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Practice mode allows gaining experience in a risk-free way
Tutorial isn't very clear, especially for beginnersTrading 212 review
Here's our in depth review of Trading 212, a fee-free trading platform with a free ISA, that's probably blowing up your phone with adverts.
Practice mode allows gaining experience in a risk-free wayTutorial isn't very clear, especially for beginnersWhat's in this review?
What is Trading 212?
Trading 212 is an app-based trading platform that lets you to trade stocks, ETFs, CFDs, forex, commodities, and more, without any commission.
Alongside Freetrade in the UK and Robinhood in the US, Trading 212 is one of the UK’s most popular trading platforms for new investors. For new investors, the main draw of Trading 212 is the fee-free ISA – which we’ll go into more detail on further down.
Trading 212 is considered a safe platform and is regulated by the Financial Conduct Authority (FCA).
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.
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What different products does Trading 212 have?
Trading 212 has three different products available:
- Trading 212 Invest. A general investment account with zero fees and zero commission. This might be what you’d use if you’d used up your ISA allowance of £20,000 (read our full stocks and shares ISA guide if you need to get clued up on ISAs).
- Trading 212 ISA (individual savings account). This is the same as the invest account, but within your tax-free ISA wrapper.
- Trading 212 CFD (contract for difference). This is a riskier game, CFDs allow you to trade contracts based on the movements of the stocks. The key thing is that your money is leveraged so you could gain or lose much more than you’re putting in.
Let’s go into a bit more detail about what each of these different account types are about.
Trading 212 Invest
Trading 212’s Invest product allows you to invest in stocks and shares without any commission. Here are the key takeaways:
- You can start with as little as £1
- There’s no commission
- There are foreign exchange fees
- You get unlimited instant trades
- You can buy fractional shares (which are exactly what they say on the tin, if a stock is priced at £1,000, you can buy a fraction of that – making it more affordable.)
Trading 212 ISA (individual savings account)
Trading 212’s stocks and shares ISA allows you to do everything its Invest product does, but with the added benefit of it being tax-free.
Investments made within a stocks and shares ISA are not subject to tax. You can read our full stocks and shares ISA guide if you need to find out more.
So, with the Trading 212 ISA these are the main things to know:
- Like any ISA, you can invest up to £20,000 in the 2020/21 tax year tax-free
- You’ll pay no administration charges
- You’ll pay zero commission for trades
- There are no charges for dividend reinvestment
Is the Trading 212 ISA any good?
Given the total lack of fees, Trading 212’s ISA seems to be a pretty good option for investors.
It’s pretty hands-on though if you’re a beginner, so if you don’t fancy the faff of creating your own portfolio and doing your own research into investments, you should look into either a “set and forget” style robo-advisor, or an actively managed fund from the likes of Hargreaves Lansdown or IG.
What can I invest in with Trading 212?
There are more than 3,000 stocks and exchange traded funds (ETFs) that you can invest in on a number of different markets. There’s a full list with detailed information on the quantity that you can invest and the market hours on the Trading 212 website. You can also buy fractional shares with Trading 212, which is a small portion of a share. If you get dividend payments on these shares then the amount you’ll receive will be proportionate to the amount you own.
Does Trading 212 allow you to reinvest your dividends?
Yes. Dividend reinvestments are possible with Trading 212 and have no additional fees. The dividends that you receive are added as funds. You can decide whether you want to withdraw the dividends or reinvest them.
Trading 212 Invest vs ISA: What’s the difference and which should I go for?
These two accounts are virtually identical.
If you don’t have a stocks and shares ISA already, you should open up the Trading 212 ISA and take advantage of the tax benefits that come with it.
If you do have a stocks and shares ISA, you’ll need to open up the Trading 212 Invest account, because you’re not allowed to pay into more than one ISA per year.
Remember that on top of your ISA allowance, every UK adult is also allowed £12,300 (at the time of writing) in capital gains tax (CGT) allowance. This means your first £12,300 of capital gains (i.e. growth of your investments) won’t be subject to tax. Once you exceed £12,300, you’ll start paying tax.
Also keep in mind that not many people will exceed both their ISA allowance and CGT allowance, so this consideration doesn’t really matter for most people. If you do exceed both allowances, then then lucky you!
Is Trading 212 safe?
Trading 212 is regulated by the Financial Conduct Authority (FCA). All client funds are kept in a segregated account.
Trading 212 is also protected by the Financial Services Compensation Scheme up to £85,000 which protects you if it were to go bust. This doesn’t cover your investments if they don’t work in your favour.
Trading 212 customer reviews
On consumer review platform Trustpilot, Trading 212 has 4.5 out of 5 stars and a rating of Excellent, based on more than 2,000 reviews.
The love continues in the App Store, where the Trading 212 app has 4.7 out of 5 stars based on more than 1,500 reviews. On Google Play, the app has 4.5 out of 5 stars based on more than 49K reviews.
Customers loved how easy the app was to use, especially for beginners. Those who were less impressed cited technical glitches and pricing issues as the reasons (updated 23 April 2020).
Trading 212 CFD (contract for difference)
Instead of trading shares, you can trade a CFD. This is kind of like betting on the direction that the stocks will move.
What can I trade with Trading 212’s CFD product?:
- Stocks. Trade on the movements in the value of stocks, like Apple, Tesla and Lloyds.
- Forex. Trade on 150 major foreign exchange pairs with tight spreads.
- Indices Trade on indices, such as NASDAQ, S&P500 and UK 100.
- Commodities. Trade on commodities such as cocoa, cotton, coffee, gas, oil and sugar, amongst others.
Features of the Trading 212 CFD account include:
- Zero commission
- Tight spreads
- Stop Loss and Take Profit
- Negative balance protection
- Instant execution
CFDs are complex and risky. If you’re new to CFD trading then we have a guide that could help.
It’s also worth checking out our guide to CFD trading risks.
Trade CFDs with Trading 212
- Trade stocks, forex, indices and more
- Download the app to start trading and investing without any fees today
- 24/7 support
Trading 212 Invest vs CFDs: What’s the difference?
CFD trading is a lot more complex compared with investing in stocks. When you trade CFDs, you speculate on the movements in value rather than purchase the underlying asset or share. This means that you’re not entitled to receive dividends, as you never own the shares.
There’s more complexity to this than just the contract, as CFDs allow for leverage.
If you’re not sure which one to go with, Trading 212 has a demo account that allows you to try it out without real money.
Trading 212 fees, charges and limits
There are no fees for using Trading 212, including the ISA, though there are several limits when it comes to deposits and withdrawals.
Minimum deposits and withdrawals
| Product | Minimum deposit | Minimum withdrawal |
|---|---|---|
| Invest | €1, £1, $1 | €1, £1, $1 |
| CFD | €10, £10, $10 | €10, £10, $10 |
| ISA | £1 | £1 |
Does Trading 212 have an inactivity fee?
Nope, which is great! A lot of trading platforms have a fee that you have to pay if you are inactive with money still held in the account.
How does Trading 212 make money?
Trading 212 makes money through the “spreads” between the buy and sell price on the platform. There is also a 0.5% currency conversion charge and you will have to pay stamp duty for share and ETF purchases.
What is the difference between “practice mode” and “real money”?
Practice mode
Trading 212 has a demo feature on the site and app that allows you to test out the platform with £50,000 of fake money. It’s fun to play around with to get a feel of the site and how it works before committing actual money to your investments. You can “buy” anything that you’d be able to in the “Real Money” feature, such as shares in Netflix, Amazon and Apple, among thousands of others. This lets you see how the investments fluctuate over time. This is quite a useful learning platform to get a feel for investing as a whole.
Trading 212 has a good focus on teaching people about the basics of investing and how to use the platform. It has a YouTube channel with hundreds of videos to teach you about share dealing and some handy guides on the basics and terminology.
It also has the demo feature for CFD trading, but if you don’t have much exposure to CFDs then this can be overwhelming and may put you off ever looking at a graph again.
Real money
Once you reckon you’ve played around with fake money enough, you select “switch to real money”. It will take you through some basic information such as your contact details and some basics on your income and savings. Choose which accounts you want and what currency you want to trade in and you’re good to go.
When buying shares you can choose how many you want and the app gives you the cost in your chosen currency, which is helpful. You have the choice to create limit orders. This allows you to enter the maximum you’re willing to go to when buying shares. If the stock prices drop below this amount before the end of the day, it will automatically place the order for you. You can also do this when selling shares by entering the minimum you’re willing to sell for.
Trading 212 pros and cons
Pros
- Free to use – there aren’t any fees for trading with Trading 212
- Can be used in the web browser and on a mobile app
- Practise mode allows you to give it a go without putting down any money
Cons
- No personal pension, lifetime ISA or junior ISA
- Tutorial doesn’t give much detail on what’s what, you have to figure it out for yourself
Our verdict
Trading 212 has a lot of functionality considering that it has no fees. The practice mode is a great way to learn how it works, but you do need to do some external learning; don’t expect it to teach you how to invest successfully. It does offer a huge range of resources to help you learn about investing which is helpful if you’re a newbie.
If you’re new to investing and are looking for ready made portfolios, this isn’t the platform for you. It’s worth checking out some alternatives that have this feature. If it’s a free trading platform that you’re looking for, then you can check out our comparisons of Trading 212 vs Degiro and Trading 212 v Freetrade.
Open your Trading212 account to invest with no commission
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.
Frequently asked questions
76% of retail CFD accounts lose money
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