Robinhood has gained popularity for not charging commissions for stocks, cryptocurrencies, ETF’s and options trading. The broker has built a simple and safe website and mobile App. It is also not charging any fee on withdrawals but it charges a hidden fee in the form of Payment For Order Flow (PFOF). However, is this broker the best stock trading app out there? We’ve put it to the test by reviewing in depth Robinhood’s fees, trading platform and usability we have found it not to be a good option for stock trading. Instead we recommend the Coinbase free stock trading app which is a reliable, regulated stockbroker with a much better interface and user experience. Read on to find out why we do not recommend Robinhood and why you should stay away in this review.
What is Robinhood?
Established in 2014, Robinhood is a US-based broker that offer multiple trading instruments to the US and Australia clients. It is a regulated broker with an objective of providing access to the financial markets by offering commission-free trades, an easy-to-use mobile app, and no account minimums. It also launched Robinhood Gold, a premium trading platform, with extended-hours trading, larger instant deposits and margin accounts for a flat monthly fee according to Gold Buying Power tiers.
How Does Robinhood Work?
Robinhood is a unique platform as it does not charge a commission on stocks and other trading assets. Its Intuitive designed platform is reliable for both beginners and experts. The platform provides a clear picture of the trader’s portfolio’s performance – which permits investors to adjust their positions according to the market environment. Traders can use its website and trading App for trading purposes.
Its mobile App is popular among investors. This is because the app is stripped-down, which makes it easy for a trader to navigate, mainly when you know how all the icons work. The app permits traders to quickly move from screen-to-screen while placing orders and investigating stocks and other instruments.
Which Countries Does Robinhood Support?
This platform is registered and licensed in the United States. It only offers services to U.S. residents and citizens, and it does not allow any illegal resident to use its platform. The platform also permits Australian citizens to trade on their platform. But it does not permit European and Asian traders to use their services due to regulatory restrictions. The platform is not eligible in the following countries:
What Stocks Does Robinhood Support?
Robinhood permits traders to trade more than 5,000 stocks and ETFs from their platform. It is one of the best places for traders who want to trade U.S. stock with now commission. The majority of stocks that it offers are listed on the major US stock exchanges. It also offers a few non-US stocks as well. However, traders who want to trade penny or small-cap stocks are advised to contact customer support or review their full stock category first. Below is the list of some stocks that are available on this platform.
What Cryptocurrencies Does Robinhood Support?
Robinhood has recently announced to support 16 cryptocurrencies on their platform. Below are the few cryptocurrencies that you can trade on this platform:
💱Bitcoin Cash (BCH)
💱Bitcoin SV (BSV)
💱Ethereum Classic (ETC)
Robinhood Platform Dashboard and Account Creation
This platform is quite easy for both beginners and advanced investors. You can start trading through Robinhood in four minutes alone. Below are the five steps that one need to take to start trading:
1. Create a Robinhood profile
2. Enter contact information
3. Verify your identity
4. Fund your account
5. Download the App
Its web trading platform and mobile App are quite easy to use. The trader isn’t allowed to customize the platform. However, the default workplace is simple to understand.
After the account creation process, the platform would ask you to create a Watchlist. After setting up the watchlist, you are free to trade any stock, ETF, cryptocurrency or options.
Its mobile trading platform is also available both on Android devices and iOS. The design of the mobile platform is similar to the web.
However, its mobile app does not offer the stock screener. Some functions like the collections, the analyst ratings and the price paid are only available on the web platform.
The platform shows the basic information about the stock along with other fundamental data both on mobile and on the web trading platform.
Its charting feature is same on web and mobile. They offer basic and simple charts. Traders can only see the price change on these charts; the platform does not offer technical charts and signals.
The Coinbase, on the other hand, offers an extensive package of charting features and trading signals. Thus, you are suggested to use other platforms if you are looking to use a detailed chart analysis.
Which Payment Methods Does Robinhood Accept?
The biggest disadvantage of using Robinhood is payment methods. They do not accept payments from credit cards and other online payment companies such as PayPal. The user can only deposit funds through wire transfer. They allow users to deposit almost $500000. They do not charge a fee on deposits. User can use U.S. and Australian dollar for funding their account.
On the other hand, a popular platform like Coinbase permits investors to use several payments methods including PayPal, Skrill, Wire Transfer and Credit Cards.
Is Robinhood Regulated?
Robinhood is a regulated brokerage firm. It is working under the trading standards set by the Securities and Exchange Commission (SEC). Along with SEC regulation, the firm has strengthened its reliability by voluntarily participating in the Financial Industry Regulatory Authority (FINRA). It is also providing an additional layer of protection to investment accounts; its investment accounts are covered by the Securities Investor Protection Corporation (SIPC).
How Much it Cost to Use Robinhood?
The Robinhood platform is popular for providing supposedly free trading services to investors. The company claims that it charges no commission. The firm even doesn’t deduct fee regarding the inactivity of account. There is also no fee on withdrawals and deposits. Robinhood offers zero fees on US stocks which can save you a lot. However, there is a very high $50 fee for non-US stocks.
They don’t charge any fees on account opening, transferring funds to the account or for maintaining your account.
Trades are free, but you will pay $5 per month fee to access margin borrowing in a Robinhood Gold account. That $5 gives you up to $1,000 in the margin, plus additional research and data.
Margin loans of over $1,000 are assessed 5% annual interest, which is well below average. The previous margin offering was very unusual, with customers paying in advance by the month.
What is the Minimum and Maximum Deposit at Robinhood?
Unlike other brokers that set limits on minimum amounts, Robinhood permits traders to trade with the lowest amount. There are no minimum deposit requirements from the firm. They do not impose any restrictions regarding the amount. The trader can use this platform as long as the amount covers all the network fees. This clearly shows that the amount you are going to send and the amount you are going to get must cover network fees. The transaction could fail if the funds are insufficient to cover fees. You will see a message if the transaction fails due to insufficient funds.
Is Robinhood Safe?
Although there are several questions over trade execution, limited educational material and payments methods, the platform is safe for investors living in the United States and Australia. It is complying with SEC trading policies and the broker has voluntarily participated in the Financial Industry Regulatory Authority (FINRA). The deposit and withdrawals methods are also safe as the firm is providing an additional layer of protection through its affiliation with SIPC.
Trading through unregulated brokers is considered as unsafe. This is because these types of brokers do not comply with trading standards. Traders funds are unsafe with these brokers.
Robinhood customer services are average. They don’t allow traders to contact the support team through call. Traders can only contact the team via email. The instant chat feature is also missing. Sometimes, the response time takes longer than expected – which causes additional damages and creates a negative physiological impact on traders. The FAQs section is available, but they offer answers for the few basic questions such as how to open an account.
Pros and Cons
Robinhood VS CryptoRocket
Even though Robinhood has its charm in the crypto trading industry, there are some hidden drawbacks that make it less valid than CryptoRocket. CryptoRocket is in fact one of the few exchanges with a minimum deposit requirement of $10, which demonstrates a willingness to guarantee as much freedom as possible to traders when it comes to how much they decide to invest. Most brokers in fact require minimum deposits of $200 or more. On top of that, CryptoRocket generally has reduced fees as well as a great selection of assets traders can choose from. It also has a fast sign up process that allows traders to get started straight after they sign up.
There is much more to CryptoRocket to find out. If you are interested in it, we suggest checking out our CryptoRocket review. It also has a brief sign up guide should you need any assistance.
Although Robinhood offers some enticing features, the platform needs to make several improvements to compete with the industry leaders. Its slogan of offering free trade apparently looks false considering the huge amount of money they are generating through Payment For Order Flow. Limited educational material and lack of advanced trading tools, charts and signals make it a poor place for both beginners and advanced investors. On the other hand, IQ Option offerrs all those enticing and innovative features that a trader needs to make the most out of their trading experience. It is also regulated and you can trade with only $10.
Robinhood doesn’t permit day trading. The traders can't immediately use your profits that are made from sock trading to trade another stock. They keep your profits in “unsettled funds” for at least three days. However, with options trading feature, traders can make small trades.
The broker only offers services to clients living in the United States and Australia. The platform doesn’t have an extensive presence in global markets. The compliance with regulators policies also bars it from offering services to European clients.
The platform only permits three daily trades in a five trading day period. However, they allow unlimited trades if you have $25,000 of equity. They also permit several trades if you have gold or margin account.
They don’t allow traders to short stocks. However, traders can short stocks through its options trading. With options, you can short any stock.
They don’t impose withdrawal free. but traders can only withdraw funds to bank account – which isn’t an attractive option considering modern-day financial services such as credit cards and PayPal. The withdrawal amount is likely to reach traders account in three business days. The trader can withdraw up to $50,000 per day. Another restriction is that if you deposit money but you don't trade with that, you can only withdraw that after 5 business days.
Robinhood does not offer Retirement Accounts. They only offer three types of account: Cash account, Gold account and margin account.
The account opening process is simple. It is composed of five simple steps:
1. Create a Robinhood profile
2. Enter contact information
3. Verify your identity
4. Fund your account
5. Download the App
The broker is regulated, which forces it to put traders funds in a separate account. In addition, its membership of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC) protects trader’s funds.