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Robinhood is one of the most well-known (and perhaps infamous) no-commission trading platforms on the market.
With both a mobile app and a web platform, more people than ever before are trying Robinhood on their own to get into the stock market.
Keep reading our Robinhood Review to see if this trading platform can fit your needs and help you start investing in the stock market.
Robinhood Snap Shot
| Features: | Details |
|---|---|
| Account Minimum: | $0 for regular account or $2,000 for a margin trading account |
| Commissions: | $0 |
| Management Fee(s): | $0 |
| Account Types | Standard Taxable Account, "Gold" Account |
| Automatic Rebalancing: | No |
| Expense Ratios: | General ETFs Expense Ratios |
| Customer Support: | Email Only |
| Human Advisor(s): | No |
| Mobile App: | Yes |
| Tax Strategy: | No |
| Tradeable Securities: | Stocks, options, ETFs, cryptocurrencies, fractional shares, American Depository Receipts |
| SIPC Insured | Yes |
| Current Promotion | Enjoy a Free Stock |
Robinhood Review
With its intuitive user interface and zero commission design, Robinhood is very attractive for newcomers to stock market trading.
However, its lack of educational materials and research resourcesmakes it arguably a better fit for more traders who have some knowledge of stock market trading already under their belts, or who are comfortable learning their way to success.
Despite its simplicity and lack of certain key features, there’s a lot that makes Robinhood a solid option for trading. Let’s break it down.
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Robinhood is Best For:
- Fans of mobile trading platforms
- Those interested in having individual taxable stock trading accounts
- Fans of margin trading
- Those looking to get into cryptocurrency trading
- Folks looking for a few stock trading account
- Experienced traders who don’t need tutorials or helpful resources
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What is Robinhood?
Like its namesake, Robinhood is, at least in theory, designed to help transfer wealth from the rich to the poor… provided you can make smart trades!
At its core, Robinhood is a stock trading platform that allows you to play the stock market without any commission fees: a staple requirement for most other stock trading platforms.
Furthermore, it offers a cash management account that allows you to gather interest on your cash or pay your bills using a linked MasterCard debit card.
While it originally began as a mobile app only, now it’s also a website that includes lots of features to make it a perfect pick for beginner or experienced traders alike.
Additionally, Robinhood Crypto was recently released, which allows stock traders to buy and sell assets for popular cryptocurrencies.
How Does Robinhood Work?
Robinhood is a very intuitive and easy to navigate stock trading app overall. In fact, this aspect may make it a little less attractive for experienced traders who want something with a bit more depth or greater control.
Regardless, both Robinhood’s app and website are similar in appearance and layout, so swapping between one or the other is usually quick and easy.
Once you download the app or visit the website, you can open a new account in just minutes and start funding the account by linking a card or a bank account.
Once you’ve opened the app and your account, you’ll be greeted with an opening screen that shows your overall portfolio value.
In terms of investing, you’re able to trade stocks, options, and cryptocurrencies with just a few button presses or taps on your smartphone screen. You’ll be offered an order ticket whenever you look at a particular asset, which highlights important information about the asset in question.
Furthermore, all assets can be traded on both the mobile app and the website, so there isn’t any advantage between using one version of the platform or the other.
While you don’t get any descriptive information about your portfolio by default, you can hover your mouse over the chart or tap any location on the chart with your finger to get more info.
That’s effectively all you get when it comes to Robinhood. It’s an incredibly simple stock trading app that doesn’t offer additional controls or many advanced features.
What you see is what you get, so there’s certainly an argument to be made that it’s better for those with some experience trading on the stock market, who may not need tutorials or training wheels.
Robinhood Standout Features:
Robinhood Instant:
This feature gives you instant access to any deposits under $1000, plus immediate access to any funds if you sell stocks and make a profit. Other apps usually require you to wait up to three business days.
Options Trading:
As with regular stocks, Robinhood allows you totrade options without any commission fees.
Cryptocurrency Trading:
The same holds true for cryptocurrencies, which can be traded without any commission fees. Available currencies include Bitcoin/Bitcoin Cash, Ethereum/Ethereum Classic, Litecoin, and Dogecoin.
Related: Best Cryptocurrency Exchanges
Ability to Day-Trade:
Robinhood isn’t really a day trading platform per se, but you can participate to a limited extent since the app allows you to track up to three separate trades across a rolling five-day timeframe.
Fractional Shares:
It’s easy to trade with fractional shares using the Robinhood platform. It also has controls that allow you to, for instance, automatically and repeatedly invest a fixed dollar amount.
Robinhood Gold:
This is the premium subscription attached to the main Robinhood platform. You pay a small monthly subscription fee and get access to some bonus features.
Robinhood Cash Management:
The new cash management feature causes any un-invested cash that sits in your brokerage account to earn interest over time. While the total yield isn’t particularly high, it’s better than nothing.
Investment Research:
While it doesn’t provide very much in-depth investment research, Robinhood does provide news from major investment outlets such as WSJ Markets, CNCB Business, and Cheddar.
You get extra investment info if you sign up for Robinhood Gold. Among the information provided are basic metrics such as “people also bought” for stock recommendations and “about” information for certain stocks or companies.
Low Account Minimum:
One of the best things about Robinhood, by far, is its $0 account minimum for regular accounts. However, you do need a $2000 minimum if you have a margin account, though this is due to industry regulations as opposed to Robinhood’s design.
Beautiful UX/UI:
Robinhood has one of the most simplistic and streamlined user interfaces for a trading platform on the market.
Dividend Reinvestment:
With Robinhood, if you have any cash dividends, you can automatically reinvest them in the underlying stock or ETF. However, only assets that support fractional shares trading are eligible for this feature.
Pros:
- Robinhood’s trading costs are extremely low, especially relative to other trading apps
- The app overall is simple and intuitive to use, even if it doesn’t have very many assistive features or tutorial resources
- Once you deposit any cash, you can use it instantly to place a trade. This can be advantageous if you want to jump on a limited-time opportunity you’ve just noticed
- You can trade cryptocurrencies in very small quantities, which is opposed to other trading platforms that usually have arbitrary minimums
- Robinhood’s mobile app is extremely fast and smooth and doesn’t usually have any interface lagging
Cons:
- Robinhood’s customer service is pretty lacking since you won’t be able to contact them aside from email
- Robinhood doesn’t allow you to trade mutual funds, bonds, futures, forex, and OTC or penny stocks
- As mentioned, multiple times, Robinhood is pretty scarce when it comes to educational or tutorial resources. That means you’ll need to know what you’re doing you start using this app, as it won’t hold your hand and won’t prevent you from making costly trades
- Robinhood’s real-time data updating could use some work. Prices update almost instantaneously, but other real-time data providers show that the app’s information lags considerably by comparison
- The app has a timeout feature you can’t turn off, so you’ll need to regularly use the app to prevent it from logging you out
Robinhood Fees and Pricing
Again, Robinhood doesn’t charge any commission for trading stocks, options or cryptocurrencies. Instead, Robinhood makes money by selling your order flow to wholesale market makers. For those not in the know, your “order flow” is just the right to fill your order on the actual market.
This doesn’t mean you’ll pay for any of that. It just means that Robinhood itself ends up earning a fraction of a cent for every trade placed through its platform. This all adds up over time.
Additionally, Robinhood, fortunately, doesn’t charge any annual or inactivity fees. Note that the app does charge a $75 ACAT outgoing transfer fee.
Is Robinhood SIPC Insured?
Yes, Robinhood is a member of SIPC, which is important. Given that the Robinhood app has had some issues with downtime and hacking before, it’s something to keep in mind.
Moreover, the separate cash management account mentioned earlier does carry $1.25 million of FDIC insurance, as Robinhood has special agreements with multiple banks.
Is Robinhood Gold Worth It?
Robinhood Gold is the premium product offered by the Robinhood platform, and it costs $5 per month. By signing up for this premium subscription, you’ll get a few extra features including:
- Margin trading, which adds 2x margin to trade on your account. The nice thing is you won’t need to pay any interest, as you would with other platforms’ margin accounts
- Bigger instantaneous deposits. Since Robinhood always allows you access to any money you use to fund your account, this is a nice plus for big traders
- Special trading hours. With Robinhood Gold, you’ll be able to place trades both before and after regular market hours
- Additional market data and research. Robinhood Gold provides traders with additional market information compared to the standard app
Ultimately, Robinhood Gold isn’t terribly worth it when you could pay money for more complex and in-depth trading platforms.
However, if you really like the Robinhood platform and want to stick with it, whether due to its ease-of-use or its layout, Gold only requires a relatively small investment compared to its already-cheap free account.
Robinhood Alternatives:
If the above cons seem to be too troublesome for comfort, remember that there are plenty of alternatives to Robinhood if you’re looking for an affordable and easy-to-use trading platform.
M1 Finance, Acorns, and Betterment are all worthwhile options that may not be as purely affordable as Robinhood, but they come with additional research and educational options or other advantages that may make them worth your time.
Side-by-Side:
Research and Education
Robinhood provides very limited research and education amenities. There aren’t any tutorials or educational resources for new traders, so it’s recommended that you either look up a Robinhood tutorial yourself or already know what you’re doing by the time you download this app.
In terms of research amenities, Robinhood doesn’t offer any screeners for stocks, options, or other assets. There also aren’t any calculators or investing related tools available. Instead, it provides news from reputable sources like the Wall Street Journal or Reuters.
There is third-party research available for Gold accounts from Morningstar, however, which does offset this downside to a certain extent. Gold members also get access to Level II Market Data from NASDAQ TotalView.
All of Robinhood’s charting and graph layouts are pretty rudimentary, and you aren’t able to customize them to any extent.
All in all, Robinhood is best thought of as a basic stock trading platform rather than an in-depth research platform for long-term stock trading analyses or technical charting strategies.
Related: The Motley Fool Review
Wrapping Up: Robinhood Review
Ultimately, Robinhood is a unique and valuable stock trading platform that offers an affordable gateway into the stock market for both beginners and newcomers.
It’s lack of educational and research resources for basic accounts, however, limit its versatility and wide market appeal.
It’s primarily a good stock trading app for beginners to trading or experienced traders who don’t mind doing their own independent research and using Robinhood purely to place their trades and collect their cash.
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