DEGIRO trading - Official review 2019

4.8/5


 

 
 Pros:   Cons:
Extremely competitive fee structure.     Web platform not suitable for advanced technical analysis.
Wide number of products and markets offered.     Inability to connect API or external platforms (e.g. Multicharts or ProRealTime).
Mobile app efficient and user-friendly.     No in depth education section.
High level of safety due to Dutch regulation.     Forex and leveraged CFDs not available.

 

Pros:

Extremely competitive fee structure.
Wide number of products and markets offered.
Mobile app efficient and user-friendly.
High level of safety due to Dutch regulation.

Cons:

Web platform not suitable for advanced technical analysis.
Inability to connect API or external platforms (e.g. Multicharts or ProRealTime).
No in depth education section
Forex and leveraged CFDs not available.

DEGIRO trading review

DEGIRO is a Dutch online broker, relatively new on the European scene. It has been active for European investors since 2013. It boasts of providing retail clients with institutional level trading fees, having  exclusively provided institutional services until 2013. The highly aggressive tariff structure makes DEGIRO one of the brokers more convenient to use for investing. In fact, there are numerous reasons why an investor would use DEGIRO. On this page you will find our official opinions and reviews on DEGIRO trading.

Trading fees and Costs

With regards of costs, DEGIRO uses

  • a variable fee structure for shares, bonds, ETFs / investment funds. It means that the fees are calculated depending on the countervalue you trade
  • a fixed fee structure for options, futures, warrants. It means that you pay a fee for each contract you negotiate

These conditions apply regardless of the number of transactions made during the month / quarter: whether you execute 1 transaction per month or 1,000, you will always pay the same rates. For this reason, DEGIRO is by far the most convenient for those small and/or passive investors interested in holding financial instruments for the long-term (buy and hold strategy). The trading of options and futures is also very convenient in terms of fees. There are also around 200 free ETFs (for the full list of commission free ETFs click here).

Tariffs represent the most beneficial aspect for the investors who choose DEGIRO: with this broker you can drastically reduce trading costs, managing to save hundreds (or even thousands) of euros a year.

A DEGIRO trading account can be considered an extension of your bank account, through which it is possible to have access to exchanges worldwide and to hold the purchased instruments in your portfolio. The opening, maintenance and closing of the account is completely free. The custody and deposit of securities is free as well.

There are no charges in the event of inactivity of your account. Another very advantageous aspect with DEGIRO concerns the extremely low financing costs when client makes use of Debit Money: it is in fact possible to use both intraday and overnight Debit Money with interest rate up to 1.25% on an annual basis.

In order to access to global stock exchanges there is a connectivity cost, called Degiro exchange connection fee. Each calendar year you will pay a maximum of 0.25% of your account value (maximum charge is € 2,50 per exchange) this cost is provided if you carry out an operation or if you maintain a position on an exchange other than the domestic one. For example, if you open an account with DEGIRO UK, you won’t pay any connectivity fee for London Stock Exchange; you will pay 0.25% of your account value (max. €2.50) for transactions or held positions on all other exchanges.

Real-time data are free on the domestic markets (except if you open account with DEGIRO UK, where you have to pay a monthly fee of £4.50 for real-time data on LSE), Euronext and CHI-X; all other price feeds are delayed by 15 minutes. Through the payment of a monthly fee it is possible to activate real time data for other markets (except NYSE, Canada, Australia, Hong Kong and Tokyo, where real-time data is not available).

For all transactions in a foreign currency, you can choose between two options:

  • Perform a manual conversion from the base currency of your account into nine other currencies (including USD, CHF, GBP, EUR). For the conversion you will pay € 10 + 0.02% of the converted amount. With DEGIRO in fact it is not possible to deposit dollars or any foreign currency directly into your account: you can only set up a Multicurrency account which allows you to convert your home currency into another currency.
  • Use the default setting (AutoFX) that executes foreign currency transactions by widening the spot rate spread by 0.1% both at the time of purchase and sale.

Account types

The procedure for opening an account with DEGIRO is completely online and paperless. In order to open an account, follow these steps:

- Register a free account online from the website.

- Upload the ID card or passport.

- Deposit funds to the account through manual money transfer (minimum amount required £0.01 / € 0.01).

Bank accounts accepted to register a DEGIRO account

DEGIRO accepts bank accounts registered in any one of the countries in which it provides its services.

Once you have deposited your first funds, DEGIRO will allocate those into your account usually within 48 hours. Once the allocation has gone through, you will be able to login to your account and get access to the platform.

During registration (and only at this point) you can decide whether to open a BASIC or CUSTODY account. The difference lies in allowing or not the securities lending to third parties for short-selling transactions.

The CUSTODY account does not allow the lending of your securities held in portfolio, but in return with this account it will not be possible to use Debit Money (financial leverage), Debit Securities (open short positions) or trade derivative instruments. Moreover, the processing of coupons and dividends and real-time quotes on the domestic market - free with the BASIC account - will have small costs.

In case you open a BASIC account, in order to be able to use Debit Money, Debit Securities and to trade derivatives, it will be necessary to make a free upgrade, within the platform, from BASIC to ACTIVE or TRADER profile.

With ACTIVE profile, DEGIRO finance the purchase of products up to a maximum of 50% of the amount invested by the client.

With TRADER profile, which is recommended for most advanced traders, DEGIRO finance the purchase of products up to a maximum of 70% of the amount invested by the client.

Regarding the margin required for trading futures, both for ACTIVE and TRADER accounts is required a margin equal to 15% of the contract value. This is quite high margin and not in line with the standards of other brokers, which require lower margins. For intraday operations a solution could be the further upgrade of your profile from TRADER to DAY TRADER, whereas the margin required for intraday transactions on futures is 5%, while the intraday equity margin is up to 3 times higher than that granted with the TRADER profile.

 

DEGIRO minimum deposit

DEGIRO does not require a minimum deposit for opening the account: you can transfer a minimum of £0.01 / €0.01, so you can open the account and test the platform, before to allocate a larger amount.

 

DEGIRO demo account

Does DEGIRO offer a demo account? DEGIRO does not provide a demo account. However, as mentioned above, minimum deposits for opening the account and access to the platform are not required, therefore in a few minutes and with a deposit starting from £0.01 / €0.01 you can access the platform and check the various services offered.

DEGIRO how to change language

At the moment it is not possible to switch the platform language. However, DEGIRO has announced that this option will be available in a very short time.

Products and Markets

With access to over 65 markets and a vast range of available securities, DEGIRO offers a vast and unique product range. In addition to most European and US markets, with DEGIRO you can access stock exchanges in Hong Kong, Singapore, Australia, Japan, Turkey, Canada.

The markets and products currently not available are stock-options listed on CME, forex and leveraged CFDs.

Trading platforms

DEGIRO offers two types of proprietary platforms: a web-based platform and an App for iOS / Android. In this review on DEGIRO we tested both platforms that have very similar features and tools. The web platform is accessible directly from the DEGIRO website via login with your own credentials, while the App can be downloaded and installed on your smartphone and tablet.

It is not possible to connect APIs (although there is indeed an unofficial way to do it) nor to external software such as Multicharts and ProRealTime. As mentioned in the previous paragraph, not even a DEGIRO demo account is offered. Given the ease of use and the lack of advanced tools for both research and technical analysis, the DEGIRO platform is particularly suitable for novice investors or those seeking only an execution-only broker without additional accessory services.

If you want to increase the security of your account and limit the risk that any hacker can access to your account, you can enable Google's two-step verification (two-factor authentication) within the login process, in addition to the insertion of username and password. We strongly recommend activating this security tool.

Web platform

DEGIRO offers an essential and slim web platform, at times almost spartan. It allows you to quickly search for financial instruments through the search engine (top right hand corner) by entering the name, ticker symbol or ISIN code of each product.

The Portfolio shows the open positions and, for each them, its quantity, current price, total value, average purchasing price (function recently added), the daily result and finally the theoretical P&L and the realized P&L.

Order types

When you want to enter an order in the platform, there are five order types available:

  • Limit Order
  • Market Order
  • Stop Loss
  • Limit Stop
  • Trailing Stop(available only on XETRA)

It is appropriate to specify the differences between Stop-Loss and Stop Limit orders, since the very similar names can be confusing.

A Stop Limit Order is a Stop-Loss Order that instead of a Market Order triggers a Limit Order when your chosen 'stop loss' level is reached.

Stop-Loss is a stop order that is triggered when the stop level is reached by the underlying. If for example you are long on a share whom price is 15 and I insert a Stop-Loss of 10, the share is sold if its price drops to 10, turning into a Market Order. There is therefore the concrete possibility that the order is executed at a price much lower than 10 (let’s think of a opening of the markets in negative gaps or when there is strong volatility on order-books combined with low volumes).

The Stop Limit order therefore serves to prevent a Stop-Loss from being executed at a price very far from the entered stop. In the example above, we will use a Limit-Stop order, setting a Limit of 8 and a Stop-Loss of 10. It means that our order will be executed if the share drops to 10 but does not go below the value of 8. We are therefore indicating a range of prices within which we want our order to be executed. If our share jumps from the quotation of 11 falls directly to 7, without therefore trades between 8 and 10, our order will not be executed. The Stop Limit order is simply a combination of the Limit Order and the Stop-Loss.

DEGIRO app

The DEGIRO app is designed primarily to keep track of your wallet and to place orders from smartphones and tablets when you don't have the chance to be in front of the computer.

The DEGIRO App is supported by all devices, including iPhone, iPad, Android smartphones and tablets. Once the app is downloaded and you first login with your username and password, the app will ask you to set up a 5-digit Pass Code. This code can be freely chosen by yourself and will allow you to log in, from that moment on, more quickly, simply by entering the Pass Code instead of the classic credentials (username + password).

In general, the DEGIRO app offers a more than pleasant mobile trading experience: portfolio management is simple and the quick search for products to place an order is just as intuitive and fast.

 

Tax regime

DEGIRO acts as withholding agent for some taxes, such as Financial Transaction Tax (FTT), Stamp Duty, income tax (dividends and coupons). For other taxes, such as tax on capital gains or wealth tax, is it duty of the client to declare and pay them, depending on where he’s considered tax resident.

As a consequence, when you realize a capital gain with DEGIRO by buying and selling any securities, no tax will be levied. Eventually, the sole taxes applicable are the FTT/Stamp Duty (where applicable) and the withholding tax on dividends and coupons.

At the end of the fiscal year, DEGIRO provides clients with a tax report, which helps client to meet their tax obligations.

Bear in mind that DEGIRO does not provide any tax advisory services, thus we recommend to contact a tax accountant to better understand what are the tax obligations generated by trading with DEGIRO.

Customer support

To test the quality and speed of DEGIRO Service Desk, we have conducted a series of phone and email tests, consisting of 10 calls and 20 emails, delivered over 2 weeks.

It turned out that in 90% of the calls made between 08:00 and 22:00, the response took place within the first minute.

Regarding the email tests, in 80% of cases the response arrived within 3 hours (excluding the night time zone from 22 to 08) and the remaining 24% between 3 and 8 hours.

Our opinions on DEGIRO's Customer Service are therefore positive.

Safety

DEGIRO does not have a banking background, therefore does not offer a bank account, credit cards or other traditional banking services.

DEGIRO operates under the supervision of the Dutch Financial Markets Authority (AFM) and the Central Bank of the Netherlands (DNB). The Dutch legislation requires the segregation of clients' assets from the asset of the financial broker so in the unlikely event that something happens to DEGIRO, customer investments/liquidity cannot be treated as recoverable assets by third parties. DEGIRO has over 400,000 clients in Europe.

DEGIRO adheres to the Dutch Investor Protection Scheme, which insures every client of DEGIRO up to € 20,000.

How are funds kept in DEGIRO?

This is, in our opinion, a very relevant feature that plays in favor of DEGIRO, as consequence of the current financial legislative configuration in the Netherlands. In fact, the Dutch legislator does not allow Investment Firms like DEGIRO to hold customer money in bank accounts. Rather, these funds must be kept in the least risky way possible (for example, by avoiding exposing yourself to the risk of bank bankruptcy where your money is deposited). For this reason, DEGIRO is obliged to invest almost all the money in Money Market Funds (MMF).

What are Money Market Funds? MMF are qualifying funds with a short duration of 60 days, which invest 90% in triple A government bonds, such as Germany, France and the Netherlands. For the remaining part, they invest in corporate bonds with the highest credit rating. The duration of the funds guarantees their liquidity while the creditworthiness of the issuers makes them extremely solvent and low risk. However, due to the current macroeconomic conditions, the yield on government bonds in which money market funds invest is negative. Does this mean that a customer will face capital losses on money deposited into his DEGIRO account and not invested? Fortunately, the answer is no, because the broker undertakes to make a compensation on negative returns, so that the customer will always have the same amounts available, without suffering any loss.

Thanks to this configuration described above, holding the money in a DEGIRO account meets the highest standards, preventing individuals from exposing themselves to systemic risks such as bank failures or improper use of customer funds by of a broker.

Education

DEGIRO has recently added on its website a section dedicated to Education, called “Knowledge”. There clients can find educational contents, either for beginners and for advanced investors.

The section contains two categories:

  • Investor’s Academy: covering a broad set of investing topics, such as investment goals, risk management, what is a broker, order types etc.
  • Investing with DEGIRO: 7 videos who explains how to use the platform, how to deposit and withdraw funds, how to purchase securities etc.

Final rating

In conclusion, DEGIRO is the right choice for all the investors interested in cutting trading costs, especially having a limited operation and a medium-low capitalization. The basic platform and absence of advanced tools make it also suitable for novice investors. On the other hand, more advanced traders will be forced to work alongside other platforms and tools external to DEGIRO, in order to use this broker only for the final insertion of orders, taking advantage of the low commissions and the vast offer of exchanges and instruments. Our official opinions on DEGIRO are therefore positive.

However, DEGIRO is a relatively new broker and it is expected to raise the level of the services it offers, starting with a more robust web platform, up to training courses and financial education in line with other players on the market.

Risk disclosure: Investing involves risk of loss

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