It’s no secret that the stock market can be both a rewarding and risky place. During the Dutch Tulip Mania, those who sold tulip bulbs right before the big crash walked away with fortunes. Today, the financial markets can still move dramatically in a short period of time, so it’s crucial to have the right tools to stay on top of your investments.
To get in on the action, you need a stock broker platform where you can trade stocks and ETFs, like Amazon, the SP500, or the MSCI World index. But as investors move away from the laptop and towards mobile devices, European stock brokerages are starting to offer more and better features on mobile apps.
These apps allow you to manage your portfolio and trade stocks and other investments on your phone. But what are the best stock trading apps in Europe? From zero commissions to global stock markets, here are the top stock trading apps in Europe for 2022.
The best stock trading apps in Europe
Here are the best Android and iOS apps in Europe for trading stocks:
Remember, the stock trading app your friend likes might not be suitable for you. Someone who values simplicity and simple pricing might prefer a stock trading app that offers no-frills, commission-free trading. A more active trader who wants global market access might prefer a stock trading app with more bells and whistles.
Interactive Brokers vs. DEGIRO
Interactive Brokers and DEGIRO are the two most popular pan-European online brokerages. When comparing the two side-by-side, it’s essential to consider what’s important to you as an investor before you pick either of them.
If you’re looking for a stock trading app with global market access, both DEGIRO and Interactive Brokers are great choices. However, if you’re just starting out, DEGIRO might be the better option as its interface and investment selection is more user-friendly. However, once you become more experienced, Interactive Brokers is the better choice because of the superior tools and product breadth it offers.
DEGIRO is less overwhelming than Interactive Brokers and offers commission-free investing and simple tools. However, as you become more experienced, you might want to consider Interactive Brokers for its global market access and wide range of features.
Both brokers are low-cost options, with DEGIRO generally being cheaper for ETFs, while Interactive Brokers offers lower commissions for stock trading. Interactive Brokers offers the most currencies (EUR, USD, GBP, etc.), stocks, ETFs, and other investment products, while DEGIRO gives you a deposit-insured EUR account, commission-free ETFs, and an overall more “European” platform. However, both are excellent platforms and can easily be combined to build a well-rounded portfolio.
What are stock trading apps?
Stock trading apps are software programs that allow investors to trade stocks and other investments on their mobile devices. They typically offer a variety of features, including the ability to view your portfolio, place orders, and track the performance of individual stocks or indices.
A stock trading app comprises a frontend and backend. The frontend is the user interface you see on your phone or tablet, while the backend is the software that powers the app. Android apps are coded in Java, while iOS apps are coded in Objective-C and Swift. APIs are used to pull stock market data and send orders to the stock exchanges.
Most stock trading apps use a client-server architecture. This means that your device (the client) communicates with a remote server responsible for handling all the heavy lifting (such as communicating with stock exchanges). This allows the app to remain lightweight and fast, even on low-powered devices.
Trading apps vs. investing apps
There is a big difference between trading apps and investing apps. Trading apps are designed for people who want to actively trade stocks and other investments. In contrast, investing apps are designed for people who want to invest in stocks and track their performance over time.
Most stock brokerage platforms offer both trading and investment options, but some platforms focus exclusively on one or the other. In the U.S., options and futures are among the most popular ways to trade speculatively on markets. In Europe, CFDs (contracts for difference) are far more widespread.
CFD trading apps offer CFD contracts in which two parties in which an investor agrees to pay the broker the difference between the current value of an asset and its value at contract time. CFDs are popular with day traders who may use leverage to trade assets that are more expensive to purchase and sell. But CFDs are very risky because they can result in substantial losses if the market moves against you. Furthermore, most CFD trades involve significant fees to the broker, either directly or through spread mark-ups.
On the other hand, investing apps typically don’t offer CFDs but real stocks and ETFs. Some brokers combine stock trading with CFDs, but this can be a dangerous mix because investors can mistake CFDs on stock markets for stock trades, which can lead to tax issues, unintended fees, or losses. The best among the apps that offer both real stock and CFD trades are those that clearly separate the two types.
What about options trading apps in Europe?
Options are a type of security that gives the holder the right, but not the obligation, to buy or sell a stock, commodity, or other financial assets at a specific price within a set period. There are only a few stock brokers in Europe that offer options trading, and most of them are aimed at U.S. investors.
That said, there are a few good apps for European investors who want to trade options. One of the best is Interactive Brokers, which offers a wide range of stock and option products and excellent customer service in multiple languages. Another good option is DEGIRO, but this broker has a limited product offering. A third option is Saxo Bank, but its app is not as user-friendly as the others.
What are the best day trading apps in Europe?
Day trading is the practice of buying and selling stocks or other financial assets with the intention of making a profit within a single day. It’s a high-risk, high-reward strategy that can be very profitable if you are correct but lead to substantial losses if you’re wrong.
There is an overabundance of day trading apps on the market, and many of them are not very good. The best day trading apps in Europe are usually those that are also best for investing in stocks. A good day trading app does not only offer CFDs but instead focuses on product breadth and quality. The best day trading apps also have excellent customer service, user-friendly interfaces, and low fees.
How online stock brokers work
When you buy stock, you’re buying a small piece of a company. As an investor, you hope that the company will do well in the future and that its stock price will go up. When you sell a stock, you’re selling your piece of the company to someone else, and hope they will pay more than you initially did.
Online stock brokers allow you to buy and sell stock online. They usually have a user interface that will enable you to view your portfolio, place orders, and track the performance of individual stocks or indices. However, a stock broker only acts as a middleman. They don’t actually hold the stock you’re buying or selling but facilitate the trade between you and someone else.
Similar to a mortgage broker, a stock broker is a company between buyers, sellers, and the financial markets. Stock exchanges, like the NYSE, are where stocks and other securities are traded back and forth between these parties to define prices. The brokerage is the one who connects investors to these marketplaces and finds a buyer for your stock and a seller for the stock you want to buy. There would be no need for any external parties in a perfect market. However, to keep liquidity (the ability to trade stock quickly), stock exchanges need market markets to ensure there’s enough volume on the supply and demand side.
Understanding brokerage companies
There are two types of stock brokerages in Europe: full-service and discount.
Full-service brokerages are usually banks, such as Deutsche Bank, HSBC, or Barclays. Banks such as these provide stock brokerage services as a way to cross-sell other products, such as banking, wealth management, and insurance. They offer a wide range of services, including investment advice, margin lending, and stock research. Many people like the convenience of dealing with a single institution and having all their financial needs met under one roof. However, the costs of using a full-service stockbroker are usually high and can eat into your profits.
Online brokerages are a newer breed of stock brokerage. They operate virtually and offer a low-cost or free way to trade stocks. They usually don’t provide investment advice, personalized stock research, or account managers. This can be a good or bad thing, depending on your needs. If you know what you’re doing and just want to buy and sell stock or ETFs, then a discount brokerage is a good option. However, suppose you feel uncomfortable making investment decisions on your own or want someone to manage your account. In that case, a full-service stockbroker may be the better option.
How online brokerages make money from you
There are two main types of business models among online brokerages: commission-based and commission-free.
Commission-based brokerages make money by charging a commission on each stock trade. The commission is usually a percentage of the total trade value, or a fixed fee per trade. The amount can vary depending on the stock brokerage. They can also make money in other ways, for instance, by charging an annual or monthly fee, often based on the value of your portfolio.
Commission-free brokerage firms, as they don’t charge a commission on stock trades, make money in other ways. The most common way for commission-free brokers to make money from clients is by receiving payment for order flow. Order flow is when a stock brokerage sends an order (buy or sell) to a liquidity provider or market maker. These will, in turn, re-sell the data to high-frequency traders who can benefit from the milliseconds it knows what direction the market is moving.
Both types of brokerages can also make money from you by charging currency exchange fees when you trade stocks in a foreign currency. A growing number of brokers also lend out your securities (stocks, ETFs, and mutual funds) to short-sellers who want to speculate on a stock’s decline in price. In return, the broker receives interest payments from the borrowers and other fees.
What to look for in a European stock trading app
When looking for a stock trading app as a European, it’s crucial to consider what’s important to you as an investor. Do you want a stock trading app with global market access? Do you want an app that’s easy to use? Here are some things to keep in mind.
Many stock trading apps offer commission-free investing, which can save you a lot of money in the long run. There’s a developing discussion on whether zero-commission brokers should be banned given their typical business model: receiving payment for order flow. However, it doesn’t seem to be a significant issue for most long-term investors as these don’t seem directly affected by it.
European brokerages keep your shares in so-called nominee or omnibus accounts. The common U.S. terminology is “street name.” Shares held in nominee or street name are held in a securities depository under the broker’s name, not yours. In case the brokerage goes bankrupt, the bankruptcy administration would have to match the internal records of the brokerage against the records in the depository to figure out who actually owns which shares. Although this system sounds unsafe, it’s actually a fairly efficient system that allows for a quick transfer of assets to another brokerage and the ability to offer low trading costs to customers.
Some brokerages do not use this system. Instead, they keep shares in custody in an individual account for the customer. This account is segregated from the broker’s and would be used to repay customers if the brokerage went bankrupt. However, this system typically comes with higher trading costs. There are countries in Europe where the nominee system is not allowed or simply has not become standard practice. Whether one system is safer than the other is hard to tell, as broker bankruptcies are not a common occurrence.
Savings or automatic investing
An increasingly popular way to invest is through automated or recurring investing. This is where an investor gives a stock brokerage authority to invest their money into a pre-selected basket of stocks or ETFs. The idea behind it is that you don’t have to worry about picking the right time to invest. You’ll dollar-cost average your investment over time, which is a technique that can help reduce the stress of investing at the right time.
Having access to trade stocks in different currencies is essential for European investors as they invest in companies worldwide. Many stock trading apps offer this feature, but it’s necessary to double-check before signing up. A lot will only deal in the Euro, which can be an issue if you want to invest in companies outside the Eurozone. If only a single currency is available, the broker is likely to charge a commission on the currency exchange.
The broker behind the best stock trading app for Europeans should be regulated by a financial authority. This is important as it ensures that the broker abides by specific rules and regulations that protect your money. The most common financial authorities are the Financial Conduct Authority (FCA) in the United Kingdom, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in Germany, and the Autorité des marchés financiers (AMF) in France.
Regulation means that the broker must adhere to certain rules and procedures, including segregating customer funds from the broker’s own money. This protects your investment in case the brokerage goes bankrupt. It also means that the broker is required to offer “best execution,” which guarantees that the best possible price was received for your stock order.
Range of markets and products
Investors with a simple buy-and-hold ETF strategy don’t need as much variety as those who want to buy shares in companies directly. Commission-free brokers typically don’t provide the same variety of products as commission-based stockbrokers. So, if you’re going to invest in individual stocks, make sure the stock trading app offers this before signing up.
Unfortunately, stock trading apps are not always transparent about their fees. Sometimes these fees can be quite high, so it’s necessary to do your research before signing up. You should be able to find a list of all the fees on the stockbroker’s website. Watch out for withdrawal, currency exchange, or inactivity fees, which are among the most common.
Tips for beginners who want to start trading stocks
Understand the difference between trading vs. investing
Trading is a short-term, high-risk investment strategy where you buy and sell stock to make a profit. Investing is a long-term investment strategy where you buy stock with the intention of holding it for years or even decades.
The difference between trading and investing is that when you invest, you’re buying a piece of a company that will be worth more in the future. When people talk about investing, they usually refer to buying stocks in a company and holding them for a long time. On the other hand, trading is a short-term investment strategy where you buy stock to sell it as soon as possible for a profit.
Stock trading is a high-risk strategy and should only be undertaken by those who understand the risks involved. Trading is usually done with leverage, and the reason stock trading is considered high-risk is because prices can go up or down very quickly on leverage, and you can lose very fast if you make the wrong decision.
Look into ETFs
If you’re not comfortable with investing in single stocks, you can invest in ETFs. ETFs are a type of investment that tracks an index, commodity, or sector. They provide exposure to a basket of assets, such as all stocks in the SP 500 index. In this way, they provide diversification. ETFs are traded on stock exchanges, so you can buy and sell them like you would any other stock.
ETF investing is also with index investing, which is a long-term, passive investment strategy where you buy stock with the intention of holding it for years or even decades. Index investors believe that stock markets always go up over the long term, and by investing in an index, they’re ensuring that they’ll get exposure to the entire market.
Index investing through ETFs is popular among investors because they believe it’s impossible to outdo the market by hand-picking stocks. So they might as well invest in something that will give them average returns with minimal effort. Their approach is to replicate the risk and performance of the world’s largest companies, on the hypothesis that the total market will outperform any individual stock over time.
Like any other investment, ETFs are not risk-free. The value of ETFs can go down as well as up, and you could lose money if you sell them at the wrong time. However, stock markets have historically gone up over the long term, so investing in ETFs is a relatively cautious way to ensure exposure to the market.
The downside of this passive strategy is that you might not earn as much as you could if you hand-picked stocks successfully. Index investing neglects value and momentum, which are strategies that attempt to beat the market by selecting undervalued stocks or sectors or have good momentum. In recent years, smart beta strategies, which use a combination of diversification, risk-minimization, value, and momentum factors, have become a popular alternative to traditional index investing.
Making trades: market and limit orders
Once you’ve found a stock or ETF you’re interested in, you need to decide how to buy it. There are two main types of orders: market orders and limit orders.
- A market order is an order to buy or sell a stock at the best available price. When you place a market order, you’re trusting the stock exchange to find the best price for you.
- A limit order is an order to buy or sell a stock at a certain price or better. When you place a limit order, you specify the maximum price you’re willing to pay (or the minimum price you’re ready to sell for).
Most stock brokerage platforms use delayed quotes, meaning that the price you see is not always the price your order will be filled. So a market order might not be filled at the best possible price if the stock’s price has changed since you placed the order.
If you’re buying stock, it’s usually best to use a limit order. This way, you’ll know exactly how much you’re paying for the stock, and you won’t be overpaying if the stock’s price goes up. If you’re selling stock, a limit order is an excellent way to make sure you get the best price for your stock. However, using a market order will ensure that your stock is sold as quickly as possible.
When you place a limit order, there’s no guarantee that the stock will be sold at the desired price. The stock could go up above your limit price, in which case your order would not be filled. Alternatively, the stock could go down below your limit price, in which case you would end up buying the stock at a higher price than you wanted.
Picking a stock exchange
Stock exchanges are where stocks and other investments are bought and sold. The three most popular stock exchanges for retail investors are the New York Stock Exchange (NYSE) and the Nasdaq Stock Market.
In Europe, there are several stock exchanges, but the most popular ones are Euronext, the London Stock Exchange (LSE), and Deutsche Börse AG (Frankfurt stock exchange). All three have good liquidity for stocks and ETFs, meaning that you can usually buy and sell stock without too much difficulty.
- Euronext (European New Exchange Technology) is the largest stock exchange in Europe, with over 2,000 listed companies. It operates several stock exchanges, including the Paris Bourse, Amsterdam Stock Exchange, Brussels Stock Exchange, and Lisbon Stock Exchange.
- LSE (the London Stock Exchange) is the second-largest stock exchange in Europe, with over 2,300 listed companies. It dates back to the 1600s and is one of its oldest stock exchanges.
- The Frankfurt Stock Exchange is the third-largest stock exchange in Europe. Its roots stretch back to medieval times, but the modern stock exchange was founded in 1585 when Frankfurt was a European center for trade. Xetra is the leading stock exchange venue on the Frankfurt Stock Exchange as it accounts for close to 90% of all transactions.
All three exchanges have good liquidity and often host the same stocks and ETFs. In most cases, it doesn’t matter much which stock exchange you use to buy or sell a stock or ETF. However, there are some exceptions. For example, some stocks are only listed on one stock exchange, so you would need to use that stock exchange to buy or sell those stocks.
Only invest money that you can afford to lose
Whether you invest in single stocks, ETFs, or a combination of both, remember that stock trading is a high-risk investment, and you could lose part or your entire investment. When determining how much money to invest in stocks, start with an amount you’re comfortable losing. Remember that stock prices can go up or down quickly, and geopolitical events or company news can cause stock prices to move dramatically.
What is the best stock trading app in Europe?
There’s no one-size-fits-all answer to this question, as the best stock trading app for you will depend on your individual needs and preferences. That said, the best app for trading stocks in Europe is likely to have low fees, a wide range of global markets, and user-friendly features.
Is it safe to trade stocks on my phone?
The best way to stay safe when trading stocks is to use a stock trading app backed by a reputable stock brokerage. Make sure to do your research before selecting an app, and read the reviews to get an idea of what other users think. In terms of mobile security, make sure to lock your phone screen when you’re not using it, enable two-factor authentication for the trading app, and set up email alerts for any transactions.
Why wouldn’t I trade stocks through my phone?
Having access to your stock portfolio and the ability to trade stocks on your phone can come in handy when you’re on the go. However, this constant availability can lead to impulsive and uninformed trading decisions, which can be costly in the long run. It’s important to remember that investing should be done with a long-term plan and a goal in mind. Traders, however, may benefit from having a stock trading app that offers real-time alerts and notifications.
Should I delete my investing app from my phone?
Like social media apps, stock trading apps can be addictive and lead to unhealthy investing habits. Find yourself constantly checking your stock portfolio or obsessing over stock prices. It might be time to delete the investing app from your phone. However, if you have sufficient self-control and can use the stock trading app responsibly, there’s no harm in keeping it installed.
How do commission-free trading apps make money from me?
Free stock trading is becoming the norm as brokerages compete for investors’ business. So, how do these brokers make money if they don’t charge commissions? In three ways, primarily:
- By selling customers’ order flow to single market makers or high-frequency traders.
- By giving poor execution prices.
- By incentivizing active trading, which statistically speaking is terrible for the average investor.
Should I trade and invest or just invest?
Investing is the process of committing money to an endeavor with the expectation of earning a future return. On the other hand, trading is buying and selling securities or commodities to make a profit from short-term price movements. While there is some overlap, investing and trading are two different activities. It’s essential to understand the difference before deciding which is suitable for you. Investing is typically preferable for individuals seeking long-term stability and growth, while trading is better suited to those who are willing to take a higher risk of losing money to achieve matching returns.
What are some tips for beginners who want to start trading stocks?
If you’re just starting out, it’s important to learn as much as you can about stock trading and the markets. Read books, articles, and watch educational videos to gain a basic understanding of how the stock market works. In addition, make sure to paper trade for a while before investing any actual money. This will help you get comfortable with the process and make better-informed decisions when you start trading with real money. Finally, remember that stock trading is a risky business, and it’s important to only invest what you can afford to lose.
The bottom line
In recent years, stock trading apps have gained popularity as more and more people become interested in investing. These apps allow you to manage your portfolio and trade stocks and other investments on your phone. While this can be convenient, it’s important to remember that investing requires research, patience, and a long-term outlook.
Whether you’re a beginner or experienced trader, there are stock trading apps out there that will suit your needs. Do your research before selecting an app, and make sure to read the reviews to get an idea of what other users think. Before deciding to trade stocks through your phone, make sure you understand the risks involved and know the best stock trading apps in Europe.