Trading Apps Reviewed
By Mike Narouei, Content Producer at Boring Money
5 Mar, 2020
Trading Apps Reviewed
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Free ISA* and trading
Auto-investing and ‘Pies’ – your own personal investment playlists
No additional charge for features like limit orders or stop losses
2020 was odd in many ways! Amidst huge global uncertainty about everything, stock markets bounced around and share prices went up and down like yo-yos. Opportunities for some; losses for others. Amidst huge waves of interest in retail investing and an expansive marketing campaign, Trading 212 has seen massive growth over the last 12 months. According to their website, the money on their platform has grown by over £2.5bn and customer numbers by 1 million globally.
The offering has 4 distinct branches: Invest (no tax benefits) , ISA (tax free and a good starter account for most), CFD* (risky and best avoided in our humble opinion) and Demo (have a play). The ‘Invest’ offering is effectively a General Investment Account – usually only worth considering if you have maxed out your £20,000 annual allowance in an ISA. The Demo account allows users to get a feel of the app and trading in general, without risking any money. Users get £50,000 of fake money, allowing them to experiment and experience trading, before diving straight in. This coupled with a wide variety of learn videos, that explain different terminology, analysis mechanisms and investing theories, gives Trading 212 an edge and can provide significant value to beginner traders.
CFDs are complex over-engineered instruments, which come with a big risk of losing money scarily quickly. Despite Trading 212’s excellent features in other departments, we strongly suggest avoiding this element of the offering. 76% of retail investors lose money when using CFDs on this platform. Those are not great odds!
The smart way to use this
Trading 212 is an excellent choice for people who want to buy shares and trade regularly. No commission, very low exchange rates, and fractional shares all allow users to make short-term trades without any restrictions. The charts are slick, clear, and easy to navigate, whilst also providing more advanced trades with various customisable options, allowing them to edit the chart style, layout and time periods, improving their analysis. This coupled with added features like limit orders and stop losses, at no extra cost, makes this the perfect platform for frequent trading.
Trading 212 is also a great option for investors that want to buy and hold long-term. With free trading, no custody fee, FSCS* protection, access to ETFs* alongside US, UK, and European stocks, all within an ISA wrapper; savvy users can build significant, diversified portfolios over time, without paying a penny over and above the costs of the ETFs (which are usually in the range of £2-£3 for every £1,000 you invest this way.)
• Trading 212 charge a 0.7% fee for debit/credit card payments, after your first £2,000. The best way around this to bank transfer money to your Trading 212 account instead.
• Trading 212's 0.15% foreign exchange fee is modest and among the cheapest on the market.
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ISA costs £3pm
SIPP options available
Access to community forums
Freetrade transformed the UK DIY investing space on its launch in 2016, becoming the first provider to offer free share dealing to investors. Both the app and the company have come a long way since then and now offer ISAs and more recently a pension option. In recent years, Freetrade have expanded their ETF* range and now offer a full collection of iShares, Invesco and Vanguard ETFs; giving users the opportunity to hold a diversified portfolio for next to nothing in costs.
Investment trust access is only available on Freetrade Plus, which costs £9.99 per month and comes with a free ISA. Plus members can also benefit from specific trading features, like limit orders and stop losses. Additionally, Plus users can also benefit from 3% interest rates on cash savings up to £4,000. Maximising this allowance would return £120 annually interest and completely offset the Freetrade Plus monthly fee – effectively giving you free access.
From a user perspective, the app lacks the intuitive navigation of some of its competitors. Chart analysis is relatively weak and investment research features are slightly limiting. However, Freetrade do continue to rapidly develop and are improving every step of the way.
The Smart Way To Use This
One avenue is to set up an ISA which costs £36 a year. Buy something like the FTSE All Share or a few similar global ETF here. Pay about 0.2% a year for these ETFs (that’s an investment management fee of about 0.2%). Don’t trade. Buy and hold. Manage a portfolio for peanuts.
For users looking for a more active trading experience, Freetrade is also an excellent fit, due to its commission-free trading. Just be careful about the shiny lure of known sexy consumer brands, and make sure you have a diversified mix which might include some more boring stuff too.
Although it’s not as free as the name suggests, Freetrade are refreshingly transparent about their charges. And if not always free, it’s generally low-cost.
• ISA: £3pm
• SIPP: £9.99pm or £7pm with Freetrade Plus
• Freetrade Plus: £9.99 (comes with Free ISA)
• Foreign exchange fee: 0.45%
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Copy trader feature and forum census is a strong learning tool
Initial test to gauge trading experience
Can purchase cryptocurrency
The rise of retail investing over lockdown alongside the recent crypto bubbles have provided eToro with near perfect conditions to rapidly grow their customer base. This has been amplified by Trading212’s decision to pause signups and new accounts, due to the overwhelming demand they have been facing. You snooze you lose – and eToro have been quick to capitalise.
eToro provide access to stocks, CFDs* and cryptocurrency free of charge. It is a great option for traders who want to dabble into these different markets, know what they’re doing and don’t want the hassle of using multiple platforms. The platform is intuitive and features like the copy trader and forum census are useful learning tools that users have taken an immediate, strong liking to.
The app’s initial tests to gauge trading experience and company profiles, in which eToro breakdown why a specific stock/coin appeals to investors and what kind of trader should include it in their portfolio, are good examples of the platform going the extra mile for their customers.
However, the lack of ISA wrapper is a significant drawback when comparing to Trading212 and Freetrade. ISAs gives every UK adult a maximum of £20,000 a year to put into tax-free shelters, so you don’t pay tax on any gains.
The Smart Way To Use This
Stay away from CFDs, with a reported 67% of retail investors losing money when trading these here. Commission free access to stocks means you can trade frequently or purchase a wide variety of shares without any downsides. Compared to other trading apps, eToro’s USP is access to crypto. If you want to dabble, whilst still holding the majority of your portfolio in stocks, this is a great place to do so.
eToro have a few sneaky charges that it is important users are aware of.
• 0.5% foreign exchange fee
• $10 per month inactivity fee (12 months no login activity)
• $5 withdrawal fee (this one is particularly cheeky)
• Crypto: Spreads between 0.75% - 4.5% depending on the coin
Glossary and Bullshit Basher
OK – three letter acronyms and jargon go with the territory. We try to explain them all here – do get in touch and tell us off if we’ve overlooked anything!
CFDs – Contracts For Difference - weird over-engineered financial alchemy – you basically take a bet on a share price moving, by spending just a fraction of the actual share price – if markets go your way it’s awesome. If they don’t it can wipe you out and quite literally be catastrophic. The odds are very heavily stacked against you. A really bad idea for most retail investors.
ETFs – Exchange Traded Funds – collections of investments a bit like the playlist concept – you pick one thing and get a ready-made selection – these are traded like shares and usually map an index by region, sector or investment type eg the FTSE 100 will have the top 100 UK shares by size in one simple-to-buy product – one trade gets you access to 100 shares
ISA – Individual Savings Account – an investment account which is sheltered from tax on any gains you make – usually the no-brainer starting point for investors – up to £20,000 can be put into this account every year
SIPP – Self Invested Personal Pension – a DIY pension where you get to pick what goes into it – so it feels like an investment account but you can’t get your hands on it till you’re in your late 50s – the benefit is you get lovely tax relief from the Government which is like a freebie top-up