I think people are forgetting that Freetrade is being geared towards people who want to invest for 10/20/30 years, so for the vast majority of itās anticipated user base (me included), stock liquidity wonāt be an issue as by the time they want to sell, the price (fingers crossed) will be way beyond what they bought the stocks for originally.
Completely understand if youāre using the app for short term trades why it could pose a problem though.
Hi Jspen.
No, Iām not a short term trader. Iām a long term investor.
Liquidity should always be a concern to you, no matter your investment horizon. If the liquidity pool is small it can dry up faster, at any point in time.
Just as an example: Who participates in DriveWealthās proprietary network? Does it contain market makers or other institutional investors (massive sources of market liquidity)? Or is it just us, Revolut users, robinhood users, or whatever else fintechās small time clients trading pennies between us?
Aside from that, you need to understand the nature of risk. Risk is in what you donāt know or understand, not in what you do (thank Taleb for this understanding). This means that their decision (and yours - and mine - inability to understand the exact second order effects of that) might affect us for years in the future.
Just of the top of my head:
I could go on forever, but you get the point. Itās a myth that their actions are only damaging to traders. They can be very very damaging to you as an investor as well.
A few good points well explained, thanks a lot.
Fractionals are still in beta testing, so Iāll wait for the full rollout and official blog from Freetrade confirming how it all works. Thereās no point in getting wound up about it and threatening to quit just yet.
There is a huge reaction going on about the ability to buy whole shares - please remember this is a beta, and Ft will react to our thoughts & opinions - I really donāt think now is the time to be shouting jump ship, especially over something quite minor - after all, if you want to buy 1000 shares before the beta, sometimes you would end up with 1001 or 999 shares if the price rose or fell as you purchased - whats the difference with the fractionals?
That said, I hope Ft are paying attention, the ability on other platforms to enter the number of shares (whole or fractional) that you want, see the price then buy at that price is a whole deal smoother and easier - it gets frustrating having orders rejected or slightly different amounts purchased then intended.
To keep on topic, my feedback after beta participation yesterday:
Iāll enter more if I think of them/find them.
I think now is exactly the time to be telling FT whether we like something or not - surely that is the point of a beta!
Fotis has explained above some other important considerations on liquidity and risk re fractionals.
Sorry youāve misunderstood me! Not saying donāt tell them, in fact I put a lot of feedback in my post! I only meant there isnāt a need to over react & quit the platform from beta behaviour that we are in a position to change - apologies if I didnāt make that clear enough in my post.
Section 9 of the revised terms has
āFractional share investment carries some additional risks to whole share investment. Fractions of shares traded through our Service cannot be traded on trading venues and are illiquid and unrecognised outside our trading platform and Our US Broker. Fractional shareholdings bought through our Service cannot be transferred to another service provider and can only be liquidated through us.ā
ā¦ which suggests that the answer to your first question @Fotis is you have to sell your shares and buy them again on the other broker.
But Iām unclear on this: if you had 10 shares of a US security which were purchased before the fractional shares era, are they now considered to be 10.000 fractional shares which would need to be sold if you wished to trade elsewhere, or could they be transferred freely?
Thanks @rod, I hadnāt even seen these. The issues I posted I brainstormed, after failing to find convincing answers in the DriveWealth help pages.
Itās good to see that there has at least been some thought into this, but I maintain that the current approach is insane and damaging to FTās bottom line (and its clientsā). Itās also kind of horrifying to see that the issues I thought about are very real and they were brushed away as in āwell, you accepted the terms of service, bye have a great timeā.
Iāve just completed my first fractional trade as a beta user I though I should even though I have limited uses for the service long term.
Can anyone explain the new FX fee? It appears new, was it baked in to the FX rate before and now broken down separately or is this a new cost?
It was baked in previously (and has always applied IIRC) - I think it was covered in the FAQs or new terms somewhere.
I think we should have the option to turn on/off a fractionals stock purchase (default set to off), so if we want fractionals trough DriveWealth we can have them, but if we prefer whole shares through the traditional channels (whatever this means) we can buy those.
This will allow us to transfer our whole shares to other platforms, etc. if we wish to, without the need to liquidate them.
Thanks @mike7 Iāll see if I can find the FAQ.
Is there a option to turn off fractional transactions if I am not interested in doing so?
The breakdown of the FX fee is broadly good and I like the transparency, however the whole purpose of freetrade is to create an investing platform that accessible and clean. This is why we all accept / work with limited company metrics & funny names for companies (BT = Slow internet) & ācleanerā graphs. It breaking down the FX fee looks untidy and alienating to the casual investor that freetrade seems to court.
@NeilB and @Mike7 thereās a fractional shares FAQ here.
Interestingly, it says āDependent on the size of your holding, you have the option to sell both whole and fractional shares.ā, which answers some of the recent questions in this thread.
You might be up because you didnāt buy Ā£25 of tesla, you bough Ā£25 ā converted to usd at a rate - 0.45%, so think something like Ā£24.85, so this seems plausible.
after all, if you want to buy 1000 shares before the beta, sometimes you would end up with 1001 or 999 shares if the price rose or fell as you purchased - whats the difference with the fractionals?
I for one have not been happy with that either. Having to buy single penny stocks just to get to a round amount that I can account for without going insane is a bit ridiculous tbqh.
If anything isnāt ready, keep it in beta. Iām sure the upcoming pitch deck will be more than impressive enough.
After speaking with support, I can confirm the ability to trade whole shares will be unavailable after the fractional update goes live. The person I spoke to was unable to give me a reason why we wonāt have the choice, which I find disappointing.
Unable to buy US shares other than fractional after roll out?
