Does Trading 212 offer UK investors a reliable broker?

Josep

25 August, 2023

Trading 212

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Trading 212 might not be a global household name, but the truth is this trading platform is well known among investors in many countries like the United Kingdom, France, Germany, and other European countries.

It certainly comes with some interesting advantages (e.g. investment in derivatives and real assets), and according to their website, no commissions (for some investments) – allow me to elaborate on this later on.

But what are the disadvantages?

Like everything, Trading 212 isn’t without imperfections (e.g. no forex or bonds), since your money/investment is at stake. To sum up, I’ve compiled a comprehensive Trading 212 review to help you decide if it’s the right choice for your investment.

Trading 212 reviews: The overview

Trading 212 is an online broker that allows you to invest in derivatives via CFDs (stocks, currencies, indices, and commodities), as well as in real (whole and fractional) assets like ETFs and many shares. Primarily you can invest in European and American markets, sadly the Asian and Australian markets aren’t available at Trading 212.

Trading 212 is user-friendly with apps available for both iOS and Android (smartphones and tablets), you can also use your preferred web browser like Safari or Google Chrome. Sadly, you’ll not be able to connect to external trading platforms such as MetaTrader or cTrader.

Pros and Cons of Trading 212

Trading 212 has made quite the impression as one of the best beginner-friendly brokers, its design and usability are top-notch. However, it’s only fair to give you the full picture of all its other advantages and disadvantages, let me break them down for you.

Trading 212 Pros:

Trading 212 demo account

Trading 212 allows you to set your account in US Dollars, British Pounds and Euros. Be mindful, that once you choose your account currency, you’ll not be able to change it.
The platform is well-designed and intuitive. Opening an account is a relatively quick and effortless process.
Through Trading 212 you can invest in derivative products via CFDs as well as in real shares and ETFs.
Trading 212 does not charge any fees when investing in real stocks and ETFs – this is a bold move to attract new clients. However, you may be charged a foreign exchange fee if you trade assets in other currencies than your main one.
Deposits can be made using various payment methods (transfer, cards and e-wallets). In addition, some of these are commission-free – instant deposit methods like credit cards may incur a fee.
It is a broker regulated by various international bodies like The Financial Conduct Authority (of the UK), and The CySEC (Cyprus).
Trading 212 comes with a demo account (for its derivatives platform only) so you can practice and get a feel for how it works without risking your money.
Trading 212 holds client funds in segregated bank accounts, and is also part of the Financial Services Compensation Scheme (FSCS) provisions.

Visit Trading 212

Trading 212 Cons:

Trading 212 learning materials

They could have a wider variety of markets and financial instruments. It’s true that they have plenty of stocks to invest in, but unfortunately, you can’t invest in other assets like mutual funds, currencies, etc.
Help and support materials could be more comprehensive, they are lacking in detail.
It doesn’t come with a section to read relevant news, this isn’t a deal-breaker, but many competitors have a section for you to filter and read financial news from top publications.
Trading 212 doesn’t have social investing options like eToro, and algorithmic trading isn’t available either.
CFD trading doesn’t allow modifying the leverage levels (e.g. if you wanted to reduce it).
You won’t be able to connect your Trading 212 account with an external platform like cTrader o MetaTrader.

See alternatives

Trading 212 in Detail

Criteria	Comment
Country and regulation CySEC y FCA	Trading 212 is a UK-based broker with headquarters in London, regulated by the British FCA (Financial Conduct Authority) – license 609146. It’s also regulated by the CySEC (#398/21) and Bulgaria (#28284). This trading platform welcomes clients from dozens of countries, including Ireland, the United Kingdom, The Netherlands, Spain, Germany, France, to name a few. Unfortunately, it doesn’t accept clients from the United States, China and Canada.
Deposits	You can add funds by credit and debit card, Google and Apple Pay or by a regular bank transfer (this can take up to a couple of days). The minimum card deposit is €1/£1 and €10/£10 for bank transfers. Other, payment methods include Dotpay, Giropay, Carte Blue, Blik and iDEAL. Deposits with Bank transfers are commission-free, other methods like credit cards may charge you a 0.7% fee once you hit a certain amount.
Demo account	Trading 212 has a demo account, so you can try it out without risking your own money. You can always easily switch between the real and the demo account, but please don’t confuse them.
Products & trading
Stocks	Trading 212 allows you to invest in shares on the main European markets (e.g. London Stock Exchange, Madrid, Euronext Paris, German Xetra, etc.), and the NYSE and NASDAQ in the USA. It’s possible to invest in full and fractional shares, the choice is yours. Trading 212 has around 10,000 stocks available.
ETF and mutual funds	With the Trading 212 Invest account it’s possible to invest in dozens of ETFs from fund managers such as iShares, Vanguard, Invesco, SPDR and others. Mutual funds, sadly, aren’t available.
CFD	Yes, Trading 212 permits you to trade CFDs, you’ll be able to invest in CFDs of stocks, ETFs, currencies, indices and commodities.
Forex	To invest in currency pairs you’ll have to invest through a CFD, investing directly in Forex isn’t possible.
Cryptos	It’s not possible to invest in crypto and other digital assets.
Other products	Investing in bonds, options, futures and forwards is not allowed when using Trading 212.
Types of orders	Market orders and limit orders are both supported by Trading 212. In addition, you can set stop loss and take profit limits. Please note that orders aren’t guaranteed*. Sadly, social trading (e.g. copy trading) and algo trading aren’t available with this online broker.
Leverage	When trading with CFDs you’ll be forced to use leverage, unfortunately there’s no way around this. There isn’t any leverage when trading stocks and ETFs.
Fees
Trading	Trading 212 doesn’t charge direct commissions for buying and selling shares. However, CFDs come with a spread between the bid and ask price. Unfortunately, there isn’t much info on the average spreads.
Overnight fees	Overnight fees are only charged when trading CFD and you keep the position open after the market closes. These fees are minimal, but are charged daily, so can add up quickly.
Inactivity fees	Good news, Trading 212 won’t charge you an inactivity fee for not using their platform.
Other fees	The first $/£/€ 2,000 you deposit with a card or an e-wallet are free, but subsequent deposits will incur fees. There is a currency exchange fee of 0.15% – e.g. when you trade an instrument priced in USD, but your account is set in GBP. But rest assured that withdrawals, account opening and closing, and asset custody won’t cost you anything
Platform features
Available platforms	You can use Trading 212 online broker from any computer with an internet connection using a modern web browser (e.g. Safari, Firefox, Chrome or Edge). There is also an app for iOS and Android. However, you can’t connect to an external trading app like cTrader or MetaTrader.
Charting	Trading 212 comes with a sophisticated charting with adjustable time frames, so you can tweak the day, the month or the hour. There are also several chart types available (e.g. candlestick, area, line, etc.). In addition, users can add annotations and perform various financial analyses (e.g. Bollinger Bands or Standard Deviation). It’s not possible to add benchmarks to your graphs. The charts are powered by TradingView.
Research	Some financial information is available for many of the assets you can trade, like being able to view financial ratios, market capitalisation or summary income statements. However, other brokers such as DEGIRO or eToro offer a little more here – information could be better presented. There is an economical calendar for you to use, but no news feed.
Education and guides	Truth be told, Trading 212 has a very compressive help section, although the articles could have more detail. There is also a section for users to learn about finances and a bunch of useful videos.
Alerts	It doesn’t offer much flexibility when it comes to customising your notifications, and it’s somewhat hidden in the menu. You can choose whether to receive notifications about your account balance, daily account status summary, promotions, monthly account status and a few other options.
Customer support	It’s possible to contact Trading 212 support using the live chat, and email support. No phone support is available.
Overall rating	Trading 212 offers a user-friendly platform where investing stocks, ETFs, and even derivative CFDs is intuitive. The platform is well-designed and opening an account with Trading 212 takes no time. They have plenty of stocks that you can invest in, more experienced traders may miss some financial assets such as crypto or bonds.

* In times of high volatility, your orders will be executed at the best available price if the one you set is not available

Trading 212 Assets & Markets

Truth to be told, Trading 212 offers something that not many other online brokers offer: being able to invest in derivatives (e.g. CFDs) and real assets (e.g. shares and ETFs).

$Trading 212 fractional stocks$

Fractional share investment with Trading 212

Additionally, you can also choose to invest in full or fractional shares and ETFs. Be aware that when you invest in portions of shares you don’t have to buy the whole share, but you can buy or sell a piece (i.e. a fraction). It’s a handy feature, if you’re on a tighter budget, but remember, fractional shares have some limitations (e.g. you aren’t the formal owner of the share).

As for CFDs, you can find derivatives on major indices (e.g. S&P 500, FTSE or STOXX Europe 50), stocks, commodities (e.g. gold, oil, silver, etc.) and currency pairs (e.g. EUR/USD, USD/JPY, AUD/USD, etc.).

Trading 212 main financial markets

Trading 212 will grant you access to quite a few financial markets, mainly European and US exchanges. Other regions such as Asia, Australia and the Middle East aren’t covered by Trading 212; check out eToro and XTB if you are looking for more variety.

It’s true that Trading 212 has plenty of stocks (and CFDs) from many markets available to invest in. However, there is a lack of other types of assets such as cryptocurrency, bonds, mutual funds and others.

Trading 212 Fees Explained

This UK-regulated broker has a mind-blowing proposal for you – no fees when trading stocks and ETFs, and holding your investments is free too.

How is this possible? Let me break down its fees for you.

Let’s start with the good news. The services Trading 212 won’t charge you a penny for:

Shares and ETFs Trading 212 fees

Stock and ETFs: Trading 212 won’t charge you for buying, selling or holding ETFs and shares. You may have to pay external fees and taxes, like the UK stamp duty.
Inactivity: Some trading platforms will charge you a fee if you don’t use them for a while. Trading 212 won’t.
Deposits and withdrawals: It won’t cost you anything to add or take money from Trading 212 if you use a bank transfer.
Admin processes: There is no cost for closing or opening your account and receiving statements.

Now, the services Trading 212 will charge you for. There aren’t many, I can tell you that.

Trading 212 average CFD spread

Currency conversion: Trading 212 will charge 0.15% for ETF and stock trading if you use a different currency than your account’s currency. For CFD trading, this conversion fee is 0.5%. For example, if your account is set in GBP, and you buy stocks in USD, EUR or JPY, you’ll be charged.
Card deposits: The first £2,000 deposit won’t have a cost, but after you’ll be charged 0.7% of the deposited amount.
CFD spread: For each CFD trade you make, there is a spread you’ll need to consider. It’s tricky to predict what the spread will be. However, Trading 212 publishes their average values.
Overnight fees: If you trade a leveraged product (e.g., a CFD) and hold the position after market hours, you’ll be charged a financing fee. This fee is a bit tricky to calculate, but you can find the information for each instrument in their app.

Fees vs. Spreads at Trading 212

Although a fee and a spread aren’t technically the same, both can hurt your investment (i.e., they are a cost for you). A fee is a set and explicit price for a service – let’s say a broker charges 1% as a transaction fee.

Trading 212 Spread example

On the other hand, a spread is a cost already included in a trade. For example, trading derivatives like CFD doesn’t come with a fee. However, Trading 212 (and other trading platforms) will sell a CFD to you at a higher price than what they will buy it from you – that cut they take is the spread.

Why Trading 212 Doesn’t Charge a Fee for Shares and ETFs?

My guess is that they lose (or don’t earn much) money by letting users buy, hold and sell ETFs and shares for free. So, they may as well offer the service free of charge, hoping that investors will also trade CFDs on their platform – which are far more lucrative for them.

Additionally, Trading 212 may make some money from you by lending securities to third parties. These are complex financial operations (e.g., for short selling) that come with some risk. Although, be aware that Trading 212 will pay you some interest for your lent stocks.

Trading 212 will ensure a collateral is in place to secure your investments (i.e., the counterpart doesn’t return the shares). However, this is not 100% risk-free.

How to Open a Trading 212 Account?

Opening a Trading 212 account is fairly simple. Just follow the steps below if you need guidance.

Visit Trading 212 homepage.
Select the account type that best fits your needs: CFD for trading derivatives and Invest for buying and selling real assets like shares and ETFs
Add your email and password
Enter your personal details
Fill in the form with your personal information
Answer the short financial test
Read and accept (if you agree) its terms of use and policies
Confirm your identity (e.g. with your passport)
Verify your phone number
Wait until you receive an email confirming the opening of your account

Later on, you may be required to submit a proof of address. In this case, you can upload a bank statement, passport, utility bill, driving licence or similar documents showing your address.

Is Trading 212 Safe?

This trading platform is regulated by several top authorities (e.g., FCA, CySEC). Of course, it’s a duly registered (investment) company and its clients are protected by schemes like the Financial Services Compensation Scheme (FSCS) in the UK. European clients are under the Investors Compensation Fund (ICF), governed by the CySEC.

Furthermore, clients’ assets are held in separate accounts from the company’s (i.e., segregated). And, the money (in cash) that you have with them is also kept in a separate bank account. However, Trading 212 is not a bank, and doesn’t have a banking licence.

Trading 212 Security Options

It’s totally normal to have some security concerns when investing with an online broker. So, let me tell you about the security options Trading 212 provides to keep your investment secure and safe.

Trading 212 2-Factor Authentication

Two-Factor Authentication (2FA): This provides an extra layer of security by requiring users to verify their identity using two different methods before accessing their accounts. Typically, after entering your username and password, you’d be prompted to input a verification code sent to your email or mobile phone.
Secure Sockets Layer (SSL): SSL is a standard security technology that establishes an encrypted link between a server and a client, ensuring that all data transmitted remains private. In other words, if cybercriminals get their hands on your data (e.g., your login and password), it won’t be usable as it’ll be encrypted.
Devices: From your Trading 212 backend, you can check the devices that have recently accessed your account in case there is anything suspicious.

Generally speaking, the security options at your disposal with Trading 212 seem good enough. Sure, other online brokers may offer a bit more (e.g., block IPs or physical options for 2FA); however, having a 2-Factor Authentication login enabled helps to keep your assets safe.

Trading 212 Alternatives

While Trading 212 is a great online investment broker, there are a couple of alternatives you may want to try. Outlined below are some of the best Trading 212 alternatives.

eToro

eToro stands as a titan in the online brokerage space, boasting a user base of approximately 20 million. This scale sets it apart from many other investment platforms. Like Trading 212, eToro provides CFD trading, as well as fractional (actual) stocks and ETFs. Additionally, the platform allows its users to participate in the crypto market. For those interested in social trading (i.e., copying the trades of others), eToro offers this feature as well.

Wisit eToro

XTB

XTB is a platform that offers access to a broad range of derivative products, primarily CFDs. They have an impressive user interface and offer highly competitive spreads (commissions). In several European countries like Spain, France, and Germany, it’s possible to purchase actual shares and ETFs, as well as derivative products on XTB. Unfortunately, this option is not available in the UK.

Visit XTB

DEGIRO

Like Trading 212, DEGIRO also primarily serves the European market, providing services to users from the United Kingdom, Germany, Spain, and 15 other countries. It provides a user-friendly, yet powerful, platform for investing in Stocks, ETFs, bonds, options, and futures. Since its inception in 2013, DEGIRO has amassed approximately 2 million users, a testament to its success. However, if your investment interests lean towards derivative assets using CFDs, DEGIRO may not be your best choice.

Trading 212 Review: Parting Thoughts

We have now come to the end of this Trading 212 review. I hope it has helped you to clarify whether this online broker is a good option, or you need to look for an alternative.

There are a couple of reasons you should like Trading 212.

Derivatives and real asset investments
Flexible demo account
Easy account opening
Regulated by FCA, CySEC, and FCS
No fees for stocks and ETFs.

However, these other aspects may be a deal-breaker for you.

It’s impossible, to connect to third-party platforms like cTrader or Metatrader.
There are some markets unavailable, like Asia, Emerging or Australia.
The inability to trade bonds, crypto and Forex.
Asset transfers to other brokers aren’t allowed.

That’s it! All you need to know about Trading 212 to make your decision. If you have any doubts or questions, leave a comment, and I will do my best to help you.

Trading 212 Review Sources:

www.cysec.gov.cy
www.fca.org.uk
www.fscs.org.uk
www.wikipedia.org
www.trading212.com
www.upskillwise.com
www.forbes.com
www.inc.com
www.techcrunch.com

Trading 212 Reviews Update:

25 Aug. 2023 – Safety of Trading 212
28 Jul. 2023 – First Trading 212 review publication