You don’t have to be a millionaire to invest in stocks, currencies or even precious metals. Trading has been a widely available option for decades, but thanks to web based platforms it’s now easier than ever. Such platforms are also great examples of FinTech in practice: how they are made, how they work and what are their best features depends both on the market needs and what their creators can actually offer. Let’s take a look at some of the most popular online trading platforms to find out why they have succeeded.
How can trading platforms be so different?
After analysing five large trading platforms, we have concluded that each of them has a strong defining quality and that they cater to completely different kinds of users. Let’s start with a few relatively new companies with strong presence in marketing channels and then take a look at the industry veterans.
eToro: trading and social investments system
eToro is a very specific trading platform, as it is dedicated to copy trading. Basically, by joining the community, you can start observing deals of other users and, if you wish, you can copy what they do using the CopyTrader technology. All this with no commission.
eToro Lets you invest in stocks and EFTs, cryptocurrencies and commodities. It offers so many options that it can become the single trading platform you need. It’s also a perfect place to start investing. Not only is it user-friendly, but it also offers free access to a priceless source of knowledge: a direct insight into portfolios of experienced traders.
Trading on eToro step-by-step
As soon as you sign up and log in for the first time, you will be asked to complete your profile. During this process, you will be asked to go through a quick survey designed to assess your level of knowledge and expectations. After that, the system will be able to suggest investment opportunities that best suit your needs.
A moment later, you’ll be able to start making money! But before you do, I suggest that you visit the “Discover” part of the platform. What you’ll find there, is the most important section called “Copy People”. Basically, it’s a catalogue of the most successful investors who don’t mind if you do whatever they do to make money. You can read all about their philosophies, see their stats and browse their portfolios. Finally, when you decide that you trust a given person knows how to make money, click “Copy”. When you decide how much money you are willing to risk, every trade this person does will be automatically copied on your account. Be patient, though. Traders make a limited number of decisions in a week, so it may take a few months before you start benefiting from copying trading decisions.
What’s interesting about the eToro community is that it is so dispersed around the world. You are free to interact with people from literally any country and speaking various languages, so you are not forced to use only English there. In fact, even eToro’s interface is translated to over 20 languages.
eToro’s path to glory
eToro is a large company now, but what was their key to succeess? It was founded in 2007, in one of the FinTech capitals of the world: Tel Aviv. Soon, its creators added the “CopyTrading” feature and decided to focus on developing the social trading aspect. Will it become a new trend? As an innovative FinTech, eToro managed to raise over $31.5 million in four rounds and then an additional $27 million. It was only the beginning, though. After that, investors went head over heels and eToro got additional $162 million! Such ample funds allowed for rapid growth and setting up a secure, technologically advanced app in a mature ecosystem. As a bonus, they have financed successful marketing campaigns involving sports sponsorships and ads with major celebrities.
Plus500: practice for free, before you invest real money
If you’re a social media user, you’ve probably already come across Plus500. They have been marketing so heavily, that they were impossible to miss in 2020! Plus500 is a universal trading platform where you can invest in all major instruments, such as CFDs on shares, indices, Forex and crypto. Note that Plus500 focuses on CFD trading, so if you invest in crypto using this platform, you don’t actually receive the currency. After all, it’s not a cryptocurrency exchange and it only allows its users to bet on prices.
Trading on the plus side
What should bring your attention to Plus500, is a great demo mode. As soon as you log in, you can start testing the platform and use it to learn how to trade with it. You get some virtual money to play with (in my case it was 200,000 PLN) and your education begins. This feature should be used in highschools to teach students how the market works and why its principles are not as simple as they may seem in a textbook. Also, the UX work they’ve done to make the system user-friendly is just great!
Plus500 from idea to headlines
The company was started in 2008 by a team of six graduates of the Israel Institute of Technology, who got an initial investment of $400,000 from Alon Gonen, one of the founders. While the first version of their app was a standard Windows application, they soon invested in a universal, web-based platform. This allowed them to reach Linux, Mac and smartphone users. Soon after, in 2011, they also developed their first native iPhone/iPad app and an Android version the following year. Thanks to the mobile-first approach, Plus500 has become one of the most innovative FinTechs of the era.
E*TRADE: innovation meets personal approach
Just as the online trading platforms mentioned above, E*TRADE bets on creative ways to encourage traders. Starting with a zero commission policy and a wide range of investment options up to a neatly designed platform available on all popular devices. What’s really unique though, is the company’s history. E*TRADE was founded during the humble beginnings of the IT boom in 1980s, making it a real dinosaur! Their online trading solution was one of the first in the world and quickly became the go-to platform for all modern US investors. What’s more, technological advances enabled E*TRADE to generate revenues high enough to acquire other financial institutions, such as Telebanc. As a result, they could offer a very wide range of services. Now, there are three account types available: dedicated for brokerage, banking and retirements.
A friend with investment advice is a friend indeed
The thing that strikes first-time visitors of the E*TRADE website is how much the company stresses it’s “investor-friendliness”. If you’re new to online investments, you can learn everything you need to know right there. They promise to help you choose investment goals and create a reasonable plan. You can even use automated investment management solutions, but for a fee: annual advisory costs 0.30% or $500 minimum. E*TRADE’s personal consultants can help you create a tailored investment portfolio if you decide to invest more than $25,000.
Besides conventional investment methods, the platform also offers a number of retirement saving options. They are addressed to companies which want to give such a benefit to their employees.
Unfortunately, the platform is a bit exclusive and you can’t simply sign up to browse the platform without opening an account of a chosen type at E*TRADE. It takes just five simple steps, though, and there are tutorials to help you out!
TD Ameritrade: a patient teacher
TD Ameritrade is another well-established trading platform. It’s been around since 1971, originally as a conventional broker. Now, it’s a big corporation, employing almost 10 thousand people and serving over 12 million active customers.
Historically, TD Ameritrade is a FinTech company that understands how technology can change the trading game. They introduced their first remote, automated and telephone-based trading system as early, as in 1988. But the milestone that made it an actual FinTech was 1995, when TD Ameritrade acquired K. Aufhauser & Company, Inc.: the first operator of an online trading platform in the world.
Long live the trading expertise!
Long presence on the market enabled TD Ameritrade to create a huge knowledge base and gather a team of thousands of investing experts. Now, the company makes use of this expertise by stressing the importance of education in every investor’s career. They really put a lot of effort into creating an insightful curriculum!
In the spirit of digital transformation, TD American trading platform can be accessed from any device. But what makes a real difference, is access to a number of personalised options. There are different versions of the app dedicated for different kinds of users. For instance, thinkorswim Desktop is a tool for professionals and thinkorswim Web is a simpler tool for everybody.
TD Ameritrade is so confident, that they even compare their own solution with the ones offered by E*TRADE and Fidelity in a neat table that present key aspects of each platform.
Interactive Brokers: for international trading
With its access to 150 markets in 33 countries over the world, Interactive Brokers is a serious player in the industry. Especially, since you can reach it all from a single account.
The application has a vast array of order selection and trading tools but its strength lies in access to more than 20 currencies that you can trade in more than 100 different pairs. The app’s market reach and asset variety are unbeatable. The desktop called the Trader Workstation has a high level of customization, providing not only powerful options but also a configuration that suits your needs. Direct access to 24-hours trading seems like a given under these circumstances.
SoFi: for beginners and long-term investors
The SoFi Active Investing is an interesting product for those who are not familiar with the topic, yet want to stay for a while. The platform gives you ability to buy cryptocurrencies and fractional shares. Also, to participate in Initial Public Offerings (IPOs) and bolsters.
With SoFi you get $0 stock and ETF commissions and a very capable app for transparency and ease-of-use. Plus, there are no trading commisions and no account minimums. You also have a rare opportunity to buy fractional shares of stock, which is practiced by very few brokerages out there.
Vanguard: top option for passive investors
Vanguard is not the best for active investors who know they way around town. It’s one of the most interesting ones for the rest, though. The platform gives you an access to an array of low-cost vast mutual fund and ETF offerings. It allows zero-commision trading, doesn’t require account minimums.
Important thing to remember: if you plan on buying mutual funds, keep in mind that most have their own minimum initial investment requirements. Also, Vanguard allows investors to buy stocks directly on foreign stock exchanges. However, it comes with a steep $50 commission.
Fidelity Investments: giant with a human face
Curiously enough, TD Ameritrade shows in which aspects it’s better than Fidelity, but Fidelity does the same thing on its own homepage. Perspective is everything, I guess.
Fidelity is the oldest company in the group, with a history of over 74 years in the industry. It’s also definitely the biggest one, with a number of employees exceeding 50 thousand! So many people on board are necessary to manage over $3.3 trillion in assets (plus $8.3 trillion of customer asset value). The corporation operates a number of funds and enterprises. Its brokerage activity is just one of the businesses for Fidelity. But what a business it is!
Trading made easier
The company draws from its experience in the financial sector to offer two interesting recommendation solutions. The first, basic one is Fidelity Go, which uses AI to advise you on trading based on information about your financial situation and goals. It’s available for free if you don’t exceed a sum of $10 thousand but remains affordable later on as well. The second, more advanced option is Fidelity Personalized Planning & Advice. It not only takes advantage of AI and Big Data, but also connects you with a financial coach who is at your disposal at all times. This exclusive service is subject to an advisory fee of 0.50% and is available only to individuals ready to start with a sum larger than $25 thousand.
When it comes to education, Fidelity is just a perfect source of knowledge. Not only does their Learning Centre have a huge library, but they also host a number of live webinars each week!
Trading platforms: power in diversity
It’s surprising how each online trading platform is different. Still, we can divide them into two main groups. Those started more recently focus on accessibility, openness and quirks, like copy trading and availability in dozens of languages. Trading platforms run by established financial corporations are in turn more likely to highlight expertise and willingness to help you achieve success in a more direct way. From coaching and advisory services to sharing their knowledge base. What is better? No easy answers here, as both approaches have their fans, making trading an exciting adventure.