Robinhood offers commission-free trading of stocks, ETFs, fractional shares, IPO access, options contracts, and cryptocurrency trades.
What is Robinhood Trading?
Robinhood is a free stock trading app making it easier to invest with a clean and easy-to-use interface. It’s available for iOS and Android devices.
With over 28 million users, Robinhood is the industry leader among millennial investors who want a better way to access the markets without the costs. The company is democratizing the financial markets as the pioneer in commission-free trades. Its offerings have grown to include fractional shares, options trading, and cryptocurrency.
How Does Robinhood Trading Work
Robinhood may be a straightforward way to gain instant access if you are new to investing and the stock market. With the online broker, you can:
- Buy and sell individual stocks, fractional shares, and exchange-traded funds (ETFs).
- Research company, stock charts, analyst ratings, current news, and more.
- Learn about the stock market and investing as you go.
- Manage your portfolio on the go on a mobile platform.
- Get alerts and notifications of companies and changes to your accounts.
Robinhood Financial LLC is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).
Features & Benefits
- Account Minimum: $0
- Unlimited commission-free trading: make as many trades in stocks, funds, and options.
- Trade Real Time: trades executed during market hours.
- Fractional shares: buy as little as $1 of company stock.
- IPO Access: request shares of new companies before public trading on the exchanges
Robinhood’s Financial Products
All Robinhood users must have an individual taxable brokerage account to gain access to other products.
- Invest: get mobile access to the markets to invest in individual companies or bundles of companies.
- Cash Management: earn a competitive interest rate on your uninvested cash and gain more flexibility with your brokerage account.
- Options: expertly trade on your bullish or bearish beliefs.
- Crypto: access the cryptocurrency trading 24/7. Read Robinhood Crypto review.
- Margin Accounts: Investing on margin is available through Robinhood Gold.
The cash management account may be insured up to $1,250,000 by FDIC insurance.
Robinhood Gold: Premium Upgrade
Robinhood Gold is an upgraded service that costs $5. Start and cancel at any time.
Instant Deposit: Get instant access to $5k-$50k when you make a deposit.
Level II Market Data: View real-time bids and ask for any security on Nasdaq to determine the demand for stocks or ETFs.
Professional Research: Access 1,700 in-depth stock research reports produced by Morningstar, an independent investment research company.
Margin Trading: respond to potential market opportunities with more buying power.
- Be 18 years or older.
- Have a valid Social Security Number (not a Taxpayer Identification Number).
- Have a legal U.S. residential address within the 50 states or Puerto Rico.
- Be a U.S. citizen, U.S. permanent resident, or have a valid U.S. visa.
Robinhood charges no fees to open an account, maintain an account, or transfer funds.
- Trading fees: $0
- Maintenance fees: $0
- Options per-contract fees: $0
Robinhood does not charge users commissions on trades. However, you will pay fees to self-regulatory organizations such as FINRA. They include regulatory transaction fees, trading activity fees, and ADR fees.
Who is it best for?
Robinhood is best for new investors or those who prefer to trade in small amounts, including fractional shares, and don’t need deep research tools.
Robinhood is a legit company and publicly traded in the exchange. The mobile-only brokerage lets you trade stocks, options, exchange-traded funds, and cryptocurrency without paying commissions or account fees.
Although Robinhood has not faired well in media and from some users online, it has amassed over 28 million users. Currently, Robinhood has a 4.1 rating out of 5 stars in the App Store with millions of reviews. It also scores a 3.8 out of 5-star rating in the Google Play Store with over 400k reviews.
In our Robinhood review, we learned the online brokerage is best for inexperienced investors looking for simplicity. It has the significant features needed for active investors or those who want to trade actively but have little experience.
Robinhood does not offer access to mutual funds, bonds, or futures trading. If that’s securities you’d like to trade, you’ll need to go elsewhere. Additionally, Robinhood may offer some educational resources, but it’s not intended as investment advice.
Pros and Cons
- Simple and easy to use.
- Unlimited commission-free trades.
- Real-time trades
- No mutual funds.
- Limited educational resources.
- Limited customer support.
How to start a Robinhood account
The time needed: 2 minutes.
Step-by-Step to opening an account
- Get started
- Create an account by clicking on the link here.
- Submit an application
- Legal first and last name
- Verifiable email address
- Complete the verification process by submitting documents as requested.
There are many alternatives to Robinhood based on your preferences and needs. For simplicity, consider Public.com (read our Public.com review), and for guidance, M1 Finance is a good alternative (read our M1 Finance Review).
Find more investing apps in the marketplace or read our 5 best online brokerage account for beginners.
What is Robinhood Financial?
Robinhood Financial was founded in 2017 by Baiju Bhatt, Vlad Tenev, and Andrew Left. The company has raised $845 million from Andreessen Horowitz, DST Global, Ribbit Capital, GV, NEA, and others. How Does Robinhood Trading Work
It all started by disrupting the brokerage industry and offering people commission-free trading access to the stock market. Robinhood changed the game, and competitors followed suit to provide commission-free stocks trading.
How to Contact Robinhood Customer Service?
Robinhood customer service is available within the app or website at any time. You can submit a ticket or email for support 24 hours a day, 7 days a week. There are no inbound calls available, but customer support will call you back with a number you provide.
Is cryptocurrency trading available?
Robinhood Crypto is an additional product offered by the company. Apply for access to start cryptocurrency investing. There are also no commissions charged on your buy and sell of crypto. Learn more about Robinhood Crypto.
How does Robinhood Make Money?
Robinhood states, “Earning revenue allows us to offer you a range of financial products and services at low cost, including commission-free trading.”
The company earns money by the following services:
- Rebates from market makers and trading venues
- Robinhood Gold
- Stock loan
- Income generated from cash
- Cash Management
Are penny trades on Robinhood?
No, you cannot trade penny stocks on the platform. Penny stocks are known as over-the-counter (OTC) securities which are now supported. Only companies with stock prices above $1.00 and listed in the major exchanges are available for trading.
Is Day Trading allowed in Robinhood?
Yes, you can day trade, but you must have at least $25,000 in your account.