In this Robinhood stock review, we will 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 and inexpensive trading. Robinhood has a completely free commission system (the first!) They are a popular US broker known for charging zero commissions on US stock, ETFs, options, and cryptocurrency trades.
Chart by TradingView.
Table of Contents
Best Trading Companies
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 also plan to expand into Europe, so hang tight, European friends!
They’ve hosted over $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 made a big splash and is now a 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 regarding customer service, but we appreciate all the effort they put into their trading app to make it simple to use for everyone.
Robinhood Review - App Web Platform
Moving on to the desktop version, the web platform is basic and has 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 decent for free, with some light ads, and have a 14.95-a-month package that is reasonable.
I like TrendSpider 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 to Acorns.
Robinhood Review - Mobile Power
Robinhood’s mobile trading platform is available on all iOS or Android devices. 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 for things they could improve at. I’m using black box stocks or trade ideas for a screener. The mobile app has awesome news functions; you can even listen to live conference calls on the Robinhood App. Good! Building a watchlist on the app is easy.
It alerts you when the stocks on your watch list are making new highs or lows. It’s pretty handy because sometimes I need to remember to check.
To trade, click the “search” icon and type in the ticker of the interested stock. You’ll see basic details about the company and recent price information. Check out a list of the top trading companies.
Robinhood Review - Securities Available
Robinhood app allows trading 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 a 2k extra margin with 2k cash in the account. Good. Please don’t be foolish with it, though.
RH stays true to its 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 option 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 is lower than some of the other big names. Take that into consideration. This should be fine if you are an investor or swing trader.
With this in mind, the inexperienced investor should only be trading options as they can be risky with the proper training. Bullish Bears has an options trading course if you want to learn more.
Robinhood Review - Account Types
You have three different account options to choose from when signing up: the Cash Account, Standard/Instant Account, and Robinhood Gold, which are common in different brokerages.
At Robinhood Standard and Robinhood Gold accounts, you are only allowed three-day weekly trades unless you have at least $25,000. If you want to avoid the PDT rule, you have some choices.
With a “Gold” subscription, you can also trade after hours. You can access 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 must enable it.
Webull, for example, lets you trade at 4 am, has commission-free trades, too, and is a strong competitor to Robinhood.
New Securities
Companies like Tencent Holding (TECHY), Burberry Group (BURBY), Heineken N.V. (HEINY), BMW, Nintendo (NTDOY), and Adidas (ADDYY) will be added in what Robinhood says is the biggest addition of new securities since the app launched five years ago. They are always actively adding new stocks, so stay tuned for big developments!
StockRover is a research tool for retail traders. Check them out!
Cons
- Available only for US and Australian residents, but Europe is coming in 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 are 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 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, but they were worth trying, 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. About ten people in our free Facebook group shared Robinhood referral links daily. 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 was satisfied as long as I only traded options under certain criteria. Again, I used the free RH version, so there were no level 2 trading or 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
I did this because I found Robinhood executions for day trading options fairly slow. The less liquid the options, the worse it got. To avoid that, I suggest you stick to the rules above if you’re going to day trade options on Robinhood.
When I look at Robinhood for day trading options since TDA and Fidelity started offering commission-free trades…it’s gotten slower. I don’t know why that is.
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; it’s brokers that have been around for a while.
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 that 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, so I swing trade spreads. I want a higher probability of profit on every swing trade I take.
That makes sense. I’d like you to please read on to understand why selling options is a safer strategy than buying them.
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, I aim to keep the premium from selling the short call or short put. I like Robinhood to sell options because there are no fees (truly free options trading), and the user interface makes it incredibly simple to sell a spread.
However, selling options can still be quite risky. However, since 80% of options expire worthless, the seller is the one who benefits.
Robinhood Competitors
Robinhood competitors include Firstrade, M1 Finance, WeBull, AllyInvest, and TD Ameritrade. All these brokerage companies provide low-cost trading plus many benefits that Robinhood doesn’t offer. Indirectly, Robinhood is competing with Robo-advisors like Betterment and Wealthfront.
1. 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.
2. M1 Finance
If you’re looking for a unique way to invest in stocks and ETFs, look no further. M1 Finance is a new hybrid Robo/self-directed brokerage shaking up the investing world.
Customers can create “pies” or baskets of stock and ETFs to trade as one unit. Moreover, 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.
3. Webull
Robinhood competitors like WeBull are 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, at least for now. You’re out of luck for those wanting to trade options or mutual funds.
Like Robinhood, you pay no commission on U.S. stocks, options, and ETFs; there are no account fees or fees to open an account. Check out our Webull review.
4. 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.
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.
5. TD Ameritrade
Like Robinhood, TD Ameritrade offers free stock, 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. Moreover, you can also access 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 might be the broker you’re looking for. What’s refreshing about Robinhood is that they are free; you can trade without spending a dime on broker fees and commissions.
Robinhood, however, needs a full-service trading platform – you won’t have access to the in-depth charting options and studies necessary for the active day trader.
But we gave you the choices above for that. It’s not a deal breaker, but having to switch between one app and another to trade sometimes stinks. If you’re able to handle that, no big deal then.
Furthermore, it doesn’t provide the in-depth research and education needed, but you can get it free from sites like Google Finance and MarketWatch. Again, they are working on improving the research feature, but it’s not a priority. I give them credit for knowing who their audience is.
Nevertheless, these drawbacks have kept 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 needs to be more powerful to be your only investment platform, it does work well for your stock trading account. Don’t be afraid of it. I’ve been using it for a while now and 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
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.
Robinhood earns its 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 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.
Good news is that there's Robinhood options trading available now. There was a time when you couldn't trade options on Robinhood—how things have changed. Options are a fantastic way to grow a small account. As a result, Robinhood got on board and made it possible to trade them.
- 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 is a publicly traded company on the Nasdaq Exchange (NASDAQ: HOOD).
- Ally
- Webull
- TD Ameritrade
- Charles Schwab
- Firstrade
- M1 Finance
- TradeStation
