Commission-free trading is an important aspect that traders look for when they’re choosing a platform.
I whittled down the options and found eToro and Trading 212 as two popular choices.
Although both of these platforms may seem like they’re very similar, upon closer inspection I found that they differ in terms of cost and product range.
In this article, I’m going to explain their differences in more detail. Before I compare them, let’s get to know more about each platform.
Table of Contents
eToro is one of the most popular trading platforms in the world.
One of their unique selling points is their social trading feature. It works like a social media for traders, and you can learn or gain knowledge from other traders in eToro.
In eToro you’re able to buy stocks and shares directly as well as trade CFDs (Contract for Differences). Which means you trade the price of an asset instead of buying the asset itself.
The platform is also a great way for beginner traders because it has a low starting point and educational content. On the other hand, experienced users can enjoy its huge range of investment options.
About Trading 212
This is another widely popular platform that also offers zero commission. Many even say that Trading 212 can be considered the cheapest platform in the game.
The product range and features in Trading 212 are very much similar to eToro.
In Trading 212, you can buy assets and trade CFDs too. The difference is you can buy assets within a tax-free ISA in Trading 212.
One thing that’s missing from Trading 212 is that it does not allow crypto trading. Overall, it’s also a great platform as long as you’re not into crypto.
First and foremost, we’ll start with some cost comparisons between eToro and Trading 212. Often, this is the most important aspect for both experienced and beginner traders.
Both eToro and Trading 212 offer cheap trading, because they’re commission-free. There are also not that many other fees, so in terms of cost these two are ahead of their peers.
One fee that they do charge is called the spread fee. This is the fee when you trade CFDs, and it’s based on the difference between the price to buy and sell shares. So bigger volumes will incur more fees. Spread fees will differ depending on several aspects, such as popularity and time of day.
Two fees that eToro also charges are conversion and withdrawal fees.
Because eToro uses Dollars as its currency, you will be charged a 0.5% conversion fee when you convert it to Pounds and vice versa. eToro also charges $5 for each withdrawal.
Better cost structure: Trading 212
In terms of investment options, both have their strengths. Both offer a wide range of products such as stocks, funds, currencies, and commodities.
One particular product that’s available on eToro but not in Trading 212 is cryptocurrencies. Cryptocurrencies have been very popular as of late, so it’s a big lead for eToro.
On the other hand, Trading 212 offers stocks and shares ISA, which means you can invest tax-free with your account. So it all depends on which you want to focus more on.
Better investment options: Draw
Both eToro and Trading 212 offer research features for shares, CFDs, and ETFs. And it seems that they’re head to head-in this section.
But eToro still pulls ahead thanks to its news feed feature.
True to their social media vibe, eToro’s news feed acts just like the homepage of your Twitter or Instagram account. It delivers a steady stream of messages that gives you information in real time.
Better research: eToro
If you’re a beginner trader, education is very important. In this area, both eToro and Trading 212 provide a decent amount of tutorial videos to appease new users.
Aside from that, they also have podcasts and share trading guides.
One particular aspect that eToro is better at is accessibility. eToro’s education is available on more channels compared to Trading 212.
Better education: eToro
When it comes to customer service, your best bet is to look at their online reviews. I checked out Trustpilot and found that both companies have excellent standing with scores that are above 4.0/5.0.
eToro and Trading 212 provide support across channels and are available 24/7. Their services are swift, reliable, and helpful. But due to the small difference in their reviews, Trading 212 wins this round.
Better customer service: Trading 212
Alternatives to eToro & Trading 212
If you still want to get to know more about their competitors, these are great alternatives to eToro and Trading 212:
- Plus500: this is another platform that offers no commissions when trading CFDs in indices, forex, options, shares, commodities, and ETFs. Plus, they have a demo account that you can use to study the platform and market before diving into the real thing.
- XTB: A global CFD broker that offers commission-free stocks/ETFs for some products. They also have free deposits and withdrawals and seamless account opening. But their products are limited to CFDs and they have an inactivity fee.
- Interactive Brokers: One of the oldest in the game, Interactive Brokers is an award-winning company that offers a wide selection of products. They charge a reasonable commission and have a very low currency exchange fee for international traders.
- InbestMe: A Robo-advisor that offers a wide range of products that are beautifully managed in portfolios. You can choose your risk tolerance and financial goals, then they will automatically build your portfolio for you. This is a great alternative for beginner traders.
Pros & Cons
Looking at both platforms, it’s hard to pinpoint who’s the winner. One platform might be ahead in one category, but lacking in the other.
Just to recap, the following are the pros and cons of each site.
- Offers an attractive interface that’s similar to social media
- Provides access to cryptocurrency
- Better accessibility in terms of education
- Great customer service
- They charge conversion and withdrawal fees
- No stocks and shares ISA
- Better cost structure than eToro
- Access to stocks and shares ISA
- Great customer service
- No access to cryptocurrency
eToro vs Trading 212 – Final Thoughts
In conclusion, the battle between eToro and Trading 212 has been intense, with both platforms offering compelling features.
After careful consideration, I am inclined to give a slight edge to Trading 212, although the margin is narrow. The decisive factor is the handling of currency conversion fees, which are more affordable with Trading 212.
They allow for automatic conversion of cash during investment purchases, whereas eToro requires pre-conversion of all funds before trading (albeit at a low fee).
Furthermore, Trading 212 boasts a tax-free ISA option, which eToro lacks. This makes it ideal for long-term investing, with no fees for opening and holding investments within the ISA. However, it’s important to note that CFDs are not included in the ISA.
On the other hand, if your focus is on purchasing and owning cryptocurrencies, eToro emerges as the preferred platform.
In general, both options offer outstanding value. They feature low costs with no commission fees, and their customer reviews and service are highly commendable.
Additionally, both platforms provide a wide range of investment options and leverage-based CFD trading, catering to various price directions (up and down).