In this article, we will give our honest review of Trading 212!
We recommend Trading 212 if you are looking for commission-free Stocks and ETFs trading and/or want to get a Robo-Advisor feature (“AutoInvest & Pies”).
Trading 212 allows you to invest in real stock and ETFs for free! On the downside, the platform is limited in the product offering, there are no relevant fundamental tools, and it charges a 0.15% currency conversion fee. Trading 212 is also not accepting new UK clients at the moment.
Trading 212 is an online broker with two distinct services within the same web, mobile app, and browser extension platforms: Trading 212 Invest and Trading 212 CFD. Both allow you to invest in different asset classes but with different exposure sets (non-leveraged vs leveraged).
Trading 212 Invest allows you to trade commission-free Real Stocks and ETFs; it presents a new feature called “AutoInvest & Pies” (including a social trading feature: Pie Copying) and gives you access to fractional shares.
Trading 212 CFD lets you increase your financial exposure meaning more investment risk but higher expected returns with leveraged positions up to 30x of your money! The product offering involves CFDs on Forex, Stocks, Indices, ETFs, Cryptos, and Commodities. Zero commissions remain, but now it applies larger spreads compared to non-leveraged positions.
In terms of safety, Trading 212 is authorized and regulated by the FCA (Financial Conduct Authority), CySEC (Cyprus Securities and Exchange Commission) and FSC (Bulgarian Financial Supervision Commission).
That’s Trading 212 in a nutshell. Keep reading if you want to find out what our research team has to say after carefully analyzing Trading 212. Here’s what we’ll cover:
1. Trading 212 Overview
Founded in 2004, Trading 212 is a fintech company with a clear goal: democratize investment activity. It has become increasingly popular among retail and professional investors for its simple and easy to use trading platforms. Statistic data proves that point: over 14 million downloads, UK’s #1 trading app since 2016 and, in 2017, it was the most downloaded trading app in Germany.
In only one account, you will be given access to two services: one with non-leveraged positions (Trading 212 Invest) and another one with leveraged positions (Trading 212 CFD):
In Trading 212 Invest, you may trade commission-free real stocks (3000+) and ETFs (450+) with a 0.15% currency conversion fee. Are you based in a EUR country and want to invest in Apple (quoted in USD)? The 0.15% will apply both in the buying and selling (0.30% in total). An investment of €1,000 would roughly cost you 3€ in total.
It presents a new feature called “AutoInvest & Pies”, where you can create a diversified portfolio and customize it to your unique financial goals in an automated way.
Besides, you will get access to Pie Library, Pie Comments, and Pie Copying, where instead of creating a pie from scratch, you will be available to prefill your slides with some of the Pies constructed by the Trading 212 community. Bear in mind you will continue to have full control over your investments. Your copy of the pie is not linked to the original. If the Original Pie edits their pie, it will not reflect that change in your copy.
Finally, as icing on the cake, it gives you access to fractional shares. From as little as 1€, you can invest in Amazon without paying thousands of dollars for a single share! Isn’t that great?
On the other hand, Trading 212 CFD is made to enhance your returns dramatically, but it carries a higher risk (two sides of the same coin, right?). The product offering is wider with CFDs on Forex, Stocks, Indices, ETFs, Cryptos, and Commodities. Zero commissions remain, but now it applies larger spreads compared to non-leveraged positions.
If you do not have the time to read the “Client Agreement” document, let us mention a crucial point you should be aware of, but, unfortunately, few investors pay attention to it! Using Trading 212, you are giving your consent to lend the financial instruments held in your account (for short-selling, for instance). While lending your shares allows Trading 212 to earn a modest amount of interest, which will help them maintain a sustainable commission-free model, this also implies an additional small (yet existent) risk for investors. To mitigate it, Trading 212 will procure to hold collateral to at least the value of the lent’s financial instruments. Share lending is only executed in Invest accounts.
The accounting opening process is fast, 100% digital and requires no minimum deposit. There are 9 base currencies available, but you can only choose one. In other words, “base currencies” is not equal to a “multi-currency account”). We faced some trouble in ID verification, but it was quickly “fixed” by repeating the process (took less than 2 min).
Finally, customer support is highly effective in response time. It is 24 hours available, and it can answer inquiries in 16 different languages.
2. Trading 212 Pros and Cons
- Commission-free Real Stocks and ETFs trading
- AutoInvest & Pies feature
- Fast and easy account opening process
- Demo account
- Top Tier Regulator
- Limited product portfolio (no Options, Bonds, Mutual Funds or Futures)
- No relevant Fundamental tools
- Spreads on Forex CFDs may be high in certain trading hours
- Foreign exchange fees (0.15% and 0.50% in “Invest” and “CFDs” accounts, respectively)
3. Trading 212 fees snapshot
Like the commission’s information, fees are quite transparent (recall that commission differs from fee). CFDs spreads are, in general, quite tight compared to other brokers. However, it may widen due to the lack of liquidity in the market. Besides, the fees on forex trading are high in some currency pairs, such as EUR/USD and EUR/GBP. So, before placing an order, make sure you know what you are paying for!
Moreover, on Trading 212 CFD, you will be charged a daily interest fee for leaving an open position for the next day (overnight funding costs). Why is that? Well, by trading CFDs, you are borrowing money (i.e. leverage), so interest is charged on that amount during the night. Also, you will have a currency conversion charge of 0.50%.
On the other hand, in Trading 212 Invest, you only have the 0.15% currency conversion fee (=foreign exchange fee). That’s all!
In other related fees, Trading 212 does not charge withdrawal, deposit, or inactivity fees.
4. Trading 212 Safety and Regulation
Trading 212 is authorized and regulated by a top tier regulator, FCA (Financial Conduct Authority), and FSC (Bulgarian Financial Supervision Commission).
Clients assets should be held in segregated bank accounts. They are covered by the Financial Services Compensation Scheme (FSCS), which means that in the event of Trading 212’s default, investors are protected up to 85 000£ in their financial assets.
However, as of August 2021, a new release in the “Terms & Conditions” (Section 13.10), states the following: “your Investments may not be segregated and separately identifiable from the Investments of the firm or custodian in whose name your investments are registered” and “as a consequence, in the event of failure, your investments may not be as well protected from claims made on behalf of our general creditors (…)”. We believe that Trading 212 has put that clause because some developing markets require that you appoint a sub-custodian located in the country to hold and trade assets on your behalf. This matter has led to several discussions in the Trading 212 Forum. Under the FCA and CySEC rules, Trading 212 must ensure the safeguarding and segregation of client funds. Nonetheless, we feel that you should be fully aware of this risk since most brokers say the exact opposite in its Terms & Conditions.
It is registered in several countries, meaning that it must have authorization from the local financial markets authorities. For instance, in Portugal and Germany, Trading 212 is registered in CMVM and BaFin, respectively.
Finally, under the August 2018 restrictions in CFD trading by the European Securities and Markets Authority (ESMA), Trading 212 provides negative balance protection for Forex and CFD trading on a per-account basis only to retail clients from the European Union. What does that mean? Imagine that you deposit 1000€ in your account and open a position with a 5:1 leverage. This increases your exposure to 5000€. If the market dropped 25%, you would lose 1250€ (25%*5000€). As you can see, it is above your initial deposit of 1000€, meaning that you would owe 250€ to your broker. With ESMA regulation, your account balance is automatically readjusted to 0€, so you only lose your deposit. (more info here).
Do you want to read a deeper analysis? Check out our dedicated article on investment protection (for EU investors)!
5. Trading 212 and Brexit – What’s next?
As of 4th January 2021, after the Brexit negotiations deadline (31st December 2020), the EU-UK agreement implementation, on the investment side, has been quite straightforward with no hassles for everyone involved: European Economic Area (EEA) Residents, Non-EEA Residents and UK residents.
Firstly, your investments will remain unaffected. Secondly, you will continue to be under the regulation and supervision of the Financial Conduct Authority (FCA) as Trading 212 remains a UK based company. That also means you will still be covered by the Financial Services Compensation Scheme (FSCS) up to 85 000£. However, additional compensation by the EU will no more apply.
If by any chance, you were one of the people that did not follow the procedure requested by Trading 212 between 22nd December and 31st December of 2020, your account will be put in “close only” mode, meaning you will not be able to open new positions, only close existing ones. In that case, please contact customer support through the following e-mail address: firstname.lastname@example.org.
6. Trading 212 supported countries
Trading 212 operates in most countries globally: Australia, United Kingdom, South Africa, Singapore, Hong Kong, India, France, Germany, Portugal, Spain, Norway, Sweden, Italy, Denmark, Luxembourg and the list goes on. However, as of this writing, Trading 212 is not accepting new UK clients.
Nonetheless, due to regulation, Trading 212 cannot accept clients from the United States and Canada.
Did we answer all your doubts through our Trading 212 Review? Did it help you make your decision regarding opening an account in Trading 212? Let us know your feedback!
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% 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.
Past performance is not an indication of future results.