Welcome to my review of the commission-free online trading app called Robinhood!
Investing on stocks has been a feasible way to make people’s money make money for them. We’ve seen Forex trades, crypto trades, and the most traditional assets being bought and sold online – stocks.
But trading stocks isn’t risk-free. With the inevitable changes on the trade market, everyone coming here to invest should be ready to face more losses than earnings. It’s a gamble and winning relies on pure luck but if you are wise and alert on the trends, you’ll make money by knowing when to buy and sell. Research and investing on the right places are also factors for successful trading.
Apart from these, knowing which platform to trade at also helps you become a profitable stocks trader. It has to be easy to interpret; it needs to have complete charting tools, oscillators and indicators; and it shouldn’t be crashing when you are trading.
Does Robinhood have all these? Is it enough to be commission-free to be called the best trading platform?
Robinhood has been a preferred trading platform because it offers commission-free trades. Unlike others where you should pay a percentage of your earnings to brokers who help you play at the stock market, this platform lets you take home your earnings in full.
Moreover, you can trade more than just the stocks. Options and crypto currencies are also available for trading. And there’s more! It also has checking and savings accounts that can give you high returns too.
While there are several options for investing, it is lacking when it comes to trading tools.
So in this review, we will try to answer the question – “Robinhood commission-free trading – is it the best place to trade?“
ROBINHOOD COMMISSION-FREE TRADING APP OVERVIEW
Summary: The Robinhood commission-free trading app lets you trade stocks, ETFs, options, and cryptocurrencies 100% free. There are no minimum accounts here too. However, mutual funds and bonds can’t be traded in this platform. You can also only make one account to use for trading. There are more issues like the lack of research and trading tools. But if you are looking to save costs when trading, then Robinhood can be a solid choice.
Product Name: Robinhood
Founder: Baiju Bhatt and Vladimir Tenev
Product Type: Commission-free trading platform
Price: $0 and $10 for Robinhood Gold
Recommendation: While we all love the fact that this platform lets investors save up to $70 per day from commissions and other fees, it lacks tools essential to helping traders make a wise trading decision. Also, I can’t really recommend trading as a means of making money online as it is like a gamble where you can lose a lot of money. Just look at how the Bitcoin traders never got to earn what they lost 2 years ago.
WHAT IS ROBINHOOD TRADING
Robinhood was founded by Baiju Bhatt and Vladimir Tenev in 2013, probably with traders on a budget on their mind. It isn’t like any traditional trading platforms as it cuts out nearly all fees associated with trading stocks, options, cryptocurrency, and ETFs (exchange traded funds). Being commission-free, a lot of traders come here to play trades so they can maximize their earnings.
This platform will let you trade online and from the app which is very convenient since you need to watch for the graphs when you are trading. I remembered playing Forex and missed a sale because I had to go to the comfort room. With Robinhood, you won’t have to miss any opportunity to earn a profit.
But to be called a good trading platform, I’m not really convinced that Robinhood can be that. Like I mentioned, some investors criticize the platform for lacking the necessary tools vital to trading. Though they can save from commissions and fees, some couldn’t make money either because they lack support in the form of tools.
ROBINHOOD COMMISSION-FREE TRADING APP - HOW TO GET STARTED
When you register and set up an account on their website, it will prompt you to download their app to encourage you to be a vigilant trader on Robinhood. Everything you do on the website, you can do too on their mobile app so don’t worry that you might be missing some features that are only available on the web version.
Creating an account is as easy as 1-2-3.
First, you have to create an account and leave out your basic information. Second, you need to verify your account with your social security number (SSN), and finally, you need to fund your account and then your set to get started.
Remember, though, this isn’t a platform for beginners since commission-free trading also means you won’t have any brokers to guide you through the processes. So if you want to trade in Robinhood, you need to have an idea and an experience to do so. Otherwise, you’ll get lost along the process of trading.
So once you download the app and open it up, Robinhood will ask you to create a “Watchlist.” Apart from setting securities to monitor, you can also activate the Smart Notifications for updates on the trade market.
After setting up your account, Robinhood will now ask you to fund your account. While other platforms make linking your account to your bank such a tedious task, the Robinhood app makes it quite easy. But before you can start trading, the app will ask you to set your investment objectives so it can give you recommendations on trading since you don’t have any brokers around to guide you. So basically, tips will come from a virtual machine that analyzes your preferences and the trading trend.
After funding your account, you can now start searching for trades to play. Like I mentioned, you can trade stocks, ETFs, cryptocurrency, and options but not mutual funds and bonds.
You will find here big companies where you can buy stocks from like Abbott Labs. Then after selecting your trade you can just hit on the stock symbol to get a quote and launch a chart as well as other basic information about your chosen stick.
This is basically all the trading information you get. You won’t get reports that you can use as a reference for your next trading or for your review so you can do a more strategic trading the following day. It’s like you are on your own here. So while it shines on the part of helping investors save money by taking away all the trading costs, it can be a lonely place where clueless traders shouldn’t dare to enter.
When it comes to funding, you can transfer as low as $1 to your trading account but I bet you won’t find anything that’s worth just that. Before funding your account, you can check the purchase amount of the stocks you have your eye on, then plan how much you are buying that you are willing to trade. Then that’s how much you should transfer to your Robinhood account.
You do have a margin account, though, with Robinhood commission-free trading app. This margin allows you to buy more stock than you’d be able to normally. For Robinhood, the margin account is $2000 which is just similar to other trading platforms. And you’ll be able to do this margin trading by joining the Robinhood Gold.
Robinhood Gold Premium Trading – $10/Month
Since 2013, it was only after 3 years that Robinhood released a premium product it called Robinhood Gold.
One of the benefits you get here is the margin trading called Gold Buying Power. Again, Robinhood’s able to cut costs here by eliminating interest. Your margin is only based on the monthly flat rate you need to pay.
Another power you get by joining Robinhood Gold is trading before and after the set trading hours. Finally, you can also get an instant access to your earnings which you instantly reinvest without waiting for settlement. On other platforms, you usually need to wait for at least 3 days before you can invest the money you made from selling stocks. So going Gold on Robinhood will make sure that your chances of making money online will be continuous.
Robinhood Cash Management Account – Checking and Savings
Just last year, Robinhood changed its Checking and Savings product into a Cash Management Account. And like its regular trading and margin trading, this is fee-free too. The interest rate you earn from your savings with Robinhood is 3% APY.
The better news? There’s no minimum requirement to open the account, no monthly fee and definitely no overdraft fee. Your account will also come with a debit card you can use to withdraw money from ATMs.
ROBINHOOD COMMISSION-FREE TRADING – PROS AND CONS
1. 100% Commission-Free
Everyone loves FREE. Investors are no different. Robinhood is committed to offering all of its trading products and services for free. This is something admirable as other brokers would charge you $5-$19.95 COMMISSION PER TRADE! There are also maintenance fees that can cost up to $50 per account. So just imagine how much you are saving with Robinhood.
Robinhood also launched Clearing by Robinhood last year so it can operate on its own clearing system. This has greatly reduced the service account fees like its bank reversal fee being charged for only $9 instead of $30.
2. Convenient and Easy
Having a mobile app version always provides a great level of convenience. You can trade anywhere and anytime so there’s no worrying that you’ll miss out on a good trade.
The app is also very easy to use and the processes too. Bank transfers can be finished instantly for up to $1000 sales from stocks. Deposits more than that, though, will take four to five days to complete.
Robinhood also uses instant verification with several banks, making deposits less of a hassle. Deposits can be set to weekly, biweekly, monthly or quarterly schedules which you can do automatically when you set it through the app settings.
3. Streamlined Interface
There aren’t too many tools available making the interface really simple so I mentioned a while back that this could be better used by pros in trading or those who know what they want when they trade and don’t have to look at so many reports to pinpoint the best stocks to buy.
The web and app versions have a feature called collections where traders can find stocks per category. On the web version, you can compare stocks side by side to help you analyze the better stock to invest on.
4. Premium Account
The Robinhood Gold account lets you trade with “borrowed money” from the broker so you can start trading without any starting funds – apart from the monthly fee you pay. Be extra cautious, though, because margin trading is very risky. Since you are trading a borrowed money, there’s a high chance of earning lesser money than the amount of your debt.
5. New Tools Added
While Robinhood started with a very decent collection of trading tools, it recently added a few more to improve its research offerings. It has an analyst rating tool, lists of top movers, links to earnings calls, and earnings calendars.
There are also already Candlestick charts on the mobile version which is the most preferred chart type of investors as it is easy to interpret. Although it doesn’t have a chatroom, it allows investors to leve some sort of a review through the “People Also Bought” and “Price Paid” sections to give hints to others on the hot buys for the day.
1. Limited Securities
Although it allows you to trade ETFs, cryptocurrency, options, stocks, Robinhood doesn’t support the buy and sell of mutual funds and bonds which are among the most popular investment vehicles.
2. Allows Only One Trading Account
Robinhood only allows one taxable account or brokerage account which, unlike other platforms or the IQ OptionsTrading that I reviewed that allows traders to use multiple accounts at the same time. This gives them more chances of making more money online as they can watch multiple stocks on play.
3. Customer Support
Connecting with Robinhood’s support can be quite a hassle as concerns should be conveyed through email only. Concerns that need immediate attention can’t be resolved at once, making some traders lose interest on the platform.
4. Lack of Tools
While Robinhood has some of the basic tools needed for trading stocks, it still lacks a lot. Reports and analytics are missing. Interaction with other traders isn’t available too. The platform still has a long way to go when it comes to trading tools.
ROBINHOOD COMMISSION-FREE TRADING – IS IT THE BEST PLACE TO TRADE ONLINE?
I’m actually 50/50 on this. The fact that it helps investors save a huge sum of money per day from commissions and maintenance fees is a huge plus. But the lack of tools is also a huge downfall.
So to conclude, I can recommend this to expert traders who don’t really need so much tools to analyze the stock market and trade.
But if you are just testing the waters, then stay out of it because it might be a little complicated for you to comprehend.
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