end where you’ll be able to get a summarised gist of the review.
Is the firm legit?
Trading 212 is a securities brokerage firm domiciled in London, one of whose objective is to democratize the financial market by increasing access for ordinary people. It originally started out as a Bulgarian firm called Avus Capital Limited before it was incorporated in the UK in June 2013.
As a result, it is regulated by the FCA in the UK and the Financial Service Commission in Bulgaria. It is also in compliance with the EU’s Market in Financial Instrument’s Directive and is registered in more than 10 other regulatory bodies in countries it operates in.
Note that the FCA is responsible primarily for protecting consumers by checking the safety measures in place by firms such as this. Trading 212 also keeps investor funds in segregated accounts which are insured to augment fund safety.
So, although it can be tricky for you to determine with a 100% certainty the legitimacy of a broker, as far as the law is concerned, they’re not out to scam you.
Is it unique compared to what’s out there?
Are you likely to find similar services in other apps? Sure!
It’s 2018 so it’s really not that surprising that you’ll find tons of online brokers. To the untrained eye, they’re pretty much the same. But usually, there’s a spectrum in online trading and each trader falls into a category.
The type you decide on will depend on the type of investor you are. So what type of trading platform is this? That depends on the type of users it attracts, the type of product it offers and the usability of the platform.
Types of users it attracts
You’ll recall that it was incorporated mid-2013 in the UK, less than 5 years ago, it operates in just 65 countries. Since then it has garnered more than 200,000 users with most of them active.
Compared with eToro for example which has over 3 million account holders in more than 200 countries, but which sees 200,000 monthly users on average, you’ll agree with me that in terms of scale Trading 212 has a higher percentage of users.
Ivan Ashinov, a co-founder thinks it’s a “disgrace” the charges on stocks which prevent youngsters from participating. So the goal is to create a platform that is attractive enough to a younger generation.
The products and services offered
In terms of products, it offers what most traditional brokers offer. So it’s quite possible for you to trade stocks in the form of equities and CFDs. You could also trade currency pairs, indices, commodities (like gold, oil, coffee), as well as cryptocurrencies. They even offer share dealing service (ETFs).
In this regard, they’re just like other brokerage firms.
As for their services, as an account holder, you’ll have access to customer support service 24/5. Whichever medium you choose to use, calls, emails or live chats, they’re known to respond quickly to all of them.
The last part of this section will focus on reviewing its online platform and the type of users this platform suits.
Unlike most brokers who use the metatrader4 platform, due to its support of algorithmic trading, Trading 212 uses a proprietary platform.
You should note that the main difference between MT4 and a proprietary platform is that the former is bespoke to the firm thus developed in-house to provide precise requirements. So basically, MT4 is like a one size fits all, while the proprietary is tailored to the firm’s trading needs.
The proprietary platform is just as compatible with whatever device you choose to trade with including Android, IOS, and desktop operating systems.
Aside from this technicality, the user interface is very easy to use, just like any MT4. It is thus great if you’re a newbie. This brings us to the next feature, demo accounts.
Before you actually begin risking your hard-earned cash, you get access to a demo account (£10,000 worth) which you can use to simulate real investment performance without the actual risk.
Again, this feature is great if you’re not familiar with online trading. You should know that this feature is not unique to Trading 212 as other online brokers offer this option.
On the platform, you’ll have access to tons of data, research, and tools with market indicators as well as tech patterns. These all include the latest news and charts that will help you decide.
The educational tools on this platform have been praised especially because its high-quality materials are accessible to even mere visitors. You mustn’t be an account holder to learn from them. This goes in line with their objective of democratizing the financial markets.
What then can you conclude from this section?
So far, you can say that the type of investors likely to use this platform are people who have been marginalized like young people who may not have been originally interested in online trading, and amateurs.
What’s the catch? Fees!
Trading 212 on its site claims to be the “first and only zero-commission stock trading service in UK and Europe”.
It is worth finding out the amount of truth to this claim.
Surely, they aren’t running a charity.
They clearly didn’t customise their own bespoke trading platform just to give it away. So what do they mean?
When you’re trading online, it’s normal to be suspicious of free stuff that isn’t promotional as there could be hidden charges. Some fees you’re likely to come across include annual, premium research, broker-assisted trade (sometimes not disclosed) and even inactive (for passive investors) fees.
So what does Trading 212 mean by Zero commission in stocks?
If you’re buying stocks through fidelity or Barclays direct for example, you’ll spend not less than £4 per deal.
With Trading 212, they won’t charge you a commission for the first 10 deals you make as long as those deals do not exceed £10,000. After these 10, you’ll pay a £1.95 commission on each successive trade plus a 0.05% on the value of each new trade you’ve placed.
Do you think this is deceptive advertising?
When you consider how expensive most brokerage firms in Europe are, this can seem like a pretty sweet deal if you’re not a major player or if you don’t trade in large sums.
If you want to trade in six figures for example, you’ll find that this zero commission really doesn’t apply to you as your first trade would exceed the £10,000 maximum. So it might seem like a deceptive ad.
However, look at it from the firm’s perspective. Its goal is to democratize the market so its zero commission on stock trading is meant to achieve this by dragging low and middle-income earners into the market.
In this regard, it’s fair to say that its advertising actually applies since it is an attractive offer for its target market.
Are commissions the only costs associated with buying stocks though?
No. You’ll likely find yourself incurring other costs if you’re not careful.
Although most of these costs have little to do with the actual stock trading itself, they are worth noting.
Credit and debit cards, Paypal as well as direct transfer make it quite easy for you to deposit money into your Trading 212 account, but they usually have fees attached. These fees are usually at the discretion of the financial medium you use so they are out of Trading 212’s control.
Currency charges, as well as government stamp duty plus PTM levies, also apply.
With respect to charges about spreads and interest on margins for Trading 212, they’re all available on their trading instruments page. It’s important to check them out so you know what charges apply to what.
Amongst seasoned investors, Trading 212 is considered quite a generous broker.
Customers who are willing to deposit more than £1000 can be rewarded with as much as 10% personal bonus. Of course you’d have to inform customer care about your intent to deposit as bonuses are usually pre-approved by site management.
There was actually a time when new members were welcomed with £50 bonuses even without making deposits.
The point is, like most trading platforms, Trading 212 reward their customers, particularly loyal ones. So, operators will usually launch attractive promos to keep you loyal. If you decide to go with this platform, take note so you don’t miss out.
Most of the pros and cons are based on what customers say about Trading 212, so you’ll find more in-depth review about why they list these.
- Free educational videos available to everyone
- Zero Commission on first ten stock trades
- Very friendly user interface
- Not an effective means of trading cryptocurrency
- Difficult to withdraw large sums of money (over 250 000)
- Slow accessible order process.
Positive customer reviews
Feedbacks used here are gotten from platforms in which Trading 212 responded to.
Most investors who have used this are particularly happy with the amount of educational resources and tutorials available to them.
The proprietary trading platform is also a win. Despite it not being Metatrader4, its interface makes it easy to use. Previous MT4 users won’t even notice.
Most stock investors complain about the platform being unsuitable for large transactions up to £300,000. They’ve also complained that it can’t perform cryptocurrency transactions. Though this complaint was when bitcoins specifically were volatile.
Another common issue is trading CFDs and the slow speed with which orders go through. Because of the importance of prices at the time of order, this can seriously affect you unless the issue has been fixed.
If you’ve skipped all the way to the conclusion, here are the main points
First, we saw that Trading 212 is a legitimate firm mostly because it is in compliance with the regulatory bodies in the UK as well as several others in Europe. Since these bodies were enacted with protecting consumers, you can be assured it isn’t a scam.
Next, we noted that because the main aim of this online trading platform is to democratize the financial market, it targets people who would normally be excluded from trading activities such as young people and middle to low-income earners. It hopes to attract them by offering zero commission stock trading on the first ten deals made which are lower than £10,000.
Although Trading 212 doesn’t use a metatrader4 trading platform, its proprietary platform offers just as easy to use interface as the latter does.
Some of its best features include the ability for account holders as well as ordinary visitors to access quality educational tools on investment. Trading 212 also has other tools you’d find in other trading platforms.
You’re just as likely to find whatever asset you want to trade on Trading 212 as on other online brokers sites.
Although most people gave glowing reviews after using this trading app, some found that it excelled at some sections more than others. For example, it isn’t considered the best place to trade bitcoins. Of course, we also noted that some of these complaints about their inability to trade cryptocurrency were made during highly volatile times so it’s likely it affected the whole industry and not necessarily Trading 212 alone.
Most online brokers tend to fall somewhere on a spectrum based on the kind of services they offer. The kind of platform you end up on will largely depend on the type of investor you are.
It is not unusual to find investors using more than one platform. Trading 212 specifically caters to small investors looking to maximise their low-cost trading while offering PRO accounts for experts. The key is knowing your niche!