How Does Trading 212 Make Money and Stay Profitable?

In a world where traditional brokers charge commissions and fees for almost every transaction, Trading 212 has gained popularity by offering a commission-free trading experience.

But how does a platform like this stay afloat and continue to scale? In this article, I’ll take a closer look at how Trading 212 generates revenue while maintaining a free-to-use model for retail investors, particularly in the UK.

What Is Trading 212 and What Services Does It Offer?

Trading 212 is a UK-based online broker offering commission-free trading services through its mobile and web platforms.

Regulated by the Financial Conduct Authority (FCA), it provides access to global financial markets, appealing to both beginner and experienced investors. The platform stands out for its simplicity, usability, and wide asset coverage.

Trading 212 offers three core account types:

• Trading 212 Invest: Enables users to trade stocks and exchange-traded funds (ETFs) without commission. It caters to long-term investors looking to build a diversified portfolio.
• Trading 212 ISA: A Stocks and Shares ISA account that offers the same benefits as the Invest account but with tax advantages for UK residents. Any capital gains, dividends, or interest earned within this account are tax-free up to the annual ISA allowance.
• Trading 212 CFD: Contracts for Difference (CFD) accounts allow users to speculate on price movements in various markets, including forex, commodities, and indices. This involves leveraged trading, which carries higher risk and higher reward potential.

These distinct offerings are monetised in different ways, allowing Trading 212 to maintain a flexible and diversified revenue model while continuing to appeal to a wide user base.

How Does Trading 212 Make Money Without Charging Commission?

Trading 212 markets itself as a commission-free broker, and this is accurate in the context of stock and ETF trading through its Invest and ISA accounts.

However, the platform still generates revenue through other methods, allowing it to operate and grow sustainably.

The commission-free model works as a competitive strategy, drawing in a larger user base by removing entry barriers.

With thousands of users executing trades daily, even small indirect charges can lead to significant income.

Revenue is earned primarily through spreads, FX fees, interest on cash balances, and share lending.

These revenue streams are embedded within trading activity but don’t appear as direct charges on users’ accounts. As a result, Trading 212 can advertise zero-commission trading while monetising trading behaviour through built-in mechanics.

This approach is similar to other popular commission-free brokers and is well established in the fintech space.

What Are Trading 212’s Main Revenue Sources from Invest and ISA Accounts?

Trading 212’s Invest and ISA accounts generate revenue from two primary sources: foreign exchange fees and share lending.

These revenue channels are designed to be subtle and user-friendly while providing the platform with a steady stream of income.

1. FX Conversion Fees

Whenever a user buys or sells an asset listed in a different currency from their base account, Trading 212 applies a foreign exchange fee. In the UK, this fee is set at 0.15% per conversion.

For example, if a user with a GBP account buys a US stock priced in USD, this FX fee is automatically added to the cost of the trade.

Although 0.15% might seem small, these conversions occur frequently across the platform.

Over time, this contributes substantially to Trading 212’s bottom line. In Australia, the FX fee is set higher, at 0.4%, offering even greater profitability in those regions.

2. Share Lending

Another key income stream is securities lending. Trading 212 may lend out shares held in user accounts to institutional investors, such as hedge funds, for a fee.

These shares are typically borrowed for short-selling or other market-making activities.

The platform retains a portion of the interest generated from these transactions.

While users still retain ownership and receive dividends, they may not always know when their shares are lent out. Trading 212 manages this internally and includes details in their transparency disclosures.

Here’s a quick view of how it works:

These mechanisms allow Trading 212 to generate income from activity even in a commission-free environment.

How Does Trading 212 Make Money on CFD Trading?

The CFD account is one of Trading 212’s most profitable services due to the nature of leveraged trading and the fee structures involved.

In contrast to Invest and ISA accounts, CFD users do not own the underlying assets. Instead, they speculate on price movements, either upward or downward, using margin.

Trading 212 earns revenue from CFD accounts in the following ways:

1. Spreads

The spread is the difference between the buy (ask) and sell (bid) price of a financial instrument. Trading 212 sets its own spreads, and this difference is effectively the fee users pay when opening or closing a position.

For example, if a trader buys an asset at 100 and sells at 99.5, the 0.5 difference is revenue retained by Trading 212. The wider the spread, the more potential revenue the platform earns per trade.

2. Overnight Interest Fees

If a CFD position is held overnight, Trading 212 charges an interest fee, also known as a swap fee. These are based on the size of the position, the underlying asset, and the interest rate environment.

For leveraged trades, the interest on borrowed funds can add up quickly, especially over multiple days.

Because CFD users tend to trade more frequently and often use leverage, Trading 212 can earn significantly more from these accounts compared to Invest or ISA accounts.

How Do FX Fees Contribute to Trading 212’s Revenue?

Foreign exchange fees represent one of the most consistent and scalable revenue sources for Trading 212.

Each time a user engages in a transaction that involves currency conversion—such as buying a US stock from a GBP account—the platform charges an FX fee.

This fee is calculated as a percentage of the transaction value. In the UK and EU, it is 0.15%, while in Australia it is 0.4%.

Given the high trading volumes, particularly among investors with globally diversified portfolios, these small percentages become a substantial source of ongoing income.

For example, if a user trades £5,000 worth of US shares, the FX fee would be £7.50. With thousands of users trading daily, this revenue stream provides predictability and scale.

FX fees are particularly advantageous for brokers because they are automated, relatively low in cost to implement, and apply frequently without being overtly visible to users.

What Role Does Share Lending Play in Trading 212’s Profit Model?

Share lending is a standard practice among brokers, and Trading 212 uses this mechanism to generate additional income from Invest and ISA accounts.

When a user purchases shares, those assets are often held in a pooled nominee account.

From this pool, Trading 212 may lend out certain securities to institutional investors for a fee. These loans are typically short-term and involve popular or heavily shorted stocks.

The borrower pays an interest rate for borrowing the shares, and Trading 212 earns a portion of this revenue. The process is seamless for the user, who continues to receive dividends and retains legal ownership of the securities.

From a revenue standpoint, share lending is particularly effective because it monetises assets passively.

Users are not charged, but the platform earns money simply by having those assets under custody. It’s a strategy that benefits from scale—the more assets held by users, the more Trading 212 can lend.

How Does the Bid-Ask Spread Help Trading 212 Make Money?

The bid-ask spread is another key area of profitability, especially in the CFD division. It refers to the difference between the highest price a buyer is willing to pay for an asset (bid) and the lowest price a seller is willing to accept (ask).

In traditional markets, this spread is often determined by supply and demand. However, in CFD platforms like Trading 212, the broker can set or adjust the spread. This allows the platform to retain the difference as a profit.

In practice, if I open a CFD trade at a buy price of 105 and immediately close it at the sell price of 104.5, that 0.5-point spread becomes the platform’s revenue.

This might seem negligible per trade, but the frequency and volume of CFD trading multiply its effect significantly.

Moreover, because CFDs are often traded on leverage, the nominal values involved are much larger, increasing the absolute spread amounts and hence the potential profit per transaction.

Is Trading 212 Profitable Despite Low Fees?

Trading 212 operates on a low-margin, high-volume business model. By removing commission barriers, the platform attracts a larger customer base. With millions of users, the cumulative effect of small fees—like FX conversions, spreads, and overnight charges—becomes significant.

Other contributing factors include:

• Low Operational Costs: The platform relies heavily on automation and digital infrastructure, reducing staffing and physical office requirements.
• User Growth and Retention: As more users join and stay engaged, Trading 212 benefits from economies of scale.
• Cross-Monetisation: Users often maintain multiple accounts (e.g. both Invest and CFD), increasing lifetime value.

While each individual user may generate only a few pounds per month in revenue, the platform’s growing user base and scalable infrastructure ensure ongoing profitability.

How Transparent Is Trading 212 About Its Revenue Model?

Trading 212 is relatively open about its monetisation strategy. On its Help Centre and official documentation, the platform outlines its revenue sources, including FX fees, spreads, and share lending.

The company is also regulated by the Financial Conduct Authority (FCA), which imposes strict disclosure and operational standards. This ensures that Trading 212 remains accountable to both its users and regulatory bodies.

In comparison to other commission-free brokers, Trading 212 provides a reasonable level of transparency. Its pricing structure is publicly available, and users are notified of applicable charges such as FX fees during the trade execution process.

What’s the Future of Trading 212’s Monetisation Strategy?

As the platform evolves, Trading 212 is likely to explore new revenue avenues beyond its current offerings. Some possibilities include:

• Premium Services: Introducing tiered features or subscriptions offering deeper analytics, market insights, or faster trade execution.
• Advanced Order Types: Charging for tools like trailing stops, advanced limit orders, or real-time data feeds.
• International Expansion: Growing its user base outside the UK and EU, particularly in Australia and Asia-Pacific markets, where higher FX fees apply.
• Interest on Cash Balances: Similar to other brokers, Trading 212 may earn interest on uninvested cash held in client accounts.

With increased competition in the commission-free space, the ability to monetise through value-added services rather than core trading functions will be essential for long-term sustainability.

Conclusion

Trading 212 has developed a diverse and efficient revenue model that relies on FX fees, share lending, and CFD spreads rather than direct commissions.

By keeping trading free and transparent, the platform continues to grow its user base while generating income through less visible, yet perfectly legal and regulated, methods.

As long as it maintains regulatory compliance and user trust, its profitability appears sustainable in the long run.

FAQs 

Is Trading 212 really free to use?

Yes, there are no commissions on trading stocks or ETFs. However, FX fees and other indirect charges apply.

What is the difference between spread and commission?

Spread is the price difference between buying and selling; commission is a direct fee charged per trade. Trading 212 charges spreads but no commission.

How does Trading 212 make money on free trades?

Through FX conversion fees, share lending, and spreads applied to CFD trades.

Are there hidden charges with Trading 212?

Not hidden, but indirect costs like overnight fees on CFDs and FX conversion charges do apply.

Can share lending affect my investment returns?

Not directly. Your shares remain in your account, and you still receive dividends, but they may be recalled during lending.

How does Trading 212’s FX fee compare with other brokers?

It’s lower than many traditional brokers, with a 0.15% fee for UK clients, but still a source of revenue.

Is Trading 212’s business model sustainable long-term?

With growing user numbers, low overhead, and diversified income streams, yes, the model appears sustainable.