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Robinhood is an online-only stock-trading platform that offers stocks, options, ETFs and cryptocurrencies. Robinhood is ideal for self-directed investors who prefer to forego the traditional path of using a stockbroker and trade stocks on their own by phone or online instead.
Robinhood was the first popular platform to offer commission-free trades, though in 2019 many other brokers followed suit, including TD Ameritrade, Charles Schwab and E*TRADE. Although you’ll have to pay a $5 monthly subscription to get the most out of Robinhood’s research offerings, its mobile app and web platform have intuitive, streamlined interfaces that make trading fun.
Robinhood at a glance
|Broker||Account Minimum||Stocks and ETFs per trade||Bonds||Mutual Funds||Key Benefit|
|Robinhood||$0||$0||Not offered||Not offered||Commission-free trading and a gorgeous platform|
What we like about it
Robinhood is a reputable brokerage firm that’s ideal for younger or thrifty investors who want to take advantage of commission-free trades and a streamlined platform. It also offers a free share of stock when investors first open their accounts and when they invite friends to the platform. There’s no minimum requirement for opening accounts, but investors need $2,000 for margin accounts. Newer investors will like the user-friendly mobile app because it lacks the bulky features and customization tools they may not need.
Things to consider
Robinhood doesn’t offer mutual funds, bonds or retirement accounts. Their only account option is an individual taxable account. However, investors usually only open these once they have between 10% and 15% income saved in retirement accounts, including IRAs and 401(k) accounts. Customer support is mostly through email, not chat. Despite having a great online help center, the phone numbers to reach a live agent aren’t listed. Robinhood makes money on interest from user account balances and they accept payments for order flows. To get advanced research tools like Level 2 Market Data and Morningstar reports, you’ll need to subscribe to Robinhood Gold for $5 per month.
Robinhood stock and ETF trading
With Robinhood, there are no commissions on stocks or more than 2,000 ETFs transactions. Trading for ETFs includes U.S. exchange-listed ETFs and options contracts. There is support for about 250 global stocks in the ADR and Canadian and Israeli exchanges. Robinhood supports about 5,000 stocks in total, including some penny stocks.
Robinhood bond trading
Bonds are not supported on Robinhood. If you’re interested in bond trading, take a look at TD Ameritrade. It charges $1 for bond trades and their web platform has an excellent educational center. A general search for bond topics might yield about 28 different results. TD Ameritrade also incorporates video tutorials into their site. Investors can explore topics like bond ladders, how they work, the level of risk and how they generate income. TD Ameritrade has a helpful tool called Bond Wizard for making bond purchases. It walks investors through the steps for bond purchases and will help you explore topics like the tax status for the bonds, the maturity, call status and bond type.
Robinhood options and futures trading
For investors ready to go long or short, Robinhood lets you trade options without being charged a commission. This means that there are no per-contract fees, assignment fees or exercise fees. This is a bonus for options traders who pay base fees and other fees per contract. The options features include filters and strategies to help traders if they have a multi-leg option strategy for a single order. There are also features to help monitor complex contracts all at once. Advanced traders will have access to strategies including iron condors, strangles and straddles. Traders will also find that they can increase their margins with Robinhood.
Robinhood trading platform
Robinhood offers a simplified web platform that is gorgeous and easy to use. On the other hand, advanced and professional traders may find the platform’s tools less impressive than some of its full-service competitors, like TD Ameritrade. If investors are looking for phone support for help with the platform, they won’t find it at Robinhood. They don’t have available phone lines, and e-mail is the preferred means of communication.
Robinhood mobile app
The mobile app has an intuitive interface and integrates with Siri. Investors can ask questions like, “Hey, Siri, what is my current Robinhood balance?” or “Hey, Siri, open my Robinhood investing account.” Traders can link their bank data and conveniently add account numbers. The mobile app is also available for Apple Watch and Android Wear. The mobile app’s streamlined platform displays tickers and stock prices, as well as a plethora of news sources, graphs and candlestick charts.
Robinhood research and resources
Without paying $5 per month for Robinhood Gold, Robinhood doesn’t offer many research options beyond price history and recent news. There are basic research, news and analyst ratings on stocks and ETFs, as well as several chart options. For in-depth reports and real-time news and analysis, you might better off with a full-service broker, though those services might cost more than $5 per month elsewhere.
The bottom line
Robinhood offers commission-free stocks, ETFs, and options trades, and is popular with millennial investors. But they should note that accounts are taxable, as Robinhood doesn’t offer IRAs. Securities include stocks, ETFs, options and cryptocurrencies, but there are no mutual funds, bonds or retirement accounts.
The platform also doesn’t quite match the investment services offered by full-service brokers to draw in professional traders. Traders may need to explore other brokerage firms for research and trading tools and then loop back to Robinhood to execute their trades. However, with $0 account minimums and no fees as primary selling points, those are allowances investors might be willing to make.