Robinhood is a streamlined trading broker that has gained serious traction in bringing online day trading to the masses through the free app. Specifically, it offers stocks, ETFs and cryptocurrency trading. However, as reviews point out, there can be a price to pay for such low fees. With that in mind, this review of Robinhood will examine all elements of their offering, including platforms, mobile app, customer service and accounts, before concluding with a final verdict.

 

 

A brief history

The founders of Robinhood, Vlad Tenev and Baiju Bhatt, were Stanford University students in 2013 when they started the brokerage. Their simple approach to trading the markets earned them $3 million in investments prior to the launch of the product. Since then, Robinhood has gone global and raised an impressive $176 million.

The company has its office headquarters in Palo Alto, California. Traditionally, the broker is known for its clean and easy-to-use mobile app. However, as the number of users and turnover grew, the exchange decided to launch a web-based platform in 2018.

In February 2018, Robinhood also launched cryptocurrency trading in:

  • Bitcoin (BTC)
  • Ethereum (ETH)

Additionally, they will provide support for real-time market data for the following coins:

  • Ethereum Classic (ETC)
  • Bitcoin Cash (BCH)
  • Bitcoin Gold (BTG)
  • Dogecoin (DOGE)
  • OmiseGO (OMG)
  • Currency (XMR)
  • Litecoin (LTC)
  • Qtum (Qtum)
  • Dash (DASH)
  • Ripple (XRP)
  • Stellar (XLM)
  • Zcash (ZEC)
  • NEO (NEO)
  • Lisk (LSK)

Initially, Robinhood was aimed only at American customers. However, due to its growing popularity, funds were soon raised for an expansion to Australia. There have also been discussions about expanding to Europe and the United Kingdom. Following user reviews, the broker also began investigating the addition of options trading in the repertoire.

Minimum initial deposit

There is no minimum minimum deposit for Robinhood’s standard account. However, if you have a gold margin account, you will need $2000, as is the regulatory minimum. Of course, you will also need enough capital to buy, for example, one share of the Nasdaq stock or ETF.

Such low minimum deposit requirements are a real bonus for this broker, as many competitors require more than $1000 to open an account.

Spread, commissions and leverage

Not only are there zero commissions on in-app trades, but Robinhood has implemented a transparent fee structure for their gold margin accounts. While many exchanges charge a confusing annual interest rate, Robinhood uses a monthly fee based on the amount you borrow. For example, with an account balance of $5,000 plus $2,000 in margin, your monthly fee would be $10.

Because of this pricing framework, Robinhood is one of the cheapest online brokers around.

Other Trading Fees

Fortunately, user reviews point out that there are no hidden fees. There are no inactivity, ACH or withdrawal fees. Having said that, there is a $75AT charge from ACAT transfer.

There are also bonuses and special promotions to note. For example, sometimes Robinhood offers a referral deal where you can get free shares if you bring a friend to the network.

Go to the official website to see what special offers are currently available.

Robinhood Trading Platform

Since the 2018 release date of the web platform was announced, an impressive 640,000 customers quickly joined the waiting list.

Once signed in, the online platform will be more robust than the mobile app, but it still won’t compare to the competition. From the menu, users will have access to:

  • Analyst ratings and market commentary from Morningstar
  • Price data and current share price of a given security, such as Japanese stocks, for example
  • Ticker profiles provide a list of recently purchased stocks and index funds, which can help users identify potentially profitable assets.

Although viewing share prices and accessing functions from the menu may be simple, the mapping package will be limited. Furthermore, the online platform will not have retest facilities or advanced analytics tools.

Having said that, Robinhood was quick to announce that it will provide guides on how to use the new web-based platform. This would mean that all desktop clients could quickly log in with their online login details and start speculating on popular financial markets.

 

 

Mobile app

Reviews of trading platforms are divided on the mobile app offering for Robinhood, which until 2018 was the only way users could place trades. First, it’s worth noting that they offer apps for both iPhone and Android users that can be downloaded within minutes from their respective app stores.

The software review is quick to point out that the platform is clearly geared towards new traders. As a result, the user interface is simple, but effective.

You don’t get screens, backtesting tools, or advanced features. In addition, not everything is in one place. So you have to go elsewhere to do your technical research and then return to the app to execute trades.

That said, it’s not too sparse. For example, you can still:

  • Make trades
  • Check Watchlists
  • Stop news
  • Attract streaming stock prices
  • Deposit or withdraw funds
  • Change your security settings
  • View maps with basic statistics
  • Do basic market research

In addition, information appears to help you get the most out of the app. Customer support is just a bit away and after an update the details of new features are quickly pointed out.

How to use Robinhood App

Reviews of the Robinhood app admit placing trades is very easy. You can access the trading screen from the typing profile. Alternatively, if you swipe left on a tick in the list, a ‘Buy’ button will appear. You can also delete a checkmark by swiping left.

iOS and iPhone app reviews note that there are various things you can’t do. For example, you don’t get any optional columns on watchlists above the last price. When setting up a stock quote, you cannot change the charts except for six standard data ranges. Furthermore, you cannot do technical analysis. Finally, there is no landscape mode for horizontal viewing.

App Verdict

It’s great that Robinhood trades stocks for free for Android and iOS users. The built-in consumer protection is also fantastic for new traders as it is a high risk investment. However, review of stock brokerages will point to numerous competitors offering more comprehensive mobile apps for those comfortable with the risks associated with high volatility instruments.

Methods of payment

Once you’ve joined a Robinhood account, you’ll need to deposit funds before you can start trading. Fortunately, you can link your bank account directly to Robinhood to make deposits as well as withdrawals. Moreover, it is easy and simple to verify the bank account.

Note that Robinhood recommends linking a checking account instead of a savings account. This can prevent potential transfer reversal.

Following customer reviews, the broker also considers alternative funding methods, including PayPal and virtual wallets.

Robinhood Accounts

Robinhood offers three different types of accounts:

  1. Standard Account – If you register, you will automatically receive this account. This gives you access to direct deposits. Plus, you don’t have to wait for your money to process when you trade stocks and make deposits of up to $1,000.
  2. Gold Account – This upgraded account gives you extra purchasing power, larger instant deposits plus extended trading hours. Because this is a margin account, you must have a minimum balance of $2,000. Gold reviews are positive, with clients enjoying the benefits that come with a margin account and more trading hours. Gold account prices will vary depending on which tier you choose. You will pay a fixed monthly fee based on margin. It is worth noting that trading on margin can be risky. In reality, you may lose more than your initial investment.
  3. Cash Account – The Cash Account allows you to place commission-free trades in stocks without direct deposits and settlement. Note that you can also downgrade from the standard Robinhood account and Gold account to a cash account.

As broker reviews emphasize, it appreciates that clients have the choice of account types, allowing them to find the right fit for their trading needs. Account verification is also fast, so traders can fund their account and speculate on markets immediately.

Demo account

Whether you’re trading forex, the S&P 500 or a penny stock, practicing on a demo account first can help you craft effective strategies before risking real capital. Despite going international, Robinhood does not offer a free public demo account.

Although you could argue that there is less need, since you have access to a free trading app anyway, virtual trading with simulated money is still a fantastic way to test stock trading software and learn about markets. Until a practice account is introduced, reviews will continue to highlight this as a major drawback to the Robinhood system.

Additional features

Robinhood’s investment reviews are quickly highlighting the lack of research resources and tools. Instead, the network is built more for those who execute simple strategies.

Because the exchange only offers stocks, ETFs and crypto trading, users get zero information about alternative securities, such as options and futures. Although there are plans to facilitate this kind of trading in the future.

With that said, you’ll find basics, valuation stats and a news feed within the app. Although you may be better off with Yahoo Finance if you have extensive news coverage. And while the site offers support articles and tips, there is a distinct lack of training videos and user manuals to help customers utilize the platform.

The limited resources are a major disadvantage of the broker’s offer. For example, as cryptocurrency trading is on the rise in the UK and elsewhere, the company can really help users by providing information on blockchain technologies and digital currency tokens.

Regulation and License

In recent years there has been an increase in hacking and promises of riches from unscrupulous brokers. As a result, traders are looking for reliable and legitimate exchanges. Fortunately, Robinhood is a member of both FINRA and the SIPC, as the account review highlights. Furthermore, the SIPC promises insurance of up to $500,000 per customer, with a sublimit of $250,000 for cash claims.

In addition, additional insurance is guaranteed by Lloyds and a number of other London underwriters. This ensures that customers have excess cover if SIPC standard limits are not sufficient.

Advantages

There are a number of very good reasons to choose Robinhood, including:

  • Costs – The exchange charges zero trading fees for buying or selling stocks and ETFs. This commission-free structure is ideal for traders with low capital. It’s not until you take Robinhood vs Coinbase, Vanguard, Fidelity and others that you realize how low Robinhood’s trading fees are.
  • No account minimum – trading blogs and forums are regularly full of complaints about high barriers to entry due to significant initial deposit requirements. However, opening a Robinhood account is free, and cash accounts have no account minimums.
  • Easy to use – their simple app is clean, fast and easy to pick up. It’s ideal for beginners who don’t want to drown in complicated features and options.
  • Free Bank Transfers – ACH transfers are always free. This will again appeal to new traders who have limited starting capital.
  • Mobile Users – Robinhood offers a good mobile trading app for both iOS and Android users. Users can conduct market research, trade and manage their accounts within the application.

Disadvantages

Despite the number of positive aspects, there are also certain disadvantages associated with offering Robinhood, including:

  • Limited Research and Education – Investment reviews are quick to point out that Robinhood falls short in terms of in-depth analysis and research tools. This can help beginner traders looking for additional resources to develop as traders.
  • Limited Products – Although the broker has taken steps to offer cryptocurrency trading, user reviews indicate that there are alternatives that offer a much broader range of tradable instruments.
  • Basic Charts – Charts and patterns form an essential part of your market analysis. Unfortunately, Robinhood takes Etoro, Etrade and TD Ameritrade and it quickly becomes clear that the former offers an extremely basic charting package. In reality, users only get tick information and historical price data, without any customization capabilities.
  • Concerns about real-time data – despite the fact that the app shows the quote data in real-time, terms and conditions note that data can be delayed by up to 20 minutes.
  • Basic order types – Robinhood does not support advanced order types or options, while limit orders are charged up to 5%.
  • Accessibility – because the Robinhood broker is still in its infancy, investing and trading in the EU and UK is not an option. Fortunately, while their net worth continues to grow, the company seems to be welcoming traders from new countries.
  • Negative purchasing power – users of Robinhood Gold are at risk of having a negative balance. Although this may not result in a margin call, you must deposit extra funds. This should remind users that it is all too easy to lose more than your initial capital.

Trade hours

Robinhood’s trading hours will depend on the asset you are trading as it usually follows the markets. Having said that, those with Robinhood Gold have access to trading after hours. As a result, users can trade an extra 30 minutes before the market opens, as well as two hours after it closes. This is because many companies release earnings reports after the markets close. But the downside of buying and selling during after-hours sessions is lower liquidity, which can result in the bid-ask spread being higher.

Contact and customer service

The Robinhood Financial company offers several ways to get in touch, including:

  • Phone
  • email
  • Twitter
  • Facebook
  • Google
  • LinkedIn

However, as user reviews are quick to point out, these resources are not available 24/7. As a result, your out-of-hours issues will have to wait until the next business day.

Despite the limited options, customer reviews show that support staff are relatively knowledgeable and can help you if your platform is down or the site is down. It can also help with a range of account enquiries.

Robinhood also tries to push users towards their online help center and the FAQ page, where the questions and queries of most users are answered in detail.

Note that customer service assistants cannot provide tax advice. Instead, go to their official website and select Tax Center for more information.

Safety and Security

In addition, Robinhood has various securities to keep personal information and information safe, including TPS encryption. Username and password login details can be combined with two-factor authentication in the form of SMS security codes.

Alternatively, if you have Fingerprint ID for your iOS or Android device, you can sign in with Touch ID. This makes entering and exiting your investment program quick and easy.

Robinhood Verdict

If low costs are your priority, you can’t beat Robinhood’s free trading service. But while the broker offers just enough for users to trade comfortably, it is perhaps best for beginners looking for a simple, user-friendly design. As the product and platform reviews highlight, experienced traders may want to look elsewhere for sophisticated tools and additional resources.

Accepted countries

Robinhood only accepts traders from the United States.