In this Robinhood stock review we’re going to take a look closely at the Robinhood app and talk about why you should, or shouldn’t use it. Everyone is looking for ways to trade that provide easy as well as inexpensive trading. Robinhood has a completely free commissions system (the first!) They are a popular US broker that is best known for charging zero commissions on US stock, ETF, options, and cryptocurrency trades.
Chart by TradingView.
Table of Contents
Robinhood Review Introduction
Robinhood is a platform that boasts a user base of over 6 million – more than the popular brokerage E*TRADE, Robinhood has been a hit since its inception. They are also planning on an expansion into Europe, so hang tight European friends!
They’ve hosted more than $150 billion in transactions and the company is valued at $5.6 billion. As a result, you can be assured this is not a fly by night brokerage firm.
The Robinhood app has certainty made a big splash and is a now key player in the ongoing broker wars. They have stepped up their game in technology, customer service and overall performance.
They still have a long way to go to be on par with the likes of TD Ameritrade when it comes to customer service, but we appreciate all the effort they are putting in to their trading app to make it simple to use for everyone.
Robinhood App Web Platform
Moving on to the desktop version, the web platform is basic and no frills. But that’s all I need. Buy and sell and locate the buttons fairly easily. I don’t need to think too hard about it. Instead, you can devote that brain power to charting your stock.
If you want the best charts to go along with Robinhood, you’ve got a few choices. We like Tradingview and TrendSpider.
If I had to pick, I would go with TrendSpider for charts. But if you’re strapped for cash, consider using Tradingview or Stockcharts.com charts. They are pretty decent for free, with some light ads, and have a 14.95 a month package that is reasonable.
The reason I like TrendSpider is because they do all the work on the chart side for me. I’m sorry, but if you’re not using an external charting system to day trade or swing trade on Robinhood, you’re doing yourself a disservice. If you are investing, that is a different story. See how Robinhood compares vs Acorns.
Mobile Power
Robinhoods mobile trading platform is available on all iOS or Android devices. In fact it has the same design, user-friendliness, and functionalities as the web trading platform. However, the stock screener and recommendations are missing.
Again, there are other tools out there for things they are weak at. For a screener, I’m using blackbox stocks or trade ideas anyway. The mobile app has awesome news functions, and you can even listen to conference calls live on the Robinhood App. Not bad! Building a watchlist on the app is easy.
It alerts you when your stocks on your watch list are making new highs or lows. Pretty handy, because sometimes I forget to check.
In order to trade you just click the “search” icon and type in the ticker of the stock you’re interested in. You’ll see basic details about the company as well as recent price information. Check out a list of the top trading companies.
Securities Available on the Robinhood App
Robinhood app offers the ability to trade stocks, ETFs, options, and cryptocurrency. The ability to trade options is relatively new for Robinhood. I particularly like trading on the Robinhood App options spreads. They give you 2k extra margin with 2k cash in the account. Not bad. Don’t be foolish with it though.
RH stays true to their word in giving you access to no-fee contracts. Even in a world where TD, IBKR, Fidelity and others are beginning to offer free trading, they still have costs for options contracts.
Not Robinhood though. Free option trading. This includes no commissions, no per-contract fee, no exercise fee, and no assignment fees.
It’s pretty tough to beat if you ask me! It’s so great when comparing your other options.
I don’t recommend day trading volatile stocks on Robinhood in this review because the execution speed might be a bit lower than some of the other big names out there. Take that into consideration. If you are an investor or swing trader, this should not be an issue.
With this in mind, the inexperienced investor should not be trading options as they can be risky without the proper training. If you want to learn more, Bullish Bears has an options trading course.
Account Types
You have three different account options to choose from when signing up: the Cash Account, Standard/Instant Account and Robinhood Gold which is common in different brokerages.
At Robinhood Standard and Robinhood Gold accounts, you are only allowed three day trades per week unless you have at least $25,000 on your account. If you want to avoid the PDT rule, you have some choices.
With a “Gold” subscription you can also trade after hours. You get access to the market 30 minutes before opening and 2 hours after closing.
This can be profitable if big news hits the market after hours. You can quickly trade before everyone else. Most brokers let you trade in the premarket but you have to enable it.
Webull for example lets you trade at 4am and has commission free trades too and is a strong competitor to Robinhood right now.
New Securities
StockRover is a research tool for retail traders. Check them out!
Cons
- Available only for US and Australian residents, but Europe is coming early 2020
- Weaker customer support vs TD or Fidelity, but improving, has come a long way.
- Limited product portfolio – no mutual funds or bonds so you need a different broker.
- Limited platform functionality for active day traders and order execution is not the fastest.
- High trading fees for non-US stocks, where interactive brokers is much better at this.
- You can’t usually trade same day option expiration strikes, they won’t let you buy them.
Robinhood Options Trading
Regardless of what you have heard about trading options on Robinhood from random people on the internet this budget, user friendly broker is fairly decent for trading options.
I’ve been using them for over a year now to swing trade options. I have not tried Robinhood Gold, because I didn’t feel I needed it. Not for what I am doing. I’m using Robinhood option trading for two things:
- Day trading options on Robinhood (buying naked calls and puts)
- Swing trading options on Robinhood (credit and debit spreads)
Why Am I Using Robinhood?
I’m not only using them for Robinhood option trading, I felt they were worth giving them a try. Especially after they’d been out awhile (since 2014) and have since become the fastest growing broker in history.
People in our trading community and on Stocktwits were constantly talking about them in 2016. In fact, there were about 10 people a day in our free Facebook group sharing Robinhood referral links. You know the ones where you get a free share of Google, Apple or Amazon?! It was everywhere you looked.
So, I gave Robinhood a shot. And I wasn’t disappointed as long as I only traded options under certain criteria. Again, I used the free version of RH, so there was no level 2 trading and no market orders.
Limit orders only! However sometimes my fills were BETTER than what my limit order was set at. The key to trading this way was sticking to these rules for what I traded:
- High volume option strikes (500+ volume on the day, 1000+ was better)
- Tight bid ask spreads, between $1-$3
- Open interest for the strike needs to be over 1,000
The reason I did this was because I found Robinhood executions for day trading options fairly slow. The less liquid the options the worse it got. To avoid that, if you’re going to day trade options on Robinhood, I suggest you stick to the rules above.
When I look at Robinhood for day trading options since TDA and Fidelity started offering commission free trades…it’s gotten slower. Not quite sure why that is.
I’m imagining that because the broker wars are hotter than ever due to commission free trading being offered almost everywhere you look, that performance has been slipping. It’s not just Robinhood, its brokers that have been around awhile.
Robinhood Option Trading for Swings
I’m completely convinced the safest way for Robinhood option trading or trading options anywhere else for that matter is to trade credit or debit spread options.
The cold hard truth is, all those people posting and screen capping their long option position with ridiculous gains are risking a lot by trading long options without a spread.
The probability game is stacked against them by trading long options, which is why I swing trade spreads. I want a higher probability of profit on every swing trade I take.
That makes sense doesn’t it? Read on to understand why selling options is a safer strategy than buying them.
Now, whether or not I sell options as bear call spreads or bull put spreads depends on whether I believe the trade is bearish or bullish.
Specifically, my goal is to keep the premium get from selling the short call or short put. I like Robinhood to sell options because there are no fee’s, (truly free options trading) and the user interface makes it incredibly simple to sell a spread.
However, selling options can still be quite risky. Although, since 80% of options expire worthless, the seller is the one that benefits.
Robinhood Competitors
Robinhood competitors include Firstrade, M1 Finance, WeBull, AllyInvest, and TD Ameritrade. All of these brokerage companies provide low-cost trading plus a host of benefits that Robinhood doesn’t offer. Indirectly, Robinhood is competing with Robo-advisors like Betterment and Wealthfront.
Firstrade
As Robinhood competitors go, the biggest is Firstrade; without a doubt. Firstrade has the lowest commissions on all investment products in the industry.
And unlike Robinhood, Firstrade offers mutual funds. With a pricing of $0 for stocks, ETFs and mutual funds and no account maintenance or inactivity fees, they are one of the best free brokerage firms.
M1 Finance
If you’re looking for a unique way to invest in stocks and ETF’s look no further. M1 Finance is a new hybrid Robo/self-directed brokerage that is shaking up the investing world.
Customers can create “pies” or baskets of stock and ETF’s to trade as one unit. What’s more, there are no account maintenance or inactivity fees, and you can open an account with $0 down.
$0 down is a huge draw for Robinhood competitors.
Webull
Robinhood competitors like WeBull is perhaps the least known. Webull clients get to trade equities and exchange-traded funds.
Only penny stocks priced above $1 and trading on major exchanges are available; that’s it—at least for now. For those wanting to trade options or mutual funds, you’re out of luck.
Similar to Robinhood, you pay no commission on U.S. stocks, options and ETF’s and there are no account fees or fees to open an account. Check out our Webull review.
Ally Invest
Zero dollar commissions. That’s right – with Ally Invest Self-Directed Trading, you can trade commission-free. What’s more, there is no account minimum to get started.
Better yet, as of writing this, you can earn up to $3,500 in bonus cash when you open an Ally Invest Self-Directed account.
And if you’re worried about account transfer fees – some brokerages charge up to $150, Ally Invest has you covered. When you move your account over, they’ll credit you up to $150.
TD Ameritrade
Like Robinhood, TD Ameritrade offers free stock and ETF trades and access to a large selection of mutual funds. Over 4,200 of them carry no transaction fees – they are commission-free.
What sets TD Ameritrade apart is that they offer a broad range of financial services that Robinhood doesn’t. What’s more, you also have access to their free trading software, ThinkorSwim.
Without a doubt, ThinkorSwim is one of our favorite platforms for charting. TD Ameritrade’s mobile platform far exceeds Robinhood’s simple app, which offers almost nothing except trading. We make our penny stocks list on ThinkorSwim as well.
Who Is Robinhood Best For?
If limiting costs is your number one concern, Robinhood just might be the broker you’re looking for. What’s refreshing about Robinhood is that they truly are free, you can trade without spending a dime on broker fees and commissions.
Robinhood however, lacks a full-service trading platform – you won’t have access to the in-depth charting options and studies that are necessary for the active day trader.
But we gave you choices above for that. It’s not a deal breaker but it sometimes stinks to have to switch between one app and another to trade. If you can handle that, no big deal then.
Furthermore it doesn’t provide in-depth research and education needed for but you can get it for free from sites like Google Finance and MarketWatch. Again, they are working on improving the research feature, but its not a priority. I give them credit for knowing who their audience is.
Nevertheless, these drawbacks haven’t slowed down investors seeking a simple, user-friendly trading platform to start their investing journey.
Robinhood Review Final Thoughts
To sum it up, Robinhood is a great way to get your feet wet with investing with no fees. If you’re a beginner, this is for you. While it is not powerful enough to be your only investment platform, it does work well for your individual stock trading account. Don’t be afraid of it, I’ve been using it for awhile now and I have zero complaints. Because trades are free, you may be tempted to dive into the world of day trading which can be risky if you aren’t armed with the proper tools and education.
So make sure you paper trade first. TDA has a great paper trading platform, as does tradingsim and TradeStation. Do yourself a favor and practice first. We welcome newbies to the trading world and give them free courses and tutorials to get them started (we were newbies once too!)
Robinhood fees being zero makes it a great app to practice trading on, maybe just one share or one contract while you learn the ropes. This will teach you how to control the emotions of trading.
Frequently Asked Questions
Is the Robinhood Stock App Good for Beginners
Robinhood is an easy to use website and mobile trading app that appeals to the do-it-yourself investor. Robinhood is geared towards millennial investors who want a smartphone-based trading platform without the bells and whistles. It has been a smartphone-first broker. The Android and iPhone apps are the primary methods to log into your account and place trades. However, they now have a fully functional web version available to all users.
Does Robinhood Make Money?
Robinhood earns their money through the Robinhood Gold subscription fees and the interest on cash balances of users accounts. They also provide liquidity to major markets. Robinhood is looking to add some 250 notable foreign stocks available for trading on its commission-free platform! This will therefore be useful for those who like to trade stocks outside the US.
Can You Trade Options on Robinhood?
Is Robinhood Really Free? (Fees and Pricing Review)
- Robinhood fees don't exist
- Free Trades - $0 US stock, ETF, option, and cryptocurrency trades
- High trading fees for non-US stocks, where TradeStation broker is much better at this
- Some features are charged a $5 subscription fee
- No minimum deposit, open it with your couch change
- Great for investors and swing traders who are penny stock traders
- Easy to use, perfect for the technologically challenged
- Can listen to conference calls and get great notifications from the app
Get updated fees here.
Robinhood's Stock Price and Symbol: Are They Publicly Traded?
Robinhood is a publicly traded company on the Nasdaq Exchange (NASDAQ: HOOD).
What Other Apps Are Like Robinhood?
- Ally
- Webull
- TD Ameritrade
- Charles Schwab
- Firstrade
- M1 Finance
- TradeStation
