DeGiro is a low-cost broker that has become very popular in the UK due to its low rates. DeGiro’s commissions are far lower than those of other low-cost competitors, and has undoubtedly revolutionized the market by breaking all rules and conventions. However, being very affordable has many drawbacks, and that´s why in this review, we will take a look at the reviews of many unsatisfied customers. We must point out that DeGiro specializes in stock market investment and does not simply include derivatives such as CFDs. So, if you are looking into trading with CFDs you can start with Plus500 as they do not charge any dealing commissions. Now, if you simply want to buy and sell stocks, DeGiro is an option that you may want to consider, although it is worth mentioning that it is of low-quality, includes many complaints, yet there are also satisfied customers. That is why we will analyze and look into everything we believe you must know (remember that CFDs are a leverage products and can result in the loss of your entire capital. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money).
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Security: Is DeGiro reliable? Is it a scam?
There is certain distrust among investors regarding the safety of their funds since it is a cheap broker. Many people find it very suspicious that a broker can be that cheap and are afraid that this may well indicate it is unsecure. Is it true? Even though this is not 100% secure, we can as investors examine how the broker is regulated.
First of all, DeGiro was founded and based in the Netherlands. So, the first thing we have to do is to see whether it is regulated in the Netherlands. When doing so, you will discover that it is regulated by the Nederlandsche Bank, which is Netherlands Central Bank and by the Dutch supervisory, the AFM. In addition, it is also registered in the FCA in the UK.
Is there anything else we have to know to determine whether it is reliable or not? We must verify whether it is part of the Depositogarantiestelsel which is an insurance for the first 20,000 euros deposited in the broker. In addition, it uses segregated accounts to further secure the funds of its customers. In practice, this means that the company cannot use the money from its customer to pay for their own expenses since it is stored in different accounts.
So what´s our opinion in terms of security? We believe it is impossible to completely affirm that DeGiro is secure since nothing can be considered 100% secure in the investment world. However, we can say that DeGiro meets our requirements, so we believe it is reliable. Nonetheless, we must remember that it is a fairly new broker, so uncertainty will always be present.
If there is something that DeGiro prides itself are their rates, and we believe they have reasons to do so. Among traditional online brokers, they have the lowest investment market fees in the stock market. For example, to invest in the UK, the commission for buying and selling 2 euro shares (if compared with ING Direct or Clicktrade, both charge 8 euros) to which we must add 0.04% of the total amount of the operation.
On the other hand, there is no commission for collecting dividends, nor any other type of expenses such as maintenance or custody for the main accounts. Also, DeGiro has been offering CFDs services for quite some time, and are not specialized in it. Click here if you want to see the rates for trading CFDs with Plus500.
Why is it so cheap?
First of all, we must clarify that DeGiro has three different types of account, Basic, Active and Trader. and another one which we will now look at. The conditions for all of them are somewhat similar, but with a few differences. For example, Degiro manages to incur in savings by lending the shares of its clients through the Basic, Active, and Trader account. Do you know what this means? The broker leaves the shares of its clients to other investors so that they can operate with them (Generally what they do is to sell by betting on the downside). They also have the Custody account in which they do not incur in these type of practices but rather include certain commissions such as collecting dividends.
In addition to lending shares, DeGiro operates in Stock Exchange with Chi-X (known as Chi square), which allows significant cost savings. Obviously, Chi-X’s market share is small. They have less liquidity and volume compared to others, which usually results in a delay in operations. So an order placed under this market may take longer to execute compared with others, or may not even close. Either way, DeGiro uses most of the operators for the Stock Exchange.
Finally, DeGiro has been using omnibus accounts for its clients since its beginning. Omnibus accounts refer to those accounts in which shares are not under the name of the real owner, but rather the broker. Then, the broker has his own records indicating the owner of each share. Even though this was something exceptional in the market a few years ago, since 2018 nominative accounts have disappeared (those in which the shares are in under the name of investors), so most brokers use omnibus accounts which have lower costs.
As you can see, it is cheap for a reason and that´s because they allow other investors to operate with your shares. We personally do not like this as much given the risks. A trader can sell your shares without you knowing, and if the price rises too much you may have problems getting them back. And if the shares are not under your name since it an omnibus account, we believe this possess an even greater risk which can definitely be avoided.
Many investors like to use a demo account before trading with a broker. This allows them to know in depth the platform of the broker in which to invest (in the following section we will analyze the platform) in order to understand the tools and signals before putting your real money at risk through an investment. Unfortunately, DeGiro does not have a simulator, so if you want to try it out, you can use another alternative we’ve searched for you.
Plus500 demo account is used by many people who are interested in learning how markets work, but want to do so by learning how to invest risk-free. Even though Plus500 offers CFD services, these CFDs allow trading with all types of underlying assets. So in addition to Forex trading and commodities, you can negotiate with CFDs on company stocks, stock indexes, and even ETFs. This simulator will allow you to learn about strategies, view the market behavior as news come out in the media, or get used to the graphics in real time.
The demo conditions are very favorable, since they don´t require you to pay anything to use it, and they don´t have a deadline. You will have it at your disposal as long as you want to use it. If you want to try it out, simply go to the lower button, click on open account, and “free demo account”.
How does it work? platform
The platform and how to operate may be the aspects that most DeGiro customers encounter. We will take a closer look at the customer reviews regarding the broker later and see that the platform and its operation face quite a few problems. As per our analysis, we believe it is important to point out that although conditions have improved, there are still many drawbacks.
Until recently one was unable to place frequent orders in trading as stop-loss. Even though it lacks many options and types of orders, the platform continues to have drawbacks, and it one can encounter complaints on the internet. Therefore, an investor looking to save using DeGiro has to be aware that there might be missing order, sometimes it is slow, and that one may encounter problems. So one must balance the price and commissions on the one hand, and the operating inconveniences to determine which one is better in each case.
There are some brokers with few reviews on the internet. However, that´s not the case with DeGiro, as they have many reviews on Twitter, and even on other social networks such as Facebook. Obviously, one can also find reviews from investors on online forums and blogs. We value these comments a lot because they somewhat indicate the degree of customer satisfaction. DeGiro reviews are very different, so we will separate them between positive and negative reviews.
Beginning with the first one, there is no doubt that the most repeated reviews has to do with their low commissions. Any forum that discusses something about DeGiro always mentions something regarding their low commissions. And we agree with that, DeGiro´s commissions are among the lowest in the market to invest in the stock market, however we would have to see whether it is worth it. Broadly speaking, the main positive review from customers is about commissions, but not everything else. Let’s take further look.
Even though we may find positive and negative comments about all brokers, DeGiro´s case is very significant since they only have on very positive aspect, and the remaining comments are either normal or bad. There are reviews from investors who complain that the website and platform experience many failures. DeGiro defends itself by stating those crashes are due to improvements. Other investors have expressed that they are unsatisfied due to the fact that purchase orders or sale of shares are often carried out in sections and increasing costs. Lastly, we have also seen reviews from customers stating that they lack tools on the platform.
The review has become somewhat extensive, and we believe it is time to reach to our conclusion. To do so, we will use a simple system by creating a list that shows both its strengths and weaknesses. However, we must remind you that this is based solely on our opinion.
- The lowest commissions for stock trading
- Web and managers that use English
- Properly regulated
- Grows fast and includes new tools and options
- Ideal for creating a long-term portfolio of securities
- The Platform still needs improvements
- Lacks essential orders
- It´s slowly getting into CFDs, so their competitors are better options
- There is often not enough market depth
- They lend their clients’ shares to other investors to reduce costs
We will now offer our final review given that we´ve reached the conclusion section. We believe that investors looking to save on costs and pay few commissions, in return for a bad service, DeGiro may be an option, but honestly we do not like it that much and prefer other alternatives. Nonetheless, we must keep in mind that its strength is stock market investment. If, however, you are interested in trading with CFDs, we recommend looking for other options. Click here if you want to start trading with CFDs without paying operating commissions with Plus500 (remember that CFDs are a leverage products and can result in the loss of your entire capital. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money).