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Trading 212 review – the best free trading platform?

16–19 minutes to read

Trading 212 is a new breed of zero commission investment platforms. Contrary to the norm, it aims to reduce costs and keep it simple for those starting out on their investment journey.

Typically, your broker will charge you to buy and sell an investment. This eats into your profit, particularly for smaller investors. As a result, this has been a barrier for inexperienced investors and potentially reduced returns. Trading 212 doesn’t do this and aims to open the investment market to everyone. Read on to see if zero commission investing with Trading 212 is for you.

Before we get started if you are new to this investing lark, it’s worth reading our Beginners Guide to Investing – how to bankroll your financial freedom. It explains the lingo and walks you through the basics. It could even help you save thousands of pounds by learning the mistakes we’ve made over the years, so you don’t have to learn the hard way.

Important Stuff – We aim to produce honest and accurate content, however, we are not financial advisors. If you need financial advice, Unbiased can connect you with a suitable professional for free. Some of our links may earn us a small commission to help us run the site.

What is Trading 212?

Trading 212 has been around since 2005 and started offering commission-free trading in the UK in 2017. The mobile app has over 14 million downloads making it one of the most popular trading apps in the world.

Plus, Trading 212 offers a platform to deal in shares, funds, commodities (like gold) and even cryptocurrencies.

Furthermore, for those new to investing, Trading 212 offers a practice account that can help you get started without the risk (and also the gains).

Is Trading 212 any good?

Customer feedback which has been independently backed, rated the Trading 212 website and app as both very good.

For that extra confidence, Trading 212 is a legit company and is authorised and regulated by the Financial Conduct Authority. If you’re wondering how does Trading 212 make money if everything is free, we answer this a bit further down.

All this makes Trading 212 be considered a good platform for beginners looking to start their investing journey. It’s clean, simple and easy to understand.

The key difference between Trading 212 and traditional platforms such as Hargreaves Lansdown, Fidelity or Interactive Investor is that Trading 212 is commission-free, whereas the others aren’t.

What is commission-free trading?

Traditional investing platforms charge a ‘trading fee’. This fee applies every time you buy or sell shares or funds. The charge is usually £10 to £12 depending on the platform you choose. Some platforms offer discounts for regular trading or may give you one free trade per month.

This means every time you buy shares in a company you pay a fee, and you pay again when you sell. If you buy and sell frequently, these fees can soon add up.

Why is commission-free trading important?

Simply, if you are charged every time you buy and sell, this is eroding any profits.

For example, you purchase £100 of shares in company X and your fees are £10 to buy. This makes the total cost £110 and means your initial investment has to increase to £110, or by 10% in this scenario, just to break even.

Then, if your £100 investment grew by 20% (new value £120) and you wanted to sell, you’d have to pay the £10 trading fee again. This wipes out all your profit as you made 20% growth, or £20, but paid £20 in total fees.

Granted, when the trading fee is a fixed amount then this becomes less relevant the more money you are investing. But, if you are buying and selling frequently, it can all add up. Plus, most people are buying and selling relatively small amounts at a time.

So, with a commission-free broker where there are no trading fees, such as Trading 212, you get to keep all your profit. However, as always, there’s a catch. As they say, there’s no such thing as a free lunch (or trade, in this case).

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How does Trading 212 make money?

If there’s no annual platform charge like Hargreaves Lansdown (which charges 0.45% per year and an £11.95 fee per trade), then how can Trading 212 make any money?

According to Trading 212‘s founder, Ivan Ashminov, the company works on a ‘freemium’ model. The charges levied on other parts of the platform, for example CFDs, pay for the free trades. The hope is that you’ll upgrade to a more profitable account as your experience increases.

Commission-free trading platforms have also been accused of increasing the ‘offer price’. This is the price you pay for buying each share. If so, a platform could make a small amount on every share transacted.

The popular US-based trading platform Robinhood (not available in the UK) was fined in December 2020 for offering customer inferior prices compared to other brokers. It was effectively receiving a kickback from the firms executing the trades. These trades happened between 2015 and late 2018 so hopefully, this practice has been eradicated.

For this review, I wanted to test the difference between offer prices in Trading 212 vs Hargreaves Lansdown. However, Trading 212 made it very difficult to see the price I was actually being offered (though the prices appeared similar).

Also, if you are only trading small amounts of money, say under £500 per trade, then any slight difference would be wiped out by the trading charges a broker like Hargreaves Lansdown would charge.

By comparison, Trading 212‘s competitor Freetrade, makes money from foreign currency conversions when buying non-UK based stocks by adding a 0.45% fee. In contrast, Trading 212 passes on the current ‘spot rate’, meaning there is no charge to customers when buying foreign stocks.

Trading 212 accounts

Trading 212 offers three types of accounts – Invest account, ISA and CFD. For most users, the choice is going to be between an ISA or an Invest account.

You can find more detail about Stocks and Shares ISAs here. There are limits to how much you can invest in an ISA and how many you can contribute to, so it’s worth checking out if this is new to you.

Trading 212 Invest account

The Trading 212 Invest account is a General Investment Account or GIA. GIA’s are typically used by investors who already have a Stocks and Shares ISA but have filled their annual ISA allowance (£20,000) and need another place to invest their cash.

The Invest account allows you to buy shares in companies listed in the UK, America, Germany, Spain, Switzerland and the Netherlands. All trades are free, unlike other platforms which charge at least £10 per buy and another £10 per sell.

You can open an account with only £1 and you can get started with a free share here.

Trading 212 ISA account

The Trading 212 ISA account is a Stocks and Shares ISA. ISA’s are used by investors as a tax-free wrapper. This means if you make gains, you don’t need to fill out a tax return. You can only invest in one Stocks and Shares ISA per year but you can hold and contribute to other ISA types (eg, cash ISA, Lifetime ISA).

To understand ISAs better check out our Ultimate ISA Guide.

Like the Invest account, an ISA allows you to buy shares in companies listed in the UK, America, Germany, Spain, Switzerland and the Netherlands. Again, all trades are free, unlike other platforms which charge at least £10 per buy and another £10 per sell.

Accounts can be opened with as little as only £1 and you can get started with a free share here.

Trading 212 CFD account

The Trading 212 CFD account allows you to trade Contracts for Difference. If you’re asking ‘what are Contracts for Difference?’, then this account is probably not for you.

CFDs are typically traded by professionals and carry a very high risk of losing money.

Here is Trading 212‘s statement on their website: “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”.

This type of account allows you to trade commodities, cryptocurrencies and use leverage. There is some negative balance protection and stop losses which sell you positions if you drop below a set threshold. However, your hard-earned cash is at risk.

This type of account is only for those that know what they are doing and you should seek professional advice.

Trading 212 leverage

Trading with CFDs (Contracts for Difference) is possible through the use of leverage. This allows you to purchase more units of your desired instrument than your available funds or initial deposit would allow you to. Leverage can also be viewed as how many times you can multiply your initial deposit or available funds to this instrument. You can check the leverage ratio for the traded instrument from its information tab, as each instrument has a different leverage ratio.

The advantage of leverage is that you get to keep the profit made from the higher investment amount. of course, the downside is that you can also lose your money very quickly. Leverage can be great when buying a stable asset like a house. For example, your mortgage is leverage. However, it is very risky when buying a volatile asset such as stocks, currency pairs or commodities.

You can only use leverage with the CFD account, so again, this is for advanced investors only and professional advice should be sought.

Trading 212 app

The Trading 212 app is clean, simple and easy to use. I feel they have traded some of the complexities found in other investment platforms to make usage as easy as possible.

Personally, this ease of use is a trade-off, as you lose more detail around the companies you choose to invest in. That said, many people would use Trading 212 to execute a trade, but will do their research elsewhere.

The pies feature, which we’ll cover below, is a handy tool for newer investors looking to spread their investments automatically.

The app has great reviews and is one of the most popular trading apps in the world, so Trading 212 must be doing something right.

Trading 212 fees

Fees? What fees? Of course, this is Trading 212’s unique proposition: you can start trading today for free.

Unlike most other platforms, Trading 212 does not charge:

  • Trading fees.
  • Currency conversion fees.
  • Deposit or withdrawal fees.
  • Inactivity fees.

Remember, you will pay stamp duty of 0.5% on share purchases made for stocks listed on the London Stock Exchange.

In addition, Trading 212 does make money from CFD accounts. These fees are often obscured from customers by offering wider spreads and charging interest on leveraged positions. Further detail on this is outside the scope of this post.

Trading 212 free share

Trading 212 offers a free share if you refer a friend. If one of your friends is already using Trading 212, you can ask them for their referral code and you’ll both get a free share. If you don’t know anyone else using Trading 212 then you can use our code and we’ll both get a free share.

Click to get a FREE Share worth up to £100 with Trading 212.

Do you want more free shares? How to get free stocks in the UK – worth up to £705.

Trading 212 fractional shares

Traditionally, when purchasing shares, you usually have to buy a minimum of at least one share. But what happens when you want to buy a share like Google, currently trading at over $1,700? You’d need to have at least $1,700 to invest.

Trading 212 allows you to get in on the action of the higher-priced companies by buying a fraction of a share. This means you can invest a more exact amount. Want to buy £500 of Google? No problem. Trading 212 lets you buy 0.4 of a share. Likewise, if you want to buy £2,000 of Google, Trading 212 allows you to buy 1.6 shares. The video below explains this in more detail.

This allows you to only invest what you can afford and not be stuck by choosing between exact share values. We really like this feature and would love to see it come to some of the larger UK platforms such as Hargreaves Lansdown.

Trading 212 Pies and AutoInvest

The Trading 212 Pie system allows you to easily divide and diversify your portfolio. Each share or fund represents a slice of the pie and you can choose the percentage of your portfolio you allocate to each slice.

AutoInvest allows new periodic investments to be allocated according to your pie. Therefore, you can invest automatically without having to rebalance your portfolio.

If you’re looking for some inspiration for your Pie, you can copy someone else’s by accessing the Pie library in the settings menu. You can even make your Pie publicly available.

The Trading 212 Pie system makes a complex portfolio balancing problem easy. Typically, this is conducted periodically and requires manual rebalancing which can be time-consuming. It’s pretty unique and I haven’t seen this from any of the other major platform providers before.

Trading 212 Pies AutoInvest

Trading 212 community

The Trading 212 Community is a forum where active participation is encouraged. You can discuss trading with other investors and put forward feature suggestions to improve the platform.

One of the drawbacks of Trading 212 is that it doesn’t have every stock listed. However, the community forum aims to fix this by allowing users to request new stocks. Simply post the stock you want and cross your fingers that Trading 212 agrees. Trading 212 claim to be adding 200+ stocks per week!

The community forum also holds a series of video tutorials. So, if you’re looking for assistance getting started, it’s the place to head to first.

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Is Trading 212 safe?

Trading 212 is authorised and regulated by the Financial Conduct Authority, FCA (Register number 609146).

All clients’ funds are kept separately in segregated bank accounts and are covered by the Financial Services Compensation Scheme (FSCS).

This means that if Trading 212 goes bust, your cash is protected up to £85,000.

Remember, this does not protect you if your investments go down or you place risky trades. This only protects you if something happens to Trading 212. Take care when investing your hard-earned cash and do your research.

Trading 212 dividends

Trading 212 processes dividends in precisely the same way as every other platform as you are the owner of the share.

You need to have purchased your shares before the ex-dividend date and still hold them on that date to qualify for a dividend payment.

For Fractional shares, dividend payments will be split based on the fraction of shares owned, then rounded to the nearest penny.

Finally, dividends will be paid into your account a few days after the dividend payment date.

Trading 212 reviews

Trading 212 has great feedback on independent review site Trustpilot. Over 8,000 users rated Trading 212 Excellent with 4.3 stars out of 5.

One thing to watch out for is that the negative reviews are full of fishing scams. This is typically in the disguise of users promising to get your money back. If Trustpilot removed these I suspect the score would be even higher.

Furthermore, users on both Apple and Android also rate Trading 212 highly, achieving over 4 stars from nearly 200,000 reviews combined.

The reviews are not surprising as the app and site are both clean and straight forward to use.

Trading 212 what we like

  • No platform or trading charges.
  • Easy to use.
  • Fractional Shares.
  • Good for beginners.
  • Good for starting with small amounts.

Trading 212 what we don't like

  • Limited stocks/funds – for example, Vanguard’s Lifestrategy products are not available.
  • Gamification of investing – making trades easy and free encourages more frequent trading. Research shows this is usually less profitable.
  • CFD Trading – there is a very high risk of losing money with this type of trading.
  • Bitcoin restriction – can only be purchased using the CFD account.

Trading 212 alternatives

The investor platform marketplace is full of alternatives. However, most of these charge commission or annual platform fees. Platforms selling themselves as commission-free platforms are a rare beast.

The main competitors providing a similar platform to Trading 212 are Freetrade and eToro. Below is a comparison, however Trading 212 appears the most competitive and has the widest range of stocks and funds.

Traditional platforms such as Hargreaves Lansdown, Fidelity and Interactive Investor typically suit experienced investors. These platforms hold more details about each stock or fund and allow you to do more research, which may give you more confidence.

The main reason that you’d use one of the larger, traditional platforms, is to have greater access to a wider range of shares and funds. For example, a favourite fund amongst those pursuing FIRE (Financial Independence Retire Early) is the Vanguard LifeStrategy funds. These are not available on Trading 212 as it doesn’t hold all stocks or funds.

Trading 212 vs Freetrade

Freetrade was the first commission-free platforms I ever used. I loved the simplicity, the ease of placing trades and the whole look and feel of the mobile app.

Both Freetrade and Trading 212 offer:

Freetrade does not offer a CFD account and as such, I doubt it is as profitable as Trading 212. Personally, I like this. However, a lack of funds has probably helped Trading 212 extend a considerable lead ahead of Freetrade as you’ll see below.

Freetrade does have some drawbacks when comparing against Trading 212. Here are the major important differences:

  • Range of stocksFreetrade has around 500, Trading 212 has around 2500.
  • 0.45% foreign exchange feeFreetrade levies a small charge for buying foreign stocks.
  • No company data – there is no valuable information on companies in Freetrade, so you have to do your research elsewhere. Trading 212 is slightly better but still not great for research.
  • Instant trade costFreetrade charges to buy a share instantly, otherwise it is purchased at 4pm.
  • ISA chargeFreetrade charges £3 per month for an ISA account. Trading 212 is free.
  • No Practice AccountTrading 212 allows you to practice trading before investing real money
  • App onlyFreetrade is only available on mobile. Trading 212 can also be accessed from your laptop on a web browser.

You can read our full Freetrade review here.

Trading 212 vs eToro

eToro has been around under a few different names since 2007. Since then, eToro has grown into a global trading platform boasting over 13 million registered accounts.

The Financial Conduct Authority regulates eToro, and your money is protected under the Financial Services Compensation Scheme. This means your money is protected as you are with Trading 212.

eToro claims to be the world’s leading social trading platform and like Trading 212 offers:

  • Commission-free trading.
  • No platform fees.
  • Mobile and web access.
  • Crypto-currency trading.
  • Free demo account.

However, as you would expect there are also some differences:

  • Funds held in US Dollars ($) – meaning you have to pay to convert your pounds.
  • No ISA account – meaning you may be subject to tax.
  • Withdrawal fee – $5 charge to withdraw funds.
  • Inactivity fee – if you don’t trade for 12 months a $10 monthly fee will be levied.

Personally, I don’t like the fact that all trades are conducted in dollars. It means you have to pay to convert your cash each time you deposit funds. If you purchase a UK stock, it would be converted back to pounds and then back again if you sold. All these small charges can eat into your profits, particularly if you are trading under £500 per transaction.

Trading 212 review conclusion

Overall, I liked the Trading 212 experience. It seems like an easy platform to start your investing journey. No platform charges and in particular no trading charges mean you can start investing with very little.

My concern with platforms such as Trading 212 is that the industry is designing apps that feel like games. This removes the investor from thinking about long-term wealth-building decisions and instead focuses on a game-like mindset that seeks quick rewards and frequent trading.

My fear is that younger, less experienced investors chasing the rainbow Bitcoin and Tesla-like gains will enjoy trading a little too much. This could leave investors with unrealistic ideas of what profits could be had. As someone who has more than dabbled with spread betting in the past, I understand how easily you can get sucked into this world.

These days, I prefer to sleep at night and not worry about what my position will be doing. Maybe I’ve got old, but I like my investing a little more ‘boring’.

That said, whatever your investment style, Trading 212 is a great place to get started with very little. Or, a good way to cut your fees if you trade regularly using a broker that charges per transaction.

You can try Trading 212 for free and get a free stock worth up to £100 when you deposit £1 using this link.

If you like free money check out our article on How to get free stocks in the UK – worth up to £780 here.

Here’s to Financial Fitness

EatSleepMoney.co.uk does not offer financial advice and is intended for reference/information only. Remember, you should always carry out your own research and/or take specific professional advice before choosing any financial products or services or undertaking any business or financial venture. If you need financial advice Unbiased can connect you with a suitable professional for free. Investments may go up as well as down and you may get back less than you put in.