How much money I make trading shares on Trading 212?

The profit so far:

I have now been trading for about 5 months and at the time of writing, I have made £450 as a profit or return on my investment. And this amount does not include the dividends that I have or will receive as owing the shares of various companies. This may not seem the best or huge return on investment of £4000, but so far the investment has yielded a return rate of around 25% which I think is quite a good number when compared to the interest the amount could have had had it was kept in a bank account.

When did I start?

I started in October 2020 with an initial deposit of £800 but as the profit started to build up, I increased the total amount to £4000. This is the amount I would ever going to invest and if it all goes bottom-up, then this is the total amount that I am going to lose.

Which shares, FX, or CFD do I buy or invest in?

I don’t do CFD or Foreign Exchange (FX) as I don’t understand them or find it too volatile for my liking. When it comes to shares, I only invest in FTSE100 or 250 or SNP 100. These stocks can often make you wait for weeks to see any return on them, but they are also less volatile and less unlikely to vanish your money altogether.

Which stocks do I invest in?

I normally go for stocks of companies that have had good quarterly, half-yearly or annual results, pay dividends and are part of FTSE 350. Just to make sure that the money I am investing in has a good chance of protection. Currently, I hold all four big UK banks as they all have had their annual results for 2020 in and they all had profit, albeit less than the previous year, and have resumed dividends. Miners such as Fresnillo, Glencore, and Ferrexpo are some of the stocks that have given me profit and dividends. And I have also bought and sold stocks of Amazon, Google, and Tesla, etc. Just for the same reason that they have more chances of not going out of business overnight or have more strength of withstanding a financial blow.

When do I sell the stock?

I never wait for or expect a big return on my investment. Sometimes I sell my stock even if the profit is in pennies. There are two reasons for it, 1, a tiny profit is better than a loss, and, 2, it protects my initial investment. Moreover, even a profit in pennies is a good return if you can generate it more often. A profit of 79p on investment of £67 over a 3 day period means that the return is 0.39% a day or 143% over a year. And it also frees up the money so I can reinvest it.

Not paying a commission does help.

Thankfully more and more free trading apps are coming up into the market and one does not have to pay a fee every time he sells or buys stocks. Currently the cheapest fee-paying share dealing account in the UK charges you about £6 a go. Even as a beginner if I bought and sold 10 times a month, that is £60 that I was never going to see. However, trading without a fee does help to make a profit or at least mitigate losses. I have been using Trading 212 for a few months now and if I was using any fee paying service, I don’t think I would have made any profit.

What are fractional shares and how to buy them?

What are fractional shares?

A fractional share is a part of a full share. It is like dividing a pizza into 5 pieces where each piece represents 1/5th
of the pizza.

How to buy fractional shares?

Many stock brokerage companies offer fractional shares to buy for their clients. But with the help of share buying apps such as Trading 212 or Freetrade, buying them now is becoming easier every day.

Buying a fractional share on Trading 212

One of the best features that the Trading 212 app has that it lets you buy fractional shares. And as the title suggests, you can buy a fraction of a share of a company. Handy if you don’t have $3000 to buy just one share of Amazon but still willing to invest by buying the 100th part of it by paying just $30. And even if that feels expensive to invest, you can buy the 200th part of an Amazon share by paying just $15. Trading 212 lets you invest any amount or buy any fraction of a share as far as your buying price is not below £1.

How to buy a fractional share?

On the Trading 212 app, select the company you want to buy the share of and click on Buy. Now type the desired quantity of a share such as 0.1, 0.01, or 0.001, and so on. Once you are happy with the amount and the share quantity, review the order and buy it.

$buy-fractional-share-trading-212$

$100th-fractional-share-trading-212$

Can I buy a fractional share of any company?

The majority of companies on Trading 212 (Including FTSE 350, AIM, European, Swiss, and American) allow you to buy fractional shares except a few. At the time of writing two American companies that I found which do not allow fractional shares are Energizer and Wills Towers. Trading 212 app also allows you to pre-indicate if a share is fractional or not by going to Setting > Trading preference and enabling Fractional shares indicator.

$fractional-shares-settings$

$fractional-shares-ok$

Do I pay stamp duty on fractional shares?

If the share is listed under FTSE 350 then the majority of shares will incur stamp duty. However, the UK AIM market shares are exempt from stamp duty. But if you are buying shares listed on any foreign exchange, you will not have to pay UK stamp duty on them.

Dividend on fractional shares

If you have fractional shares of a company, you will receive dividends on them provided you held them on the eligible dates (Ex-dividend and Record Date). However, the amount you will receive will be proportionate to the fractional quantity of the shares. For example, if the company paid a dividend of $1.00 per share, and you held a 0.25 share, your dividend amount will be $0.25 or 1/4th.

$dividend-on-fractional-shares$

Trading 212 Review : From a newbie’s perspective.

In the beginning:

I download Trading 212 in September 2020 after watching a brief advertisement on the telly. Though I had seen its adverts a few times before, I never gave it any serious thought as I did not believe that you could trade stocks without paying any fees. To be honest, when I first heard about it, I thought it was a scam or a trick app that claims to be free but once you have started to use it, it bombards you with hidden costs and fees.

Even after downloading it to my mobile, for the first few weeks, I trod very carefully in terms of depositing money and buying and selling stocks. I have now been using it for about one and half months and here is my review (Please note my review is only related to the share dealing account as I have not used the other features of the Trading 212 app namely ISA and CFD):

1. No Fee:

Yes, it does not charge you any fees for selling or buying stocks: However, there are some other fees that you would be paying such as stamp duty (charged at 0.5% of the total cost). But this is a government levy and everyone has to pay it if buying UK stocks.

2. You Don’t Have to Have an App Only:

You can download the app from Google Play Store but Trading 212 also has a website https://www.trading212.com where you can trade stocks and shares if a mobile app is not your cup of tea.

3. I Wish I Had Downloaded It Sooner:

I have been buying and selling, in the hope of making a living as a day trader, for around 10 years. And in that period I have not made much money to call myself a day trader, but I have paid a significant amount of money during the last 10 years to online brokers. And this is why I like apps like Trading 212 as I don’t have to pay anything for fees when I trade. There is also no fee or commission if you transfer money to or from Trading 212 to your bank account. Neither there is any management fee for the stock you hold on it.

4. You Pay the Spread Anyway:

Many people say that Trading 212 is not free as you are paying indirectly as the spread (the difference between the price of selling and buying). So basically the argument is that Trading 212 charges higher prices when you are buying and gives you lower prices when you are selling the stocks. But, Trading212 is not the only brokerage company that does so. No matter whichever broker you choose, they all have the spread – even if you are paying a fee for your stocks or not. The spread is always there.

5. It Is a Popular App:

Trading 212 started in Bulgaria and entered the UK in 2016 and it started to offer no-fee online share dealing in 2017. At the time of writing Trading 212 app has had 15 million downloads.

6. Is Trading212 authorised?

Yes. Trading212 is regulated by the FCA (Financial Conduct Authority) UK. Trading 212 has an FCA Firm Reference Number 609146 (https://register.fca.org.uk/s/firm?id=001b000000NMi1QAAT).

7. Is My Money Safe With Trading 212?

In the event that Trading 212 goes bust, a user’s money is protected up to the value of £85,000, the same way as a bank account in the UK is protected by the FSCS for up to £85,000.

8. How to Get Started?

If you want to check out how the app works or how to trade on it, you can do so by first trying out using a practice account where you are allowed to deal up to £50000 in virtual money.

9. Trading 212’s Reviews on Other Sites:

At the time of writing, Trading 212 has the following scores on the review sites:
Trustpilot UK: 7242 reviews with an average score of 4.4 out of 5
Google Play: 73506 reviews with an average score of 4+ out of 5
For reviews and group discussions on Reddit: visit: https://www.reddit.com/r/trading212/
https://www.reddit.com/r/UKInvesting/comments/7g3boz/trading_212_yay_or_nay/

10. If It Is Free Then How Does Trading 212 Make Money?

Trading 212 makes money by selling the stock at a higher price and buying them at a lower rate (the difference is called the spread). Spread is the difference between buying and selling price. For example, if a share costs 5p, then the price the broker might be showing you may be 5.25p when you buy it. And when you sell it, it might be 4.98p and so in both cases, you are buying expensive and selling cheap giving the broker an opportunity to make a profit by the spread.

11. Trading 212 Free Shares:

Currently, if you sign up for Trading 212 by using an invitation code from someone who is already a Trading 212 account holder, both you and the invitee will get free shares up to the value of £100 or $100 or 100 Euros. One user can invite up to 20 people and therefore can get free shares of up to 2000. The accounts are credited within 3 working days with free shares once your friend or invitee has signed up for a new account and has deposited the minimum amount of £1. However, there is a limit of 20 signups per account for which the inviter will receive free shares.

12. Over 2950 Stocks from Germany, UK, USA, Holland, France, Spain, and Switzerland:

The heading says it all!

My personal experience:

So far, I like it. In the past, I have paid out hundreds of pounds just to be able to buy or sell stocks. Even if you trade just 20 times a month, that can amount to £160 (£8 per go, on the cheap side) just for the brokers’ fees. At least I am not paying that now. And even if Trading 212 is making money by the spread, buying and selling the stocks for me are still way cheaper than before.

I can start investing from £1.

The minimum amount of stock that I have to buy on Trading 212 is £1 (for the majority of fee-charging brokers the minimum amount is £50).

I can buy fractional shares:

One of the best features of Trading 212 is that one can buy fractional shares. Quite handy when you don’t want to or have that sort of money to invest in a very expensive share such as Amazon ($3219 apiece), or Alphabet inc. ($1795) but would rather invest a little money to own a fraction of the whole share. $fractional-share-trading-212$

No foreign exchange fee:

When buying the US, or European shares, Trading 212 has no foreign exchange fee. The buyer pays the converted amount in his local currency. no-foreign-exchange-fee-trading-212

Live chat:

Contacting customer support through live chat is handy when there is a problem. I have contacted them a few times and 4 out of 5 times they were able to resolve the issue over the chat.

My Only Qualm:

Probably the biggest disappointment with Trading 212 is that occasionally there are times when there is a delay in share buying and selling execution as it goes in the pending mode. The delays sometimes can be up to 2 minutes and longer and if the price moves up or down in the meanwhile, there is a good chance that you won’t be getting the price of your choice. pending-order-trading-212

Conclusion:

Overall I have found Trading 212 cheap, user-friendly, and easy to buy and sell shares and stocks. And I do hope that it remains this way as there are very few alternatives apps that can deliver the same features and cost. The issue of pending orders, fortunately, does not occur frequently and so far it has not made a big difference in price. But there is certainly a need to fix this issue up.