Robinhood has gained popularity in recent years thanks to the fact that it offers smooth transactions and a fantastic user experience. These features, as well as the fact that it’s simple to use, make it a top app pick by young and tech-savvy investors.
If you’re not familiar with Robinhood, there are a few things you should know before signing up. Here’s a complete review of the Robinhood investing app to help you out.
What Is Robinhood?
Robinhood is an application that offers free trading in the stock market. Over the years, it has started branching out to offer cryptocurrency investments as well. This includes Ethereum, Bitcoin, and more. Robinhood is a broker-dealer which obtains its revenue from the following sources: interest from the cash balances of customers; order information sold to high-frequency traders; and margin lending.
The Robinhood app is simple, so most investing neophytes find it convenient. However, even though this app is a favorite choice for many, it has received some scrutiny. This is because of intentional trade restrictions and sudden outages during market volatilities. Amidst all these controversies, the user base of Robinhood has continued to grow.
Let’s take a look at some of the key features of Robinhood so that you can determine whether it fits your investing strategy.
Robinhood’s Trading Technology
Robinhood’s trading technology does not involve publishing trading statistics. As a result, you cannot compare the competitors’ order flow data. The trading platform also does not publish statistics on price improvements. And, because Robinhood likes to keep everything simple, you cannot perform backtests or automate trading strategies.
However, Robinhood ensures that its system sends your trade to market makers with the best price based on their historical performance.
The Robinhood Mobile App
Robinhood prioritizes the mobile app over its web-based platform. In other words, it’s a mobile-first brand. Many traders love the Robinhood app because it allows simple navigation. It’s easy to move from one screen to another while making investments and analyzing stocks.
Robinhood mobile app comes with an accessible search bar at the top of your screen. You can use this to pull up a particular stock chart you want to view. The mobile app’s dashboard allows you to track the following:
- The vital statistics of stocks
- Market cap
- Dividend yield
- A brief overview of your profile
- Analysts’ rankings
- News feed
The app also comes with a trade button you can click when you’re ready to make your investments or trades. When you want to create an entry, just type in how many shares and contracts you want. Then, the app lets you see your buying power. You can also:
- Place and limit your market orders
- Stop your trade orders
- Find your portfolio
- Access account management options
Robinhood’s Fee and Cost Structure
One key feature of the Robinhood app is its lack of trading fee charges. Additionally, the following fees not related to trading are also waived:
- Equity trades, such as ETFs and stocks
- Option trades
- International and domestic wire fees
- Account opening, account inactivity, and account maintenance fees
Robinhood does charge for the following:
- $75 for account transfer
- $20 for a domestic check if you want to send it overnight
If you wish to trade on margin, you must subscribe to Robinhood Gold at $5 monthly. This subscription includes a $1000 margin. If you exceed that amount, you must pay an interest rate of 3.5 percent.
Advantages of Robinhood
Now, let’s talk about the best features of Robinhood. This will help you determine whether this is the investing app for you.
User-friendly Mobile Interface
The Robinhood mobile app is simple, so it’s easy to use. The ease of navigation means that beginner investors can begin trading right away. Overall, Robinhood’s streamlined mobile interface offers a convenient and smooth trading experience.
Fractional Shares
Robinhood allows effective fractional sharing. This is good when you want to reinvest or buy dividends. You can place a $1 trade or buy at least one-millionth of any share. The fractional shares program is also extended to stocks not featured in other brokers’ partial share programs.
Robinhood’s program can also help you place all your money into the stock market. This is often better than saving it up to buy a single high-priced tech stock.
Reliable Quick Funding and No Account Minimum
Robinhood has no account minimum, and its funding process is quick and reliable. Other brokerage platforms take longer to receive your funds and route them to your account. But Robinhood’s trading platform allows the quick transfer of money into your account. With the Robinhood app, you can transfer as much as $1000 into your account at any time.
You don’t need to go through the hassle of verifying tiny back deposits to confirm your account, either. Instead, you just log into your bank account directly through the app.
The Disadvantages of Robinhood
If Robinhood has its advantages, it also has some drawbacks. Here are a few of the disadvantages of the platform.
Lack of Free Research Components
One of the cons of not paying for almost anything on the app is the limitation on free research components. This can be a disadvantage for beginners, who may be seeking guidance to learn and improve their trading records. Unfortunately, Robinhood lacks extensive educational resources that beginners can use to get better at investing unless they are willing to pay five dollars a month for the premium offering.
No Retirement Accounts
Robinhood only offers taxable brokerage accounts. You cannot rely on it to save money for retirement. If you do, you won’t get the tax benefits of tax advantaged retirement accounts. Most investors prefer investing using brokerage accounts after they have funded their retirement accounts.
Limited Offerings
Trading options are somewhat limited as well, as you can’t trade futures, fixed income, mutual funds, or Forex instruments on Robinhood. Customer support is similarly limited.
The Bottom Line
The Robinhood app is probably the best fit for people who prefer using mobile devices. With its user-friendly interface and basic features, Robinhood can be mastered in no time. You might also like that almost all trading on Robinhood is fee-free. Just remember that you cannot use this platform for your tax-advantaged retirement accounts.
Overall, Robinhood is a good option for those who are interested in getting started with investing. While it may not be the premium trading app available in the marketplace, it can certainly be an effective tool for trading and investing.