Investors in the UK have a big decision to make when choosing a platform to invest with. Trading 212 or eToro? They are both great accounts for long term stock market investing & CFD trading… But which is better?
We have a few different aspects to consider when choosing a brokerage account for our portfolios, but here is a quick run-down of the the most important things to look at when making a decision:
|Instruments Available||Stocks, CFD, Forex, Crypto||Stocks, CFD, Forex, Crypto|
|Initial Deposit Amount||£1 or $100||$200 or equivalent in any currency|
|Payment Methods||PayPal, Apple/Google Pay, Skrill, Bank Transfer, VISA Card||BPAY, Neteller, PayPal, Perfect Money, Rapid Transfer, Skrill, Swift, UnionPay, Visa, Webmoney, Wire Transfer, Yandex Money|
|Minimum Trade||0.01 Lots||$1|
|Mobile Apps||iOS, Android & Windows||iOS, Android & Windows|
|Auto Investing||Pie Investing, automatically invest in stocks using monthly deposits.||Automates your trades or investments using CopyTrader or CopyPortfolio. Where you copy profitable investors.|
|Copy Trading||Copy other investors portfolios using the Pie Library||CopyTrader and CopyPortfolio are automatic systems that follows any trader you choose.|
|Customer Support||24/7 Live Chat & Customer Forums||24/7 Live Chat & Customer Forums|
|Head Quarters||Based in the UK||Based in Cyprus with offices in the UK|
|Client Fund Management||Segregated client funds for safety||Segregated client funds for safety|
|Sign up Bonus||1 Free Share when signing up through a friends affiliate link!||Verified accounts get lower deposit limits|
|Fees||Commission Free Investing in Stocks. With a maximum of 3 pips spread for CFD accounts||Commission Free Investing in Stocks. With a maximum of 3 pips on CFD accounts. You can get a 1 pip discount by using our affiliate link!|
|Our Score out of 5||✪✪✪✪/5||✪✪✪✪✪/5|
What does an Online Broker Actually do?
For most of us, it can be very stressful picking an online broker to go with because we aren’t actually sure what one should do. Most of these companies that have online platforms are exactly the same, just with a different theme or gimmick to get you through the door.
The main things you want from an online broker are:
- A free or cheap service that allows you to buy and sell securities.
- Good customer support with transparent communication between you and the broker.
- Regulated systems that are enforced by a Governing body such as the FCA or SEC.
- Easy access to your money and free transfers in and out of your account.
- A wide variety of tradable securities to give you diversity across the market.
When I hear people going on about ‘imputed interest’ or ‘disintermediation’ I think… “As long as I can invest safely and securely, I’m happy”. The people that talk that gobbledygook are trying to make investing online complicated… But it’s not!
There are tonnes of different options for online brokers, but today I’m giving you the overview of eToro and Trading 212, two of the most trusted brokers in the UK and around the world for social & retail investors with small capital. So let’s get into the overview of each company.
Overview of eToro
eToro was formed and released in 2006, making them an early adopter of the commission free online stock trading platform model. Since then, eToro has managed to gain over 13 million registered users worldwide.
The platform has become well known for their CopyTrader and CopyPortfolio features, which have allowed passive investors make gains automatically by following verified profitable traders who also use eToro.
Using the ‘passive investor’ slogans, and the social trader features, eToro has pushed to the front of beginner investors minds. Rightly so, as they have created a stress free way to become profitable while you build your investing experience.
What does the eToro Platform Look Like?
eToro has a simple design focused on easy navigation. You can see my watchlist, you can create as many watchlists as you want and store them on your home screen. You can also see exactly how much equity is in your account, what the profit/loss is on your current open positions, and what funds you have available for use.
The bottom bar, showing your accounts available funds is viewable from all pages other than the deposit screen. This gives you full overview of the position you account is in.
Other aspects worth mentioning are:
- CopyTrader/CopyPortfolio Section: This is easily accessed and updated constantly to give users the best and most profitable traders to follow.
- eToro Club: This is a premium feature where you paid a monthly fee to gain access to longer trading hours, more assets, and a higher amount of leverage.
- Invite Friends: Inviting your friends to eToro can be beneficial to both parties, as eToro offers cash incentives to users that refer others to the site.
- News Feed: Not only does the news feed get updated by verified users who offer tips or opinions on particular investments, but it is also linked to major media groups such as Yahoo Finance and Bloomberg.
Investing funds into your eToro account is easy, you can complete transactions using any of the methods mentioned above. However, unverified members have a $1,000 minimum deposit. So I would verify your account by providing photo’s of ID and proof of address before depositing, this will bring your minimum deposit down to $50!
Overview of Trading 212
Also based in London, Trading 212 is a platform that first wanted to give regular people access to the Forex markets. But after obtaining it’s UK license in 2013 and becoming authorised by the FCA, the Trading 212 team expanded to allow users to invest in stocks, commodities, cryptos, and precious metals… All commission free!
In my eyes, Trading 212 is a platform that appeals to beginners, as the features are set up to make trading and investing easy and safe. The education section of Trading 212 also allows users to build financial knowledge.
Trading 212 has 3 main account types, all of which are free to use, the only charges come from the ‘spread’ on CFD trades which is at most 3 pips. On a £10 trade, 3 pips would be a penny.
The 3 account types are:
- CFD Trading Account: This is where the day traders will sit, spread-betting on a variety of securities. Although higher risk than long term investing, Trading 212 has limit features to help users with risk management.
- Invest Accounts: This is the simple account where you buy stocks to hold. You can invest in a pie or separately, dividends are paid directly into your account, and you can auto-invest using the ‘Pie Library’.
- ISA Account (UK only): An ISA is a tax free shelter where you can trade stocks and the gains will be tax free. It is almost identical to the invest account, but you don’t have to pay tax on any profit you make.
For more information on ISA’s check out what is best for you: ISA Investing. For those around the world, there is another option offered by M1 Finance called a Roth IRA, which is the direct equivalent to an ISA.
What does the Trading 212 Platform Look Like?
These are screenshots from my personal Trading 212 account. I recently cashed out on a healthy profit for a deposit for a new house. That’s why there’s only £100 in there!
The Trading 212 interface is one of the best features of the platform. It is easy to navigate, and easy to see what your money is doing. Check out this next screenshot of the investment page where you can see all your investments in one place:
Like I mentioned, I recently cashed out of my current portfolio, which took my holdings from £2,120 at 11% gain, down to £100. So I should have written this article before that!
Again, much like eToro, this platform has it’s own special features:
- The Search Tool: You can not only search for specific companies or symbols, but you can apply filters and constraints to your search. So, Trading 212 will read your filters, and only show companies that fit your criteria, so you can do your research from within the app.
- Video Tutorial Library: This is the education centre of the application which has hours of content on finance management, fundamental & technical analysis, and stock trading.
- Event Calendar: Major financial events will be automatically uploaded to the Trading 212 server, so you will be altered to any news or stories related to your investment.
- Auto-Investing Pie’s: Investing in Pie’s means setting allocations to specific stocks and setting a monthly deposit amount. Each monthly, Trading 212 will take your money an invest it across your portfolio in the allocations you want. It takes passive investing to a new level!
You can check out the pie featured in the images above here!
You can start investing in Trading 212 from as little as £1. This is available because of fractional shares… Being able to get involved in the growth of large companies is now available to those without large wallets, you can buy as little as 0.001% of a share if you choose. You can see that I am currently invested in some fractional shares.
Trading 212 vs eToro… Which is Better?
It might seem like these online brokers are all the same, just with a different look. You wouldn’t be entirely wrong thinking that…
Because the online brokerage accounts offered by these companies are so heavily regulated, it can be hard to find differences in services, so I think it’s better to go for the platform you think has:
- The Easiest Tools to Use
- The Lowest Cost
- The Best Available Investment Options
- The Best Support & Education Facilities
- And… The Best Automation to Make your Life Easier
Let’s get into the these 5 points and discuss who comes out on top.
Which is the Easiest to Use?
Trading 212 is the easiest platform to use for all types of investing, whether that be long term, day trading, or spread-betting. Even though eToro is user friendly, Trading 212 blows it out the water on this point.
This makes sense however because Trading 212 is designed to appeal to beginner investors, whereas eToro was made for everyone beginner or expert alike.
I think the main reason Trading 212 takes the cake on this point is it’s intuitive interface which presents a high volume of information.
Every stock has up to 10 years information directly available from the app. The information included are such things as financial statements, dividend history, price history, and company details. You can also apply your own technical indicators onto the charts, to analyse even further.
Not only the information present. It is extremely easy to navigate both the desktop online version, and the mobile app.
The only area of usability that eToro tops Trading 212 is the education centre. Trading 212 only offers educational videos on how to use their platform, whereas eToro gives tutorials on how to be a safe and profitable trader with techniques to use and news stories to watch out for.
This is not to say eToro has a bad interface, or is unusable for beginners, it is quite the opposite, eToro is also great for beginners… Trading 212 is just better.
eToro focuses on CFD accounts and less on long term stocks, which are more complex investments to make. But the long term investment options are still very good.
Both eToro and Trading 212 have these features which make their apps easy to use:
- Multiple watchlists where you can save desirable companies.
- Full portfolio overview and real time result of trades and investments.
- 24/7 online support available directly through the applications.
- Notification centres where you will get news updates, investment updates, and trading information.
- Education centres where you can learn how to invest using the platforms, and the best practices to be a safe investor.
What features does Trading 212 have that eToro doesn’t?
- Auto Pie Investing:here you can simply organise a pie you wish to invest in, and Trading 212 will invest your money based on your chosen allocation. All you have to do is deposit the funds.
- In app stock analysis: The extensive knowledge bank of the Trading 212 server means you can perform almost all of your research inside the app.
- The Pie Library: This is where you can see where other investors are putting their money and see how it compares to your investments.
What features does eToro have that Trading 212 doesn’t?
- CopyTrader or CopyPortfolio: This is the big one for usability. You can simply tell eToro that you want to follow the trades made by another user, allocate the amount of your funds you wish to use, and eToro will place the trades automatically to copy the user you follow.
- 24/7 New Bulletin: You will get real time news updates from the eToro app which you can alter the notifications for, so you can get every news update, or just those relating to your investments.
Which Platform is Cheaper?
Both eToro and Trading 212 are commission free brokers. This means when trading stocks or ETF’s you are charged a fee when placing the trade.
The only ‘fee’ that you will ever be charged is called a ‘Spread’ which is only chargeable on CFD trades, this fee makes your gains exempt from Capital Gains Tax.
The spread on Trading 212 is between 1.9 & 6.0 points depending on the securities you are trading. Whereas eToro has a spread of 1.0 to 2.0 points. For reference, if you were placing a $100 trade, and the spread was 1 point. The cost of the trade would be $0.10.
On the trading side of things this means eToro is the cheaper option for people who wish to engage in day trading activities.
Trading 212 hits back with the easy deposit and withdrawal process. currently to withdraw from your eToro account, it will cost you $5. Trading 212 do this process for free. Tied in with the low deposit limit of only £1 compared to eToro’s $200, it is much easier to access your money from Trading 212.
Another fee, which for most will not become a problem is an inactivity fee imposed by eToro for accounts that go inactive for 4 months or longer. After 4 months of inactivity, the balance in your account will be charged $10 per month, unless you become active. If your account has no funds in, this inactivity fee will not be charged.
There is no inactivity fee on Trading 212.
Overall, for active traders eToro works out cheaper because of the lower spreads. However, if you plan to invest and hold assets for extended periods of time, Trading 212 is the cheaper option.
Which has the Best Investment Options Available?
In terms of investment vehicles, both platforms offer the same assets to trade. But each company focuses on different securities.
Trading 212 is more focused on stocks, whereas eToro has made a real stretch for Cryptos. However, crypto investing is only available in the U.S.
There is no difference between the assets available on Trading 212 and eToro. It’s just the amount of time each platform puts into promoting the assets. However, if we are talking about sheer amount of assets available to trade, Trading 212 has over 4,000 available stocks and ETFs, which is considerably higher than eToro… But as I mentioned, eToro focuses more on cryptos, forex, and commodities.
Again, it isn’t a bad thing that Trading 212 offers more stocks and ETFs, eToro was built for Cryptos and CopyTrading. But for stock market investors Trading 212 is the platform for you.
Which has the Best Support & Education Centre?
Both platforms have video libraries aimed at teaching new investors about finance. But eToro is focused on teaching beginners how to invest safely, to lower risk, and become more profitable. Whereas Trading 212 is based around using their platform and performing analysis.
I think because eToro is marketed to experience traders, the education centre goes into more depth regarding how to profit from investing.
It is not surprising that Trading 212 only offers the basics when teaching new users, as they are built for beginner traders. Because eToro demands a higher level of investing experience, it is no wonder why they are able to give more detailed lessons on analysis, leverage, and market conditions.
Both companies have YouTube channels where they upload some of their older content, new content is only available to active users. You can check out their YouTube channels to get an idea of the type of lessons they are teaching. You can find them in PainFreeInvesting’s featured channel list.
As for customer support, there is no difference between the companies. They both offer in app 24/7 customer support, as well as user forums where you are connected not only to the support teams, but every platform user.
Which has the Best Automation?
I think you know the two features I’m going to mention here… CopyTrader/CopyPortfolio & Auto Pie Investing.
The automation on eToro is solely based around completely passive trading. Where you follow other traders that are profitable, allocate a portion of your funds to their trades, and eToro does all the buying and selling for you.
Auto Pie investing is slightly more hand on. You need to choose your investments and how much of your funds you want to allocate to that particular asset. Once your perimeters are set, you just deposit money and Trading 212 buys the correct amount for you. The best thing is, you don’t have to worry about portfolio drift, because Trading 212 will auto correct any movements back to your chosen allocation.
If you just want an easy ride, where you deposit your money and someone else takes over, eToro is the platform for you. If you utilise the CopyTrader or CopyPortfolio or both, you will never have to manually place a trade ever again. The only work you need to do, is occasional check you’re still making money by following the chosen traders.
However, for beginners looking for a more hands on experience, Trading 212 is the best of both worlds.
Which Platform do we Recommend? Trading 212 or eToro
At the stage I am at with my investing experience, I can’t look away from eToro. As a more experienced trader, I can use the extra tools to my advantage. Also, I can lift some pressure from myself by allocating some of my money to the CopyTrader feature.
Not only that, but I can hold my long term stocks and day trade from one account, whereas with Trading 212, you would need a CFD account and an Invest account.
But that’s me… I think the recommendations should go something like this:
- Complete Beginner with no Prior Experience: eToro is the platform for you. By using the CopyTrader function while taking the online lessons, you can make money while learning how to do it yourself. Not making money early on is why most beginners lose interest, this way you can have the best of both worlds.
- Mild Beginner who has Never Placed a Trade before: You might have some knowledge and have a good idea of what you’re doing, but you’ve never actually done it before. Trading 212 will be perfect for you, as the in app analysis tools are far superior to eToro. You can grab ideas from the Pie Library, but at the end of the day, you are confident making your own decisions.
- Passive Investor who places their own trades: Again, you know what you’re doing, and you’ve been able to consistently find good trades. Trading 212 would help with your analysis, but for less required work or to take more off your plate try eToro’s CopyTrader.
- Active Traders that are Consistently Profitable: Trading 212 is an easy alternative to the platform you currently use, it is cheap and easy to use, also the analysis tools available will only help your trading. Again, if you want less on your plate, or wish to diversify your funds, eToro’s CopyTrader is a good way to mix up your trading strategy.
- Long Term Passive Stock Investors: Trading 212 without a doubt, any sort of long term portfolio could lead to you not having to place a trade for months or year, which would lead to eToro charging you an inactivity fee. Also, you can automatically invest in your stock portfolio using Auto Pie Investing.
- Investors Looking to Move into Day Trading: If you want to start day trading but you already have an investment portfolio, and you understand the basic technical analysis needed to trade short term assets, eToro is your best bet. The spread on the eToro account is significantly lower than Trading 212, so in the long run you will save more money. Also, you can also take advantage of the technical analysis lessons in the education centre.
- Looking to Make Money as Quick as Possible: You should never invest in equity markets if you want to make money quick. 75% of retail investors lose money with trading online. You don’t have to be one of 75%, you can learn how to invest from our several media outlets. Then you can get started with eToro’s CopyTrader, which will hopefully gain you some profit to start with.
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