Composer vs. M1 Finance: What are the differences?
Compare Composer and M1 Finance in our in-depth analysis and explore the features and performance of both to determine which one suits your trading needs best!
What are the main differences between Composer and M1 Finance?
As much as 78% of all trades (according to the SEC) are executed by stock trading algorithms. Two of the most popular platforms include Composer and M1 Finance. While both platforms have their advantages and disadvantages, I've outlined some of the key differences to help you make an informed choice if you are looking to create your own stock trading bots.
User Interface & Platform Access
With a visual no-code strategy builder, Composer offers an easy way to understand the logic behind your stock trading strategy. This enables both beginners as well as advanced traders to build strategies with ease. The best way to experience Composer is via desktop as the screen size enables you to make the most of the backtesting functionality as well as the strategy creator. Note: Composer also lets you login via mobile if you wish you check in on your investments.
On the other hand, M1 Finance offers a unique approach to portfolio management through its "Pie" concept. This visualization method allows investors to view their portfolios as a pie, with each "Slice" representing different securities such as stocks, exchange-traded funds (ETFs), and cryptocurrencies. Users have the option to create their own Pie or choose and modify pre-built portfolios known as Expert Pies. This setup offers a broad range of choices for investors who wish to both create and automate their investment portfolios. The M1 platform, accessible via its website and mobile app, provides features like Auto-invest, which automatically allocates deposits to each Slice of the investment portfolio.
One disadvantage of M1 Finance is that there is limited flexibility when personalizing your Pie. While you can "Create your own pie" with different allocations, you can't customize the entry conditions that determine asset allocation. Meanwhile Composer has a full range of technical indicators that you can use, as well as a variety of trading frequency options.
If you like an M1 Finance Investing Pie, but prefer the flexibility of Composer, you can create it from scratch in Composer or make edits to the following:
Retirement Pie Examples
General Investing Pie Examples
For example, let's take the Ultra Aggressive: General Investing Expert Pie. In Composer, you can make the following changes within minutes:
Change the trading frequency so it rebalances at a different interval (e.g. weekly rather than quarterly)
Change the entry conditions e.g. Allocate more weight to the SPY ETF when the RSI of SPY < 30, else allocate more weight to emerging markets.
Change the weights of various ETFs.
Ask the AI assistant to make personalized recommendations to the strategy based on your needs.
Backtest to understand historical performance.
Click on the strategy, and then click "Edit". This takes you to the Composer visual editor which allows you to make changes, no coding needed.
Pricing
Composer offers a transparent pricing system with a $24 per month fee (paid annually) that does not scale with the amount of trading or AUM you have. This means you can invest in as many trading bots as you would like without worrying about your costs increasing. Composer also offers free backtesting, strategy following, and strategy creation for all users on both the free and paid plan.
In terms of having complete flexibility for your trading strategy, Composer's pricing is one of the most competitive on the market.
On the other hand, M1 Finance Basis is free and M1 Plus is $125 per year. The Plus account offers smart transfers, two trading windows, and smart cashback.
Brokerages & Deposit Security
Both Composer and M1 finance are SEC regulated broker-dealers with SIPC security protection of $500k. Composer uses Alpaca and Apex Clearing as their brokers. M1 Finance uses Apex Clearing.
Asset Choice & Transaction Types
Both Composer and M1 Finance are long-term focussed investing platform offering access to the full range of stocks and ETFs (M1 Finance also offers limited OTC securities and crypto too).
More specifically, Composer suits the needs of active traders better. The structure of the platform allows you to rebalance your strategies at daily, weekly, quarterly, yearly or threshold-based intervals. The big advantage of Composer is the flexibility of trading indicators, assets, and logic, whereas M1 Finance does not allow this granular customization of their "investing pies".
Composer offers the ability to ‘follow’ strategies with a simulates $1000 that you can track over time and measure out-of-sample performance. On the other hand, at the time of writing, M1 Finance does not offer paper trading or an equivalent.
AI functionality
Composer has recently introduced ChatGPT functionality to supercharge the investing process. Using ChatGPT you can ask questions about your strategies, find ways to diversify, and continue to improve your returns. Here's some examples of what you can ask: What are the risks of this strategy? What should I add to diversify this strategy? What type of strategy would be a good complement to this one? You can then ask for the code from ChatGPT to build the strategies directly in-app. You can check out more details here. M1 Finance does not currently offer this functionality.
Customer Support
Both platforms offer extensive customer support channels. Composer offers email, live chat, and zoom calls with the product team. Likewise M1 Finance offers email and phone support.
Final Remarks
Based on Composer's transparent pricing, easy to use no-code interface, flexible strategy creation, Composer seems like a logical choice for many people.
Moreover, building strategies in Composer is a fun activity, and spending time doing so is a great way to get accustomed to how the no-code editor works.
As you do so, we invite you to explore the site and sign up for a free Composer account to get a first-hand impression of what our platform can do for you.
We'd be happy to have you on our side, and provide you with the best automated stock trading platform there is!
Important Disclosures
Investing in securities involves risks, including the risk of loss, including principal. Composer Securities LLC is a broker-dealer registered with the SEC and member of FINRA / SIPC. The SEC has not approved this message.
Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Composer has not independently verified such information and makes no representations about the accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Composer has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, as it was prepared without regard to any specific objectives, or financial circumstances, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not intended as a recommendation to purchase or sell any security and performance of certain hypothetical scenarios described herein is not necessarily indicative of actual results. Any investments referred to, or described are not representative of all investments in strategies managed by Composer, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see Composer's Legal Page for additional important information.