Advice on trading platform

wmb194

maxsteam said:

wmb194 said:

maxsteam said:

The phrase "Invest for free, forever" is in bold, in the bottom left corner of your screenshot, wmb194. Is this acceptable hype or a little white lie? It's certainly not an accurate description of the Freetrade.io service and it's certainly not something that is corrected on the page you copied.

And, including directly below it as an explanation, everywhere else it states, "commission free." This is what it's referring to and is an accurate explanation. 

It is correct to describe their service as commission free. It is not correct to describe the service as investing for free. There are costs involved with investing other than commission which can include stamp duty, spread and currency conversion costs and these are costs which the investor pays. These costs are not mentioned until you go deep into the Freetrade.io website. They are also costs that can be significant on some products.

These other things you mention are third party costs (taxes) and part of the 'your investments may fall in value' risk in investing and are not broker account fees or commissions. Freetrade's fx fees are clearly stated and obviously only relate to particular securities. It could be that you're not understanding because you aren't very experienced - in a previous thread you were clearly unaware of ETFs and that not all shares listed in London attract SDRT - but these are just part and parcel of investing and can be mitigated and almost eliminated if you choose wisely.

maxsteam

underground99 said:
 If there is a spread, it doesn't mean the broker is pocketing it.

Haha. There is always a spread. Freetrade.io do not have direct access to the LSE or any other stock exchange. With a mainstream broker, the broker clearly declares their commission and the spread is decided by the market makers on the stock exchange. The broker gets the commission, the market maker profits from the spread. There will usually be several market makers for major stocks and they will compete to give the best prices. For major FTSE stocks, the spread will be a fraction of a %. Freetrade.io do not work like this. They may sometimes use intermediaries, they may sometimes make the market themselves. In the latter case, yes, they pocket the spread. For some "popular" products such as bitcoin and GameStop, the spread can be many times the spread on "traditional" products.

It seems very odd that people seem willing to defend the obviously false statement "Invest for free, forever" which Freetrade.io use to promote their service. Commission, spreads, stamp duty and currency exchange costs are costs of investing. Removing the commission and using spreads that are different from mainstream brokers does not make their service free.

wmb194

maxsteam said:

underground99 said:
 If there is a spread, it doesn't mean the broker is pocketing it.

Haha. There is always a spread. Freetrade.io do not have direct access to the LSE or any other stock exchange. With a mainstream broker, the broker clearly declares their commission and the spread is decided by the market makers on the stock exchange. The broker gets the commission, the market maker profits from the spread. There will usually be several market makers for major stocks and they will compete to give the best prices. For major FTSE stocks, the spread will be a fraction of a %. Freetrade.io do not work like this. They may sometimes use intermediaries, they may sometimes make the market themselves. In the latter case, yes, they pocket the spread. For some "popular" products such as bitcoin and GameStop, the spread can be many times the spread on "traditional" products.

It seems very odd that people seem willing to defend the obviously false statement "Invest for free, forever" which Freetrade.io use to promote their service. Commission, spreads, stamp duty and currency exchange costs are costs of investing. Removing the commission and using spreads that are different from mainstream brokers does not make their service free.

No, you're thinking of Trading212. Using intermediary brokers to execute trade in foreign markets isn't the big deal you think it is. For the LSE, I usually get a quote with another broker before buying and sometimes selling if I also own the security elsewhere and so far - since Jan 2020 - the executed price with Freetrade has always been the same as iWeb, Barclays or AJ Bell and a couple of times slightly better. Also, all of the trades are reported immediately to the LSE. What Freetrade's trying to do is move people into its accounts that charge a fee, I presume it'll be trying to make some fx fees and it is also developing its own software which it has spoken about licensing to other companies in other parts of the world.

It's really a very basic execution only stockbroker and it's clear that it's just commission free. All of the other stuff you keep mentioning is just part and parcel of investing and not something brokers are responsible for*. You keep obsessing over that one phrase and ignore everything else...

*And you can largely avoid with e.g., the big ETFs.

maxsteam

wmb194 said:
You keep obsessing over that one phrase and ignore everything else...

That one phrase is in bold, in a prominent position on their website and it is incorrect.

wmb194

maxsteam said:

wmb194 said:
You keep obsessing over that one phrase and ignore everything else...

That one phrase is in bold, in a prominent position on their website and it is incorrect.

It isn't, though, it's a subsidiary heading with text below it clearly stating, "Commission-free, unlimited instant trades."
The main "lead" on the homepage, at least six times the size, is: "Invest. Commission-free."
You can clearly see all of this in the screenshot I posted yesterday.

underground99

maxsteam said:
 The broker gets the commission, the market maker profits from the spread. There will usually be several market makers for major stocks and they will compete to give the best prices. For major FTSE stocks, the spread will be a fraction of a %. Freetrade.io do not work like this. They may sometimes use intermediaries, they may sometimes make the market themselves. In the latter case, yes, they pocket the spread.

For some "popular" products such as bitcoin and GameStop, the spread can be many times the spread on "traditional" products.

You should try instead coming at it from a starting point of knowing the facts, rather than as someone who's never had an account with them and is just guessing without having done any research that they will make the market themselves and pocket the spread rather than use their trade execution intermediaries to place the trade on the most efficient trading venue. 

Periodically they give a list of major execution partners ranked by volume and value; the 2020 statistics haven't been published yet so these figures are before they started offering fractional US shares via their partner broker-dealer Drivewealth, but the execution disclosure for 2019 showed that c.80% of the trades in 2019 went through Peel Hunt and Winterflood with the remainder going via other usual suspects such as Numis, Stifel, Investec, Shore etc. Those are not unknown names; for example the UK's largest DTC retail investment platform Hargreaves Lansdown state that they place all their international deals with Peel Hunt and Winterflood.

Freetrade have explicitly said on their own website that they, "never make money from the spread or include hidden commission baked into the spread.". They have also confirmed that they don't accept PFOF (payment for order flow) revenue in the US or elsewhere, and that they "also independently monitor for best execution and would direct our orders differently if we felt the best price wasn’t being achieved for our customers".

Of course, you are welcome to shout no no no I don't believe they work like this, all their customers are suckers taken in by 'incorrect language'!... and assert that they pocket the spread, and tell us that you believe that "for some "popular" products such as bitcoin and GameStop, the spread can be many times the spread on "traditional" products.", so you don't believe they should be allowed to say 'invest for free' which you feel is obviously false. But you are not coming at this from a place of knowing the facts: for example, they do not even offer bitcoin, as bitcoin does not trade on the UK or US stock exchange.   You can't buy or sell cryptocoins through Freetrade.

While nobody would dispute that the spread on an illiquid pump-and-dump stock such as Gamestop is going to be wider than the 0.05% spread you would see on a share of Royal Dutch Shell on the LSE or the 0.05% spread for bitcoin on a major cryptocurrency exchange, it's still reasonable for freetrade to say that the key feature of their 'no monthly fee or broker commission' account is that you can 'invest for free'.  It's not their fault if you choose to pick some AIM stock or illiquid US minnow and pay 5% spread when you could instead buy Shell at 0.05% spread.  The spread isn't money that they are charging you, and neither is the stamp duty (if you chose to buy Shell instead of something that didn't involve stamp duty).

With the non-premium, non-ISA account, the only 'fee' you might pay which is not a government levy (e.g. SDRT, PTM) or a inherent part of the cost of your investment's price (e.g. spread) is the fx rate loaded by their fx provider on changing your GBP into foreign currency if you want to buy something denominated in a foreign currency when your account only holds sterling.  That's about half a percent, but the fee to actually buy or sell the stock with that currency is still zero. And you are under no obligation whatsoever to buy stocks or ETFs denominated in foreign currencies.

underground99

Alexland said:

underground99 said:

Cheers, I promised myself I'd only add comments on one subject a week

I actually deleted the comment as I wasn't sure you wanted to bring attention to your return!

Ah I wondered why it went a bit funny when I hit 'quote'...  I'm enjoying semi retirement but had a quiet couple of days to pop in - old habits etc.

maxsteam

My gripe with Freetrade.io is simply that they make a false claim on their website. I find this unacceptable. Other people may forgive it for whatever reason. However, surely no one can deny that their website promises that investors can "invest for free, forever" and surely no one can deny that this is a false claim. Whether or not their spreads or product ranges are reasonable or better than other sites is of little concern to me. They are falsely pretending that there are no charges. They are attracting investors with a false claim.
The promise "invest for free, forever" is not followed by any explanation of the costs of investing and it is extremely easy for an investor to sign up in the belief that they will able to invest in shares without paying any investing costs.

Koloto

wmb194 said:

You don't have to pick just one. I've been using it since January last year and so far Freetrade's been fine for me. Trustpilot has a tendency to accrue negative comments so I'd take it with a pinch of salt. You could head over to the referrers board and find a free share code and try it out with a small amount of money.
One problem with De Giro and Fineco is that they're foreign and covered by schemes other than the FSCS.

Thanks, I have done just that. As of Monday AM the account is awaiting verification. Says should be a day or two. 

Doshwaster

wmb194 said:

maxsteam said:

wmb194 said:
You keep obsessing over that one phrase and ignore everything else...

That one phrase is in bold, in a prominent position on their website and it is incorrect.

It isn't, though, it's a subsidiary heading with text below it clearly stating, "Commission-free, unlimited instant trades."
The main "lead" on the homepage, at least six times the size, is: "Invest. Commission-free."
You can clearly see all of this in the screenshot I posted yesterday.

I don't think it's any different to those "Commission Free" signs to see at Bureaux de Change. They may not be charging you any commission but they made their money on the spread. No planform is ever going to be 100% as they have to make their money from somewhere.
I've been dabbling with Freedtrade recently. It's very basic in functionality but at least it keeps things simple. I like the idea of fractional shares though at present these are only available for US stocks.