Last Updated on 9 months by Anoob P T
In this post about Robinhood Review, we try to look at Robinhood apps features, pros, cons and how to use Robinhood app.
Robinhood Review: Features, Pros, Cons, & How to Use
Table of Contents
What is Robinhood?
Robinhood is a US based free trading app that lets you to have fee free stock trades and a free cash management account.
This app offers the trade of financial products without any commission. Hence, you can earn money without spending a lot on the trade process.
The financial products which you can trade include stocks, options, exchange-traded-funds (ETFs) and different cryptocurrencies.
The commission free and fee-free trades have helped Robinhood become popular in the financial industry. The availability of a mobile app has also been beneficial to the mobile users.
What are the Features of Robinhood?
Commission-free
You can trade stocks, ETFs, options and cryptocurrencies without giving any commission.
If you are an investor, who trades frequently, this is a big saving for you. Every dollar you spend on trading is saved when you use Robinhood.
Besides commission, the operating or service fee charged by the trading app is also very low.
The biggest fees Robinhood charges are $75 for an outgoing transfer fee. But this can be considered as a usual fee for investors when compared to other features offered by Robinhood.
No minimum investment
Robinhood allows trades even for very small quantities. There is no need for a minimum investment in order to carry out cryptocurrency or stock trades. Hence, this trading app is best for new traders who have only small quantities to trade.
Mobile App
It is possible to sell your trades or investments very easily using the Robinhood mobile app. This app is supported in iOS, Android and Apple Watch. You can simply log in to your account and place traders. The web version is also available for all users.
Advanced Order Support
Robinhood supports market orders, limit orders, stop-limit orders, and stop orders. You can enter some orders as good for the day or good till cancelled (GTC).
Day-Trade Tracking
Robinhood will let you track up to three trades in a rolling five-day period.
Scheduled Deposits
You can schedule automatic transfers on a weekly, biweekly, monthly, or quarterly basis.
Robinhood Instant
You will have instant access to deposits (under $1,000) and immediate access to your funds after selling stocks, unlike the usual wait of three business days.
Robinhood Gold
This feature introduces after-hours trading, line of credit, and larger amounts of instant deposits. It allows investors to invest on borrowed money or margin.
Cryptocurrency Trading
Robinhood will now allow you to invest in Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and Dogecoin, as well as allowing users to track a list of other currencies.
Fractional shares
This feature allows you to invest in a portion of share even when you do not have money. It only requires $1 and helps you to build a diverse portfolio. You can buy many companies in this way, without much investment.
High yield savings
Robinhood offers a cash management account that pays 0.3%. you will also receive a debit card to withdraw cash from nearly 75000 ATMs. In addition, they also offer up to $1.25 million of FDIC insurance.
How does Robinhood work?
They are used for trading stocks, options and cryptocurrencies.
Stocks
In order to trade a stock, go to the app installed in your phone or the web browser. Click on the search icon given for the stock you have in mind. You will find the results with basic details about the company and recent price information. It supports market orders, limit orders, stop-limit orders, and stop orders with good-for-the-day or good-till-cancelled parameters. There are also options for day trading.
Options
Options give you access to no-fee contracts along with helpful filters and advanced trade strategies. These contracts do not require commissions, per-contract fee, exercise fee and assignment fees.
You can also trade multi-leg options strategies in a single order and monitor these complex contracts together. If you are an experienced investor, you can increase your margins by trading at Robinhood.
Cryptocurrencies
Robinhood allows you to buy and sell six popular currencies; namely, Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and Dogecoin. You do not need to pay any commission or fees for trading cryptocurrencies, which is of great advantage over other trading platforms.
Robinhood Gold
Robinhood gold is recommended for serious and advanced traders. It offers you to buy and sell margins on credit. With the Robinhood gold account you can buy as well as sell stocks by using borrowed money. However, to upgrade your Robinhood account to gold, you need to have $2000 as minimum balance in your account.
Gold also gives you access to extended-hours trading for pre-market (30 minutes before the market open) and after-hours trades (2 hours after market close). With this, you can enter a trade when big news hits the market before anyone else. Gold also offers instant access to deposits, an upgrade over the standard three-day hold on deposited funds.
Gold carries a monthly fee of minimum $5. If you want a credit of $10000without interest, the fees go up to $50 per month.
Robinhood Screenshots
How does Robinhood make Money?
Mostly, Robinhood makes money with its Gold feature. It needs the investors to pay a minimum of $5 and more depending on the credit allotted. This is mainly the subscription fees given by traders who use the Gold facility.
Apart from the subscription fees, Robinhood makes money from the interest of cash balances in users’ accounts. In a savings account, our cash gets a certain rate of interest over time. However, in Robinhood managed accounts, the interest is kept by Robinhood.
Robinhood and Competitors
Some of the alternatives for Robinhood are Firstrade, Webull, and E*Trade. These are some big online brokers which eliminated trade commission and fees similar to Robinhood.
Firstrade also offers trade of mutual funds which is not available in Robinhood. They do not charge any commission for trade of stocks and options. Minimum investment is also not required for investors to trade their stocks.
Webull allows virtual trading unlike Robinhood. They also have similar features of Robinhood in the case of investment as well as stock and options trade.
E*trade also has options for the trade of mutual funds.
Pros of Robinhood
The features offered by Robinhood can be said as its pros. They are:
- You can trade popular cryptocurrencies without any fees or commission through Robinhood.
- It does not require commission or fees for trade of options and stocks.
- No minimum investment required.
- Market news notifications are sent on your mobile device for earnings announcements and other major news on stocks in your portfolio and watch list.
Cons of Robinhood
- Only supports taxable brokerage accounts.
- Trading of mutual funds is not possible.
- Limited customer support; only through email.
- No retirement accounts are possible.
Recommended Reads
