Robinhood Review – Robinhood is a brokerage aiming to bring stock investing to a wider audience. With a name that sounds like it will take from the rich and give to the poor (though it doesn’t actually do that), Robinhood offers fee-free stock trades aimed at Millennial investors who want a smartphone-based trading platform without any bells and whistles.
Robinhood is a smartphone-first brokerage, with Android and iPhone apps as the primary method to log into your account and place trades. A web version is slowly rolling out to users. However, currently, there are nearly 1 million people already in line, so it may be awhile before you can trade on the web.
The platform doesn’t offer the same in-depth research and tools of larger, traditional brokers, but with much of that information now available for free from sites like Google Finance, Morningstar, MarketWatch and others, this free stock trading platform may be all you need. Or at least, it may be all you need to dip your toe into the pool of stock investing to test the waters.
Robinhood Review – What Is Robinhood?
Robinhood is a brokerage that offers free stock trades through its iOS and Android apps, as well as through a web version that is being rolled out to customers this year. However, essentially, Robinhood is only for those looking for a mobile stock investing experience.
The company has more than 3 million users, and while it does not release assets under management, it shares a history of over $100 billion in trading volume since the firm’s founding in 2015. Robinhood estimates $1 billion in fees saved by users, compared to other platforms.
The company is well funded via venture capital investments and raised a Series C funding round in April 2017 at a $1.3 billion valuation.
2018 is already shaping up to be a huge year for Robinhood. The company currently has no fewer than three waiting lists: for the web version (as mentioned above), for its Options Trading service and for Robinhood Crypto, which will let you trade two of the most popular cyber currencies. We’ll get to that in a minute. First, let’s take a look at how this fee-free brokerage works.
Robinhood Review -Robinhood Fees & Features
- Scheduled Deposits – You can schedule automatic transfers on a weekly, biweekly, monthly, or quarterly basis.
- Advanced Order Support – Robinhood supports market orders, limit orders, stop limit orders, and stop orders. Certain orders may be entered as good for the day or good till canceled (GTC).
- Robinhood Instant – Instant access to deposits (under $1,000) and immediate access to your funds after selling stocks. You don’t have to wait the typical three business days.
- Day-Trade Tracking – Although we’re not big fans of day trading, Robinhood will let you track up to three trades in a rolling five-day period.
- Robinhood Gold (New) – This features introduces: after-hours trading, line of credit, and larger amounts of instant deposits.
- Options trading (New) – Robinhood has rolled out the ability to trade options with no commission fees.
- Cryptocurrency Trading (New) – Robinhood will now allow you to invest in Bitcoin and other internet-based currencies.
Robinhood Review -How Does Robinhood Work?
Hop into the app on your phone with your password or fingerprint (on fingerprint-enabled devices) to access your account. There is no “trade” option in the menu, which I found disorienting at first. To trade a stock, click on the “search” icon and search for the stock you have in mind. It really is simple and free once you pull up the page showing basic details about the company and recent price information.
I tested it out myself buying shares of CCL and ON through the Android app, and the experience was as easy as advertised. After years with a big discount broker, I found the fee-free experience refreshing. I bought just $30 of ON, which I would not have done if it had required a $5 fee — 16.7% of the purchase price.
The platform supports market orders, limit orders, stop-limit orders and stop orders with good-for-the-day or good-till-cancelled parameters.
Because trades are free, you may be tempted to dive into the risky world of day trading. That is something we at Investor Junkie advise against. However, the Robinhood account screen does show you the number of day trades on your account, which may tempt you to give it a try.
Options is a new product for Robinhood in early access with a waitlist. But once those doors open for you — which should happen at some point in 2018, according to the Robinhood website — you will get access to no-fee contracts. That includes no commissions and no per-contract fee, no exercise fee and no assignment fees. It’s tough to beat free.
Robinhood’s Options Trading will include helpful filters and advanced trade strategies. The typical investor should not be trading options at all, but if you are an experienced investor who wants to trade in the options space, you can increase your margins by trading at Robinhood. While we can’t get into it yet, if this service is anything like the stock trading Robinhood offers today, it will be cutting edge and easy-to-use and include a mobile first interface.
The biggest buzz is probably around the new cryptocurrency trading service Robinhood is rolling out for its users. Access is not instant, and Robinhood currently shares that the waitlist is over 1 million people long, so it may be awhile before you get in. But if you do sign up, you’ll get you access to buy and sell two popular currencies, Bitcoin and Ethereum.
For all Bitcoin orders, Robinhood imposes a 10-cent minimum. For Ethereum, the minimum is only 1 cent.
Access is rolling out first to users in California, Massachusetts, Missouri, Montana and New Hampshire. Other states will follow, according to the Robinhood blog.
Even if you don’t get access to buy and sell, all Robinhood users now have access to price and market data for 16 popular cryptocurrencies. The big benefit of Robinhood over Coinbase and other well-known digital wallet providers is that Robinhood extends its no-fee trading to cryptocurrencies as well. And you also have the ability to trade 24/7. That is, if you are one of the lucky few allowed in so far.
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