Robinhood Trading rating

Robinhood Stock Trading Review

Robinhood Stock Trading Overview

Robinhood Financial (member of SIPC) is a unique brokerage firm established in 2013. Offering stock and ETF trades for free (yes, they really are $0), it is by far the cheapest broker in the industry. The following article will try to figure out how the firm does that, and what tradeoffs customers must sacrifice to get the zero commissions.

Robinhood Stock Trading Technology

The first thing traders will notice is that the Robinhood site has little on it. There is no research or educational tools available. In fact, the broker's customers can't even place a trade on the website. All trading takes place on the broker's mobile app, which is available for Apple and Android tablets and phones. There is also a Robinhood platform for Apple Watch.

RobinHood Stock Trading App

The app is fairly basic, and charting is very simple. There are no technical studies or drawing tools. In comparison, the low-cost Firstrade has a few technical studies available on its app, and the more expensive TD Ameritrade has approximately 400 studies. Robinhood's chart cannot be displayed horizontally. A chart's line (there are no candlesticks or OHLC bars) is green if the return is up over the period shown and red if it is down.

There is no financial information displayed for a company, so security research is not possible on the app. Combined with the fact that security research is also not available on the website, the broker's customers obviously can't use the firm to do necessary stock research. Even low-cost brokers like Firstrade and Merrill Edge have educational material, at least on the website. Obviously, free trades come at a price.

Robinhood Stock Trading on the App

Using the app to place a trade is fairly simple. A search field will hunt for a stock after the user enters a company's name or ticker symbol. Clicking on a plus sign adds a stock or ETF to a watch list. Tapping on a security's name produces a simple profile page. The chart's timeline can be displayed between one day and 5 years. A 'Buy' button appears at the bottom of the profile page. Tapping on it generates a simple order ticket. There are four order types available: market, limit, stop loss, and stop limit. The app's description of a stop loss order seems somewhat confusing. The price entered on a stop loss order should be below the current market price, although the app says it should be "above the current price". The order ticket also has a field to enter any number of shares desired. Based on the current market price, the order ticket estimates how much the order will cost.

RobinHood Entering Stock Trade

Currently, only stocks and ETF's can be traded using Robinhood. Options, bonds, and mutual funds are not available. The lack of these products will surely disappoint many investors. Short selling is also not possible.

Account Management

Both margin and non-margin accounts are available. The broker also offers a feature called Robinhood Instant. This is a semi-margin account that allows investors to trade with unsettled funds. These are proceeds from sales of stock that have not yet cleared. Also, up to $1,000 of a deposit of cash from an external bank can be used immediately in a Robinhood Instant account.

RobinHood Account Management

Linking a bank account is easy using the mobile app. Some banks, such as US Bank and Wells Fargo, have icons on a banking link. Tapping on one of the icons produces a login for that bank that will link a deposit account to the Robinhood securities account. Banks that are not listed can be added by submitting routing and account numbers.

Fees and Account Minimums

Amazingly, the broker's other fees are also pretty low. Broker-assisted trades are only $10. ACH transfers are free. Paper statements are $5 each, while hard-copy confirmations are just $2. Traders do have to pay exchange and regulatory fees when selling securities. Usually, these charges add up to less than a dollar. List of all the fees is here: Robinhood fees.

RobinHood Stock Trading Fees

Robinhood Promotion

Open account and get FREE stock.

Robinhood Gold

The broker also recently launched a modified version of a margin account called Robinhood Gold. Instead of a percentage of every dollar borrowed, the firm charges a flat $10 per month for the ability to borrow up to $2,000. Going up another $2,000 tacks on an additional $10 fee. Above $50,000, the broker switches to the regular percentage-based system. Currently, it's 5.0%.

Robinhood Gold also gives members extended trading hours and instant access to fund transfers. As one of the few advanced features on the app, this service gives an investment edge to frequent traders that was not previously available through the platform.

How Does the Company Make Money?

This is the $64 million question, so to speak. There is no advertising on either the company's website or on the mobile app. The firm says that it will earn money by not paying interest on free cash balances, and charging interest on debits in margin accounts.


The brokerage firm is insured by SIPC, the non-profit insurance for U.S. broker-dealers. Assets in a Robinhood account are guaranteed up to $500,000, and cash balances are insured up to $250,000. Robinhood is also a member of FINRA, the self-regulatory organization that oversees the securities industry.

Does Robinhood Offer Dividend Reinvestment (DRIP)?

No, Robinhood right now does not offer Dividend Reinvestment Programs also known as DRIPs. Cash dividends will be credited as cash to customer account.

Does Robinhood Offer IRA Accounts?

No, unfortunately Robinhood right now does not offer any IRA accounts.

Who Is Robinhood's Main Competitor?

M1 Finance is the other company that now offers commission-free investing.

Robinhood Stock Trading Review Summary

Robinhood has taken a major gamble in trying to be profitable without charging commissions. This will be even harder to accomplish without selling advertising. It seems that investors also are taking a risk with zero research tools and rudimentary charting. The broker's customer service number is only available during market hours and isn't toll free. As in other areas of life, you get what you pay for.

Robinhood Promotion

Open account and get FREE stock.

Open Robinhood Account

Robinhood Stock Trading reviewed by Rating: 3