I’d echo what Georgi said to an extent, although rather than being based on the size of your portfolio I think the applicable FX rate in the current month should be related to the volume of trades made in the prior month.
I.e.
If it changes then i’d prefer the custom package idea. Rates based on tiers and minimums add complexity to the pricing system. Nobody wants to read a list of scenarios to try and figure out what they’ll end up paying
This. Tiers remind me of HL and their ‘you can trade for £5.95 if you pay us £200 for a month in the first place’ and this is not something that can be easily tracked by the majority of users.
Perhaps freetrade can offer a premium account/subscription for active traders where they get a favourable fx rate and no £1 fee. My guess is that the fee structure will eventually change as the size of the community grows.
We’re not planning to do this at the moment. Once we enable stock transfers from other brokers, you won’t need to sell & buy the share again on our platform so the only thing you’d need to worry about would be any charges, that the broker who you’re switching from, applies.
Freetrade already have a premium account (planned at least). You already get free US instant trades with alpha. Perhaps they should lower fx rates for those paying £10 a month, maybe 0.2% or something for those users. That way if you trade a lot you can pay a fair flat fee per month and very low per transaction fees. I think it might make alpha more attractive for some.
I do think it’s really important that freetrade have a clear mission and stick to it though. Investing has very different priorities than trading - features good for one are not neccessarily good for the other and I’m glad freetrade are avoiding margin trading for example. If you expect to make multiple trades every day it should not come as a surprise if freetrade’s fee structure does not suit you. It’s not their main focus, and should not be IMO.
I’d support something changing in alpha to keep pricing simple but the company does need a revenue stream so of there’s a change to lower fx then the free instant should be changed to 25p or 50p. Alternatively leave it as it is. They aren’t intending to be cheaper than absolutely every broker out there. That’s just a race to the bottom and recipe for disaster.
Sure, though they’d still have a revenue stream from both types of users, just a slightly reduced one for the very low number of people paying for Alpha.
Ideally I’d like to see Alpha be one flat fee (could be higher than at present), and then no charges on top of that save for a small fx charge if necessary. It’d simplify the proposition, make it clearly more appealing for those who do trade more, and probably get far more signups to Alpha. As it is I’m not sure Alpha is compelling enough over paying the £3 ISA fee - you really only get free US instant trades, and still have to pay for UK ones even if it is a reduced rate. Another option is to add a ‘Trader’ account type which charges £20 a month or something and no fx charge or transaction fees, for those who want to buy/sell frequently.
It is interesting how many different approaches to the market there are - all the way from investing for decades to trading in seconds hoping to make small amounts from predicting price movements.
Nothing wrong with profit, in fact as a shareholder I’m quite keen that Freetrade get there at some point.
As long as the fees are clear then I’m happy. It’s important we’re not misleading though and zero-fee investing might need some work-shopping to make it more clear. How about “Zero fee investing unless you buy US stocks in which case expect to pay a perfectly reasonable but sub-optimal exchange rate” - might need some work…
I believe we need to distinguish between two different points.
One time FX fee - There can be argument how much is good e.g. 0.45 or 0.2 But I believe this would be required as freetrade is not bank
Able to have USD balance - effectively multi currency account. I believe efficiency is missing here. I can understand this can be key revenue source specially for basic trades like typical cross FX positions. But still inefficient for scenario where user would like to keep reinvesting in USD & FX positions will not offset each other e.g. instant trades. Whoever supporting freetrade for FX may end up having good revenue share. Worth considering either flat monthly fee or less percentage if user would like to keep USD balance
I think we need to recognise that it’s impossible to be the cheapest for every possible type of trade and still make money. There has to be some revenue and I think a charge of less than 1% on currency conversion is not unreasonable.
If your current broker works out cheaper for a particular trade you still have the option of using them
Quite a few users have raised this point so instead of saying freetrade not for you worth drilling down and understand what’s real problem .
Is problem per transaction cost?
Is problem one time FX?
Can multiple options not be provided depending upon different types of users?
Quite a few of us are investors and we would like freetrade to success but I think constructive conversation may be better idea rather than saying just use other broker(I agree tone wasn’t correct when point was raised though).
I appreciate there can’t be one size fits all but it seems there are quite a few who invest primarily in US markets and are concerned.
Yes although this is partly what the Alpha level of account is for with a monthly fee. If you charge a monthly fee you have revenue regardless of the no of transactions, so £0 per transaction is sustainable.
If it costs freetrade a few pennies per transaction, and they charge say £15 a month + a low fx rate, they still come out ahead except in the most extreme cases (which they could add monthly limits to free trades for, I’m sure most would be fine with that, I know I would).
A USD account is an interesting idea for those who want to do trading in US shares only and only take the hit once for currency conversions. It would probably remove any controversy over fx spreads as they’re not on every trade. Have you posted an idea for this already? Strikes me as an Alpha feature, and one which would add a significant cost to freetrade in complexity and in fees for holding money in US accounts. Probably not something we’ll see in the near future for these reasons as there are so many other more pressing features to add and it’s pretty niche.
I think the issue for the OP is that this FX markup (which is a transaction cost) is distorting their frequent short term trading decisions, but for Freetrade they are building a model that caters for longer term, more infrequent, investment decisions.
Publication of the new Freetrade mission could be helpful here in the sense that this platform is not necessarily going to be the best for traders.
This will come up again. One day Freetrade will add access to other exchanges like the Euronext or the Xetra for which we need €uros, or the Tokyo Stock Exchange and then we’ll need the Yene, or Australia, and so on and so on…
Challenging… To find a balanced, sustainable, competitive offer.
As for today I am yet to find in DE GIRO the option of tax shelterd products like an ISA. In the long run, for those who mainly buy and hold, the ISA may probably be a better solution.
As for those who actively pursue a more active approach… It will depend on the success they manage to achieve. Is it whort it to have an ISA where .45% is paid in FX per trade with no tax due? Or is it better to pay taxes above the 11k threshold?
Disclosure: I love taxes
They pay for schools, hospitals, roads, politicians, etc
I used to be on degiro and I’ve been caught out before. They have a very large number of fees for all sorts of actions. Freetrade is very straightforward. Also degiro don’t offer an ISA, plus they don’t seem to have the same ambitions as freetrade (eg fractions, SIPPs etc).
