Trading 212 Review: A Comprehensive Guide to Accounts, Fees, and Safety

About Trading 212: Information Overview

Founded in 2004, Trading 212 is a fintech company established by Ivan Ashminov and Borislav Nedialkov, and is regulated by the Financial Conduct Authority (FCA) in the UK, the Cyprus Securities and Exchange Commission (CySEC), and the Financial Supervision Commission (FSC) in Bulgaria.

It democratizes financial markets through a free, smart, and easy-to-use app, allowing anyone to trade stocks, ETFs, forex, commodities, and more. It offers “commission-free investing” and three types of accounts.

Is Trading 212 Safe to Trade with?

Yes. Trading 212 is regulated by the Financial Conduct Authority (FCA) in the UK and the Cyprus Securities and Exchange Commission (CySEC), but it has a revoked license in Vanuatu and a suspicious clone license in Cyprus.

Regulation Overview

Money Protection

Trading 212 offers strong protection for client funds. UK clients are covered by the FSCS up to £85,000, and client cash is held in segregated accounts with major banks. Investments are also safeguarded, being held at Interactive Brokers, fully segregated from Trading 212's assets.

Investor Protection

Assets are protected under the European investor protection scheme, covering up to €20,000. However, cash balances are not protected by the European Bank Deposit Guarantee Scheme.

Editor's Comment

Trading 212 is regulated by reputable bodies and offers strong protection for client funds. However, the revoked and suspicious licenses in Vanuatu and Cyprus raise some concerns, making it important to exercise caution, particularly with CFD trading.

Trading 212 Accounts

Trading 212 offers three distinct account types: the Invest Account, which provides commission-free investing in stocks and ETFs with fractional shares starting at £1 and 4.9% AER on GBP cash; the ISA Account, which allows tax-free investing with no commission fees, up to £20,000 annual deposits, and 4.9% AER on cash; and the CFD Account, which enables trading CFDs with leverage and transparent pricing, suitable for more advanced traders.

Trading 212 Invest Account

• Commission-free investing: This account offers commission-free investments in stocks and ETFs. You can buy shares in companies instantly with as little as £1 using fractional shares, allowing you to invest in high-value stocks like Google, Amazon, and Apple.
• Interest in cash: You can earn 4.9% AER on GBP, paid daily. Withdraw anytime.
• Automated investing: Build wealth by investing in ready-made “pies” or create your own, selecting from thousands of stocks and ETFs.
• Multi-currency support: This account supports 13 global currencies, enabling you to deposit and invest across multiple currencies while avoiding FX fees.

Trading 212 ISA Account

• Zero-commission investing: The ISA (Individual Savings Account) provides tax-free investing with no commission fees on stocks or ETFs.
• Tax-free savings: You can deposit up to £20,000 per tax year into this account and pay no tax on your profits.
• Earn daily interest: Similar to the Invest Account, you can earn 4.9% AER on cash, paid daily. Withdraw funds anytime.
• No account fees: There are no fees for account maintenance. The ISA lets you build wealth in a tax-efficient manner, with full flexibility to manage your portfolio.

Trading 212 CFD Account

• Trade CFDs: This account allows you to trade Contracts for Difference (CFDs) on a wide range of assets including stocks, commodities, forex, and cryptocurrencies.
• Leverage: Use leverage to amplify potential profits (and losses).
• Fee transparency: Offers transparent pricing with low fees for trading CFDs.

Each of these accounts offers unique features tailored to different investment strategies, from commission-free investing and tax-free savings to leveraging CFD trading.

How to Get a Verified Trading Account at Trading 212?

The account opening process at Trading 212 is simple and fast, with new accounts typically verified within one business day.

To open an account with Trading 212, simply follow these steps:

1. Go to the Trading 212 website and complete the registration form to apply for an account.
2. Select your country of residence and provide essential personal details such as your email address and date of birth.
3. Enter your tax information, including your country of taxation and tax number.
4. Choose the type of account you wish to open and select your base currency.
5. Answer questions about your financial status, employment, and trading experience.
6. Accept the terms and conditions, then activate your account by verifying your identity and address.

To verify your identity, you will need to submit the following documents to Trading 212:

• Proof of identity: national ID, passport, or drivers license
• Proof of address: a recent bank statement or utility bill (within the past three months)

Once your identity is verified, these final steps will typically follow:

1. You will be required to complete a trading experience questionnaire. Dont worry, this is just to ensure you understand the risks and have a basic level of financial knowledge.
2. Select your account type and base currency.
3. Finally, deposit funds into your account to begin trading.

Fees

Editor's Comment

Trading 212 offers a highly competitive fee structure with no trading commissions, custody fees, or deposit/withdrawal fees, making it an attractive option for investors. The dynamic spreads and overnight interest charges are standard in the industry but may vary depending on market conditions.

The 0.5% FX fee is only applicable when closing positions in a different currency, which adds a slight cost for those trading across different currencies.

Overall, Trading 212's fees are transparent and relatively low, especially for investors looking for straightforward, commission-free trading.

Tradable Assets

Trading 212 offers traders CFDs on 29 commodities, 36 indices, over 8,000 shares, and 184 forex pairs, alongside access to exchange-traded securities such as fractional shares. The range of products and services available to you at Trading 212 and any applicable Trading 212 entity will depend on your country of residence. For example, EEA/EU residents will register with the broker's Trading 212 Markets entity, while U.K. and “Third Country”-based residents will register with the broker's Trading 212 UK Limited entity.

Trading 212 Card

The Trading 212 Card offers several attractive features, including zero foreign exchange fees, true interbank rates, and no spread markup. You can earn 0.5% cashback on your spending and enjoy 4.9% AER on your GBP balance. With no monthly subscription fee, it supports transactions in 13 major currencies and allows free ATM withdrawals up to £400 per month. Issued by Paynetics UK Ltd., this card offers cost-effective and rewarding benefits for users.

Conclusion

Trading 212 is a very user-friendly broker for European investors. While it is more suitable for experienced traders due to the variety of options it offers, beginners may find it a bit complex and intimidating. The advantages of Trading 212 are that it supports fractional shares and is the cheapest option on the market. Unfortunately, it does not provide tax assistance, which could be a burden for first-time investors. Therefore, if you are just starting out in investing, Trading 212 may not be the most suitable broker for you.

FAQs

How does Trading 212 generate revenue?

Trading 212 earns through overnight interest fees, CFD spreads, and share lending, where it shares 50% of the interest with users, allowing for zero-commission trading.

Does Trading 212 offer a demo account?

Yes, Trading 212 provides a demo account for practicing with virtual funds, allowing users to learn and test risk-free strategies.

What happens to my demo account after I open a real account?

Your demo account remains accessible for testing strategies and experimenting risk-free after opening a real account.

How does regulatory protection vary across account types?

CFD accounts offer negative balance protection and segregated funds, while Invest and ISA accounts provide FSCS protection, independent asset holding, and regular audits.