Trading apps enable quick investments in the stock market.
The plethora of providers makes it difficult for inexperienced investors, as the offerings sometimes differ significantly.
A test compares the trading apps from Trade Republic, Scalable Capital, Flatex (investments in securities harbor risks of loss), and eToro. Another app for entertainment, that we can recommend is the Hellspin Canada.
In difficult economic times, stock market prices often fall – one man’s sorrow is another man’s joy: small investors who are not yet invested in the securities market see their chance to get in at a favorable price.
To get off to a good start on the stock market, the right online broker is the foundation. They decide which securities can be traded on which terms.
Trading apps are considered to be particularly accessible, beginner-friendly and inexpensive. However, the providers do not always deliver what they promise. A test compares four of the most popular trading apps in Germany and accompanies newcomers to the stock market on their first steps.
The Methodology Behind the Provider Selection
This article is the result of a careful selection of national providers that have been extensively researched based on frequently searched terms and well-known providers. The main aim is to provide readers with a diverse picture of which providers may be of interest at the moment and which established and new options should be considered.
Given the wide range of providers and products, this article does not provide a complete overview of the market, as it is impossible to include all providers. Rather, the aim is to provide an initial orientation and create a sound basis for decision-making.
What are Trading Apps?
With digitalization came the revolution in the securities market – suddenly anyone with a computer or internet-enabled mobile phone could speculate on the stock market.
Trading apps are the end product of this development. They are issued by online brokers to provide investors with an application-orientated alternative to the web versions in the browser. Some providers, such as Trade Republic, even ran a mobile-only course for a long time, but there is now also a PC version.
Trading apps are now offered by most online brokers. These include established direct banks such as ING or DKB, but also new neobrokers such as Trade Republic and Scalable Capital.
The comparison contrasts the trading apps of the provider’s Trade Republic, Scalable Capital, Flatex, and eToro. These brokers are characterized by the fact that, unlike direct banks, they focus exclusively on the essentials of securities trading and are generally somewhat cheaper.
How do trading apps work?
In principle, trading apps are similar to the desktop versions of the individual platforms. Sometimes the functions within the trading app are condensed, but the main features are clarity and usability.
Securities and other assets, such as cryptocurrencies, can be bought and sold with just a few clicks. Added to this is the flexibility offered by smartphone applications: A stable internet connection is all that is needed to trade shares worldwide.
However, this freedom also harbors the greatest danger of trading apps. With mobile trading, investors are quickly tempted to trade frequently and recklessly. This is also the basis of the neobrokers’ business model because as trading is often commission-free, agreements with cooperating trading partners bring in money. There is a refund for every trade executed.
Good to know: Most financial experts recommend a long-term investment strategy. This enables investors to bridge short-term fluctuations in the securities market without suffering direct losses.
Fees as the Measure of All Things
The level of fees is the decisive criterion for many investors when choosing a broker, and often not without good reason – after all, additional costs reduce the return.
Neobrokers have made it their mission to offer commission-free trading, which is part of their business model. Nevertheless, it is not possible to do so without fees. These vary depending on the provider and are not always completely transparent. An overview brings light into the darkness.
Account Opening and Custody Account Management Fees
There are generally no costs for opening an account or maintaining a securities account.
eToro does not charge any fees for ETF investments. German investors pay USD 2 when opening and closing a share position on stock exchanges in Australia, Hong Kong, Dubai and Abu Dhabi. A fee of 1 US dollar applies to all other stock exchanges. Trade Republic charges a flat-rate third-party fee of 1 euro for share and ETF trading, while Scalable Capital charges 99 cents for the free version. Only Flatex is somewhat out of line with order fees of 5.90 euros plus standard market spreads, fees and product costs. The third-party fees of the respective stock exchanges may also be added, which are usually between 1 and 2 euros. With 700 premium ETFs, a one-off investment of EUR 1,000 or more is also free of charge (plus standard market spreads, inducements and product costs).