Review of Robinhood Trading
Robinhood was the first in the U.S. to offer zero commission on stock trades. Now that other brokerages do the same, is Robinhood still a good choice? We'll find out.
Most Notable Features
Robinhood continues to stand out by regularly adding new services. Examples include its shift to self-clearing and adding cryptocurrency wallets, enhancing crypto trading flexibility.
Here are some key features:
- Stock lending
- Fractional shares
- Instant deposits
- No commission fees
- Advanced options trading
- Web3 crypto wallets without network fees
- Crypto gifting
- IRA with 1% Match
- IPO access
- 5% interest on uninvested cash
- Premium service package (Robinhood Gold)
Robinhood Account Types
Robinhood offers a variety of account types, though options are limited. Available are individual or joint margin accounts (Robinhood Instant), a cash account, a Spending account, and an attractive IRA option.
Robinhood Instant Account
'Robinhood Instant' is the standard account you get when you sign up. The 'Instant' refers to the ability to use new deposits right away without waiting, thanks to margin use without margin interest.
This account lets you use most of Robinhood's features like borrowing for spending or trading, and trading with unsettled funds.
Robinhood Cash Account
A cash account might be better for some. You must downgrade from Robinhood Instant to use it. Trades take longer to settle, and you can't trade level 3 options, but you're not subject to the day trading rule.
Spending Account
The Spending Account offers a debit card and all standard checking account features. It allows for digital payments and physical card usage.
It includes a cashback program, free ATM access, recurring investments, and direct deposits.
IRA
Robinhood now offers an IRA Match account, providing a 1% match on contributions, akin to a 401(k) but without needing an employer.
Contribution limits are $6,000 or $7,000 annually, depending on age.
Available Securities
Robinhood's selection of securities includes U.S. exchange-listed stocks, indices, ETFs, and cryptocurrencies, supporting advanced options strategies. It lacks mutual funds, Forex, futures, and commodities.
Stocks, ETFs, and Options
Trading stocks and ETFs on Robinhood is user-friendly. You can start investing with as little as $1, paying only minimal transaction fees.
Options trading on Robinhood is straightforward, allowing you to set up various positions through multi-leg options strategies. Zero-day-to-expire options trading is also available.
Cryptocurrencies
Robinhood's cryptocurrency trading is robust, with no commission on transactions and a dedicated crypto wallet. You can trade major cryptocurrencies like Bitcoin and Ethereum directly from your account.
Bonuses and Promotional Content
Robinhood offers free stocks for new accounts and referrals. You and your referrals can get fractional shares of well-known companies.
You can invite unlimited people, but there's a cap on bonus values you can receive annually.
Robinhood Promotion
1% IRA match and up to $200 FREE stock at Robinhood.
Visit Robinhood Website
Subscription-based Upgrades
Robinhood's base services are robust, but subscribing to Robinhood Gold adds even more features, like enhanced charting and bigger instant deposits.
Robinhood Gold costs $5 monthly and includes a free 30-day trial to test its features.
Robinhood Gold Features
Gold subscribers earn more interest and have access to more extensive research tools and advanced charting.
The instant deposit limit can go up to $50,000, depending on several factors like account size.
While the monthly fee might be a deterrent, the value added by Robinhood Gold can justify the cost for active traders.
Costs and Fees
While Robinhood markets itself as a zero-commission broker, there are still some fees to be aware of, such as for money transfers, margin use, and certain services.
Common fees include $25 for returned checks, $100 for outgoing transfers, and $20 for overnight mail. Margin rates and other service charges also apply.
Robinhood Pros
Robinhood's strengths include its zero-commission structure, user-friendly mobile platform, and variety of services, from stock trading to crypto wallets.
Robinhood Cons
Downsides include the lack of a comprehensive trading platform and some popular investment options.
Awards
Robinhood Recommendations
Robinhood is recommended for investors who value simplicity and speed in their trading experience, with advanced features for market engagement. It's not suitable for those seeking extensive professional trading tools or who prefer not to engage in Payment for Order Flow practices.
Robinhood Promotion
1% IRA match and up to $200 FREE stock at Robinhood.
Visit Robinhood Website
Updated on 7/19/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
|