Robinhood App Review: What’s The Real Cost of Free Trades?

Robinhood App Evaluation


Trading Platform


Short Lists

Relieve of Use

Executions and Routes


The Robinhood Trading App acquired a lot of attention by using complimentary trades with no commissions. Is it worth to switch to Robinhood and get free trading commissions?

About the Robinhood App

Robinhood was the creation of Stanford classmates Vlad Tenev and Baiju Bhatt. The duo developed trading platforms on Wall Street for some the biggest financial institutions and obtained a mobile platform that might take benefit of electronic trading and automation to cut costs down to no for the end-user while maintaining efficiency and stability on the back end. Since 2020, Robinhood has actually grown to 13 million users, up from 2 million users in 2017.

Is this the right investing app for you? Continue reading our Robinhood app evaluation to discover.

Robinhood is a mobile trading application for iPhone and Android that provides zero commission trades on U.S. stocks and ETFs. They are a mobile-only stock brokerage, with access to noted foreign securities as well (for a charge). The app is intuitively created and flows very smoothly.

What is the Robinhood App?

The Robinhood app is a simple mobile application that enables investors to purchase and offer stocks, ETFs, shared funds, alternatives, and cryptocurrencies.

Robinhood is concentrated on making investing basic and thats precisely what the app does. The app is easy-to-use and created specifically for beginner financiers who desire to get included in the stock market.

Opening a Robinhood Account

Comparing Robinhood to a full-service discount broker would not be an apples-to-apples comparison, so we will be concentrating on Robinhoods distinct offerings in our Robinhood review.

To open a brokerage account, the trader needs to have a legal U.S. address and U.S. citizenship or legitimate U.S. visa, legitimate social security number, and be at least 18 years or age. The standard/basic account is a restricted margin account that enables instant settlement and instant deposits. This doesnt permit short selling or margin trading, nevertheless those functions are readily available through Robinhood Gold completely leveraged margin accounts.

Here are a few of the key functions of the Robinhood app.

Another nice perk is that brand-new users can get a totally free stock when they open a new account. Im sure many users open an account simply get a free stock. You can get extra complimentary stocks by inviting good friends to join (as much as $500 in totally free stocks each year).

Money accounts are offered through downgrading in the app. There is no account minimum for the routine Robinhood account. All represent individual single person accounts, no joint or corporate account capabilities are offered yet.

Robinhood Features

Robinhood is developed for simplicity. Robinhood isnt actually designed for financiers who have actually been browsing the markets for years.

I was amazed by how simple it was to open a Robinhood account. It takes about five minutes to open a brokerage account with Robinhood.

Investing and Trading

Robinhood users can invest in and trade the most popular financial assets. These include:

The charts in Robinhood are standard and really tidy. Robinhood recently added candlestick charts to the platform (a much-needed addition). If you are a technical trader, you will absolutely require to use another charting platform, such as TradingView.

The only way I could see somebody spending for Robinhood gold is if they really enjoy the Robinhood platform and dont want to transition to another broker.

Expert Research– Users will have access to Morningstar research study reports.

If you have a little account, full shares of high-priced stocks may be unattainable. Amazon is priced at over $3,000/ share at the time of composing this. If you have less than $3,000 in your account, you cant purchase a full share of Amazon.

Stock trading and alternatives trading is readily available for over 5,000 securities.

Popular Lists Among the cool functions Robinhood recently added to the app is “Popular Lists.” These are lists of popular stocks in different sectors or styles.

This is a simple and practical feature. You really have to know which stocks you desire to keep an eye on and trade. The line chart next to each ticker is a great extra function.

Client Service Traders can e-mail and message client service with concerns. Phone assistance is likewise offered. Remember broker-assisted phone trades are charged $10 each.

Robinhood Cash Management is a banking option that supplies some compelling features you will not find at standard banks. The standout function is the interest rate. You can quickly discover banks with FDIC insurance coverage, no account minimums, and zero-fee ATMs.

Robinhood Gold Robinhood Gold is a premium account upgrade that is offered for $5 per month. This upgrade includes a couple of main advantages: Bigger Instant Deposits– This allows users to quickly transfer $5,000 from their bank accounts if they desire to begin investing deposits quicker (i.e. no awaiting the deposit to clear).

While Robinhoods “complimentary trading” was a game-changer when it at first introduced, traders now have more alternatives for complimentary trading. Companies like Webull, Dough, and Firstrade have actually recently announced totally free trading alternatives.

While client support is good, its certainly not as available as full-service brokers like ETRADE.

The app also consists of a function called “Pattern Day Trade Protection.” This feature will prevent users from positioning trades that may be in infraction of the PDT rule. Basically, if youre about to position a 4th trade in a period of 5 days, the app will avoid you from doing so. This is absolutely a valuable tool for new traders who are either uninformed of the PDT guideline or lose track of the number of trades theyve placed.

Margin Investing– Double your purchasing power using utilize.

While Robinhood Gold benefits can justify the $5 monthly membership charge, they are truly just appropriate for a specific kind of investor. If you are a sophisticated financier who requires access to professional research, margin trading, and level 2 information, you are most likely better suited for an advanced discount rate broker like ETRADE or TD Ameritrade. These brokers offer similar services free of charge.

When Robinhood at first released, it was a mobile-only brokerage. They have actually since rolled out a web-based trading platform, but its about as standard as the app. You can find fundamental line charts, watch lists, and estimate– however not much more. In a method, this is just a cleaner variation of a free tool like Yahoo Finance with the included functionality of order positioning.

Cryptocurrency trading is offered for 17 of the most popular coins, including Bitcoin, Ethereum, Ripple, Litecoin, and more.

As kept in mind numerous times in this review, the Robinhood app is meant to simplify trading for the typical investor/trader. Appropriately, the app is limited but user friendly in functions. The app accepts Touch ID authentication and Face ID authentication (for iPhone X).

Commissions & & Fees Robinhood does not charge any commissions on trades. Most traders wont incur any costs, however specific kinds of funding/withdrawal methods do sustain charges.

Stocks & & ETFs
Shared funds Alternatives trading Cryptocurrencies Stocks and funds are the bread and butter of the service, but alternatives trading and cryptocurrency trading have actually become increasingly popular over the last couple of years.

Robinhood Cash Management uses a high yield savings choice that presently pays 0.30% APY. This rate modifications relative to the fed funds rate, which is presently super low. That stated, 0.30% APY is much higher than the majority of standard bank accounts like Chase and Wells Fargo and reasonably competitive when compared to other high yield cost savings accounts.

This function can be handy for investors who want to use the financial investment app to discover new investment concepts. ETFs
Robinhood instant allows you to re-invest funds without waiting the three-day settlement process as in a cash account. The minimal margin account lets you invest the funds from offering a stock position right away. Margin guideline and limitations will use, consisting of the PDT guideline (no more than three roundtrips throughout a rolling five business day period for accounts under the $25,000 limit).

Platforms & & Tools As we will continue to reiterate throughout our Robinhood evaluation, this app is developed for simplicity. Users will have access to standard investing tools, however thats about it.

Level 2 Data– Users can get access to Level II information supplied by NASDAQ Totalview.

Robinhood changes this by enabling you to buy fractional shares of business. You might purchase 1/10 of a share of Amazon for $300. This function was at first promoted by services like M1 Finance and Stockpile, and is now readily available to financiers who utilize Robinhood.

The money management account is a terrific location to park your uninvested money while you wait for investment chances. You wont get rich off of 0.30% interest, however you will make more cash than you do at your other savings account.

Fractional Shares Robinhood enables financiers to purchase fractional shares of their favorite business. This is certainly a worthwhile feature for investors with smaller sized brokerage accounts.

The order screen is clean and easy to utilize. Just enter the amount of shares you want and the cost you are ready to pay (with limit orders).

The app also offers an earnings chart which does a great job of comparing revenues estimates to actual profits.

In no way will this change your other basic research study, but its a nice addition and a handy method to get a quick understanding of a businesss existing standing.

Like whatever in the Robinhood app, positioning an order is really simple. There are no innovative order types (such as conditional orders) available, but most brand-new traders will not use these anyhow.

Outgoing ACAT (automated customer account transfer service) transfers have $75 costs but inbound ACAT wires are totally free.
International wire transfers are $50 and outgoing domestic wire transfers are $25.
Broker-assisted phone trades cost $10.
Domestic over night check delivery is $35 and $30 charges request returned and NSF checks.

These costs are common with the majority of brokers and can be prevented by utilizing totally free funding techniques and positioning your trades within the app.

Robinhood uses the exact same set of basic info that you will discover on websites like Yahoo Finance or FinViz. You can rapidly get a snapshot of a stocks yearly range, market cap, P/E ratio and more.

Who is Robinhood is Best For?

Common Questions About Robinhood is quickly turning into one of the most popular stock brokers for new traders so we figured we need to address some of the most common questions about the broker.

Robinhood is best for long-term financiers and traders with extremely small accounts. It can practically be thought about of a knowing tool that permits brand-new traders to evaluate their skills without burning money in commissions. For traders with more experience, brokers like ETRADE, TD Ameritrade, and Schwab will likely be better.

Its really tough to trade actively on this platform considering that there is no direct order routing, chart indications, news feeds, scanners or much screen area. While the zero commissions are the primary selling point, the mobility and convenience is a fringe benefit. Robinhood is like the small house of online brokerages. Users require to be self-directed, resourceful and independent sufficient to supplement this no-cost platform with research and analysis off another platform. The fills may also be difficult given that Robinhood has order flow deals with multiple firms.

” Free” commissions might sound enticing, however they come at an expense. You will not have access to level 2 trading (without Robinhood Gold), advanced charts, advanced order types, and more. Trading commissions must never ever be the difference in between an unprofitable and successful trading strategy.

The Robinhood application deals with new and casual financiers who rely solely on their mobile devices. The simpleness of the app appeals to Millennials who are the most comfortable demographic with a mobile-only stock brokerage. We discuss this group more in our Acorns Review as we examined another service created specifically for “app financiers.” More recent traders like those in Ricky Gutierrezs Learn Plan Profit group seem to truly like the simplicity of the platform.

Swing traders and financiers will appreciate the portability and streamlined benefit of the app. Intra-day traders will need a more thorough routing system in addition to research and charting functions discovered with a direct gain access to broker.

How does Robinhood offer open markets?

When you put a buy or sell order, your order needs to be sent to the market. Orders can take a couple of various paths before being performed and companies are in fact completing to get access to your orders. That stated, Robinhoods practice of internalizing order circulation does come at a cost.

Commissions arent even the biggest source of profits for brokers who charge commissions (i.e. ETRADE, Interactive Brokers, etc.). Stock brokers can make money from commissions, but the bulk of their earnings comes from interest on customer accounts and payment for order circulation.

Robinhood also generates income from its Robinhood Gold service.

Does Robinhood have a desktop platform?

Robinhood just recently released a web trading platform that looks extremely similar to the businesss mobile app. While its practical to handle your account online, the desktop platform really does not include much value. Its rather simplified and many of the information it supplies can be found free of charge elsewhere.

Does Robinhood have concealed costs?

Robinhoods free commissions are not a “bait and switch” technique, nor are they intended to distract customers from other account fees. Robinhood is in fact respectable at providing transparent, reasonable prices. You can either choose the complimentary plan, which is absolutely complimentary, or you can select Robinhood Gold for $5 monthly.

What can I trade at Robinhood?

Robinhood clients can trade cryptocurrencies, alternatives, and stocks. That said, traders can not trade the full series of these property classes. For instance, sub-penny OTC stocks are not readily available through the platform, nor are a great deal of the cryptocurrencies you d find with services like Coinbase.

Can you make money with Robinhood?

You might think about a service like Motley Fool Stock Advisor or Motley Fool Rule Breakers if you require assistance choosing stocks.

Robinhood is just a broker that facilitates stock trades, alternatives trades, ETF trades, and cryptocurrency trades. The performance of your financial investments will dictate whether or not you make cash. If you purchase Apples stock and the stock price goes up, you will make cash; if the stock rate goes down, you will lose money.

How does Robinhood compare to other discount rate brokers?

Robinhood is a streamlined version of discount brokers like ETRADE and TD Ameritrade. This simpleness comes at a cost, as the brokerage has actually eliminated numerous advantageous resources that you will find at other discount rate brokers. Outright novices are unlikely to notice the missing functions, however most experienced traders will prefer another broker.

How does Robinhood compare to totally free brokers like Webull?

There is no account minimum for the routine Robinhood account. I was shocked by how easy it was to open a Robinhood account. Robinhood Gold is a premium account upgrade that is offered for $5 per month. Robinhood is best for long-lasting financiers and traders with very little accounts. Robinhoods complimentary commissions are not a “bait and switch” technique, nor are they planned to distract customers from other account costs.

Robinhood is a leader in the mobile investing industry and, to date, its hard to beat the apps simpleness and ease of usage. That said, many competitors are catching up and completing the gaps in Robinhoods service. For example, Webull recently launched as a totally free app-based brokerage that provides advanced trading tools alongside complimentary commissions. In my viewpoint, Webull is a clear winner over Robinhood.

Pros No commissions on U.S. stocks, ETFs, and shared funds
Not the best fit for active stock trading (primarily developed for investing).