Robinhood Investing is a popular financial services company headquartered in Menlo Park, California. While not a full-service firm, Robinhood is an online-only brokerage firm that offers services for stocks, options, ETFs and cryptocurrencies. Robinhood is ideal for thrifty investors who prefer to forego the traditional path of using a stockbroker and trade stocks on their own by phone or online instead.
Traders prefer Robinhood because trades are free and there are no fees or commissions. Although Robinhood has earned a reputation for subpar research, trading tools and customer service, the online broker has a consistent following. After all, it’s cost efficient to use Robinhood, and its mobile app and web platform have streamlined interfaces with all of the basic trading features.
Robinhood at a glance
|Broker||Account Minimum||Stocks and ETFs per trade||Bonds||Mutual Funds||Key Benefit|
|Robinhood Investing||$0||$0||Not offered||Not offered||Free trades|
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 the free trades this firm offers. Robinhood offers free ETF transactions and $0 commissions. It’s also one of the only publicly traded companies to offer a free share of stock when investors first open their accounts and when they invite friends to the platform.
Traders like that Robinhood is a cost-efficient broker, especially when factoring in commissions and fees. There’s no minimum requirement for opening cash 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 that 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.
This brokerage firm only operates online and 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. Additionally, professional traders may not like the firm’s limited, bare-bones trading tools.
Robinhood makes money on interest from user account balances and they accept payments for order flows. And, to be clear, trading with Robinhood Investing isn’t entirely free. Robinhood Gold, for example, is $5 monthly and while it gives traders access to premium features, it likely won’t work well for professional traders.
Robinhood stock and ETF trading
Stock trading is free and the time it takes to create your account is negligible. However, investors should exercise caution when buying in real-time due to delays in exact prices. They also need to pre-load accounts or use Robinhood Instant to maximize their buying power.
With Robinhood, ETF transactions are free for 2,000+ ETFs, but information on them isn’t clear. Trading for ETFs includes U.S. exchange-listed ETFs and options contracts. Their ETF broker supports all U.S.-based stock exchanges but not international exchanges. 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 through Robinhood Investing. If you’re interested in bond trading, take a look at TD Ameritrade. They charge $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 them 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 will appeal to younger investors who want free stock, ETF and options trades. On the other hand, advanced and professional traders may find the platform is devoid of in-depth research and investing tools. Real-time quotes are optional but require a Robinhood Gold account, which will run you $5 monthly.
New traders might want to find their research on sites like MarketWatch, Google Finance, Closing Bell and Morningstar, all of which provide free investing information. 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 it 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 available for Apple Watch and only requires a secure 4-digit PIN to login.
The mobile app’s streamlined platform displays tickers and stock prices. Traders can add to their watch lists and review 52-week highs, P/E ratios and other data. Relevant news includes sources like MarketWatch and CNBC, while graphs and candlestick charts are also available.
Robinhood research and resources
A drawback of Robinhood is that it doesn’t have a lot of research on its platform. This isn’t necessarily a deal breaker, but new traders might struggle without some direction. There are basic research, news and analyst ratings on stocks and ETFs, but chart functionality is limited. For in-depth reports and real-time news and analysis, you might better off with a full-service broker.
Take trade research on the mobile app, for example. When an investor enters a stock name or ticker, Robinhood aggregates the available data, which includes news, earnings and fundamentals. However, with equity derivatives, the mobile app is too basic for the complex data needed to make an informed options decision.
The bottom line
Robinhood offers free stocks and options trades, free ETF transactions and $0 commissions. It’s popular with millennial investors, but they should note that accounts are taxable as they don’t have IRAs. Securities include stocks, ETFs, options and cryptocurrencies, but there are no mutual funds, bonds or retirement accounts.
The platform also doesn’t 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.