Everything You Need to Know about Robinhood Platform

UTC by Adedamola Bada · 8 min read
Everything You Need to Know about Robinhood Platform

Robinhood platform remains one of the best choices when it comes to choosing a broker. Find everything you might need to know about Robinhood in this guide.

Robinhood is your one-stop-shop for commission-free stocks, options, and ETF trades. Although many companies offer similar trading services, Robinhood platform boasts of being one of the very few that do not charge its customers for making trades.

Key Points:

  • Robinhood is a trading platform that charges zero fees on trades.
  • The platform features no minimum deposit for customers
  • Available on mobile and desktop platforms
  • Robinhood gold account allows holders to perform margin trades.

Summary

Robinhood is a trading platform that features trade stocks, exchange-traded funds (ETF), digital currencies, and options at no charge; thus, there are no commission payments or hidden charges. For a long time, Robinhood was known as one of the few brokers to provide free trades.

However, that has changed somewhat after other bigwig online brokers decided to remove commissions and charges on trades towards the end of 2019. Though this brought a little setback to Robinhood, it remains one of the best choices out there. Robinhood is one broker Customers can count on for crypto trading.

Robinhood can be accessed on both Web and mobile as it has platforms designed for both devices. However, the two platforms weren’t designed with much sophistication, which some Customers may find unsatisfactory since some account options and tradable securities are lacking. Robinhood stands out as a crypto exchange platform that offers free cryptocurrency trading and streamlined trading service.

Robinhood can be used for various purposes, some of which include:

  • Taxable accounts of individuals
  • Holding digital assets
  • Margin accounts

Full Review of the Robinhood Platform

Account minimum: for the brokerage account, the minimum amount is $0. For the Robinhood Gold account, the minimum is $2,000 for a margin account which is the supervisory limit.

Cost of trading Stocks:$0

Options Trades: $0

Account fees (annual, transfer, closing, inactivity): there is no annual, ACH transfer, or inactivity fee. There is a $75 ACAT outgoing transfer fee. A monthly fee of $5 applies to Robinhood Gold.

Tradable securities: they include stocks, options, ETFs, cryptocurrency, and American Depository Receipts for more than 250 global companies.

Number of Commission-free Exchange Traded Funds: all supported ETFs enjoy zero fees trades

Trading Service: the web platform has a simple design yet serves the needs of traders excellently.

Mobile app: a user-friendly application on Android and iOS devices comes with customizable candlestick charts and a news feed for real-time trade signals.

Research and data: although it is free, it comes with some limitations. Signing up for Robinhood Gold at five dollars per month will grant you access to research tools like NASDAQ Level II Market Data, insights and reports.

Customer service options: social media and email.

Promotion: inviting a friend to join the platform qualifies you to get a share of stock for free.

Best Things about Robinhood Platform

Commissions

Robinhood’s obligation to users includes the provision of 100% commission-free stock, digital assets, options, and ETF trades. These commissions are added to user’s returns, which, at the end of the day, makes the savings of Customers quite significant. However, many top brokers are offering free trades nowadays, so if you’re on a search for a broker, ensure that you make your comparisons based on other features as well.

Robinhood has a service named Clearing by Robinhood which allows it to operate on its clearing system. The company is also committed to keeping other investor costs low and with this service, Robinhood has succeeded in reducing some of its account fees.

The outgoing account transfer fee is one of the biggest on the Robinhood platform which costs $75. However, fees of this nature are not unusual among brokers. When an investor decides to transfer his or her investments to another broker, it is referred to as an account transfer. But there is no fee attached to the sale of your investments and having the proceeds to wire to your account via ACH.

Account minimum

Robinhood has excluded account minimum from its services. This means as an investor, you can begin trading right away. However, before you can start investing, you must ensure you have enough money to purchase the investment.

Fractional Shares

Robinhood has fractional shares just like other brokers such as Charles Schwab and Interactive Brokers. That means with as little as $1, you can pay for a portion of a share even if the actual price of the share is in the hundreds of dollars. With this feature, investors can build a diversified portfolio. This means the investor can purchase many more companies, even when he or she does not have enough money to facilitate such investments.

High-yield Savings

Robinhood introduced a cash managed account sometime in December 2019, which currently pays 0.30%. The account will provide you with a debit card and ATM withdrawal from over 75,000 ATMs, all free of charge. Also on offer is an FDIC insurance worth up to $1.25 million. This is a result of the agreements Robinhood has with several banks.

Ease of Use

If you’re a smartphone user, which is Robinhood’s target user base, you will find the registration and account funding process easy and fast. Everything is done within the app and will only take a few minutes. You will be asked a few questions that will be used to set up your accounts such as your contact details, social security number, and means of funding your account. Once you’re approved by the company, a notification will be sent to you in less than an hour, followed by bank transfers which will be initiated by the company.

Robinhood works with many of the big banking firms to instantly verify the transactions of investors. Bank transfers that are up to $1,000 can be used instantly for investing, as well as proceeds from stock sales of up to $1,000. Any deposit that exceeds $1,000 will take at least four banking days to process. Customers can initiate an automatic weekly, biweekly, monthly, or quarterly scheduled deposit.

Streamlined Interface

Some investors may not find Robinhood’s interface impressive because some of the bells and whistles found on other online stock brokers are missing. But if you’re all about business, you’ll find the platform adequate for trade executions. Robinhood supports limit orders, stop-limit orders, market orders and stop orders.

The web and mobile platforms come with a feature called collections. They are stocks arranged by category or sector. An example of this includes companies in the entertainment industry or companies with female CEOs. On the web platform, Customers can sort collections and make a side by side comparison of stocks.

Situated at the base of the Robinhood app is a tab bar. With it, you can quickly access transaction history, watch lists, account statements, and portfolio values.

Robinhood Gold

This is a margin trading tool for Customers. To opt-in, investors will pay a flat monthly fee of $5.

New investors should take note of the fact that margin trading is risky. When you use this feature, you’re simply borrowing money from the broker to trade. If the trade goes south, you stand to lose more than you invested.

Improved research offerings: When compared to other brokers, Robinhood falls short. However, the company is making serious efforts to beef up its tools and available research for its customers. Robinhood now offers analyst ratings, earning calendars, links to earnings calls, and lists of top movers. Also, candlestick charts can now be viewed on mobile.

Things to Improve

Limited securities: The Robinhood platform does not support mutual funds and bonds. Also, the company is yet to provide an automatic dividend reinvestment program for its customers. This means that customers’ accounts will receive dividends in cash form rather than reinvested in the security from which they came. The company is making plans to introduce this offer in time to come.

One account option: For investment purposes, Robinhood only supports individual taxable accounts (brokerage accounts). For most investors, it is advisable to only make investments through a taxable brokerage account after investing 10% to 15% of the income you set aside for retirement in a tax-advantaged account like an IRA or 401(k).

Customer support: For many investors, a phone number is a necessary part of a company’s customer support. However, it isn’t so with Robinhood. Customers who wish to get in touch with someone in the company will have to do so through email since there is no published phone number from the company. Regardless, Robinhood has a very organized online help center and its website is transparent and easy to navigate.

The Bottom Line: Robinhood Platform Pros and Cons

If your need as an investor includes a streamlined trading platform or a place where you can trade cryptocurrency with the support of reputable operators, then Robinhood is a good place to pitch your tent.

However, since there is now an increased number of online brokers who offer commission-free trades like Robinhood, investors are presented with a lot of choices and can afford to compare brokers and go for the one that aligns with their interest the most.

Robinhood Platform’s Pros

  • Robinhood trading platform provides streamlined Interface
  • No minimum deposit for users
  • Free crypto trading

Robinhood Platform’s Cons

  • Inadequate customer support
  • Lack of bonds or mutual funds
  • Lack of retirement accounts
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