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Robinhood Review

Blain Reinkensmeyer

By Blain Reinkensmeyer / February 18th, 2019
Last Updated: April 23rd, 2019

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Founded in 2013, Robinhood is an online broker that has raised $539 million in venture capital funding. The brokerage, which appeals primarily to young Millennial do-it-yourself investors, is best known for offering $0 stock, ETF, options, and cryptocurrency trades alongside an easy-to-use website and mobile trading app.

Free basic trading comes at a cost though. No phone support is offered, tools and research trail the depth and comprehensiveness of industry leaders such as TD Ameritrade and Fidelity, and hidden costs can drive up the underlying cost of being a customer (more on that later).

APRIL 2019 UPDATE

We keep getting the same questions over and over again. To make things really easy, here are the speed answers for you!

  • Is Robinhood completely free? The short answer is yes, technically Robinhood is free and charges $0 for stock, options, and cryptocurrency trades. However, certain features require a $5/mo subscription to Robinhood Gold and Robinhood does accept payment for order flow (PFOF). Here's Robinhood's Fees disclosure PDF and here's our full breakdown of how Robinhood makes money.
  • How do I get my money out of Robinhood without paying any fees? First, sell all your stocks and any other positions. Next, transfer all your cash via ACH to your bank account (ACH transfers are free). Finally, contact Robinhood to close your account. If you transfer stock holdings to another broker, Robinhood will charge you a $75 ACAT fee. Switching brokers? See our list of the best online stock brokers 2019.
  • Can I day trade stocks using Robinhood? You need at least $25,000 in your account to day trade with Robinhood (all brokers require at least $25,000 by law), otherwise your account is restricted to just three day trades every rolling five business days. That said, even if you had $25,000, I wouldn't recommend Robinhood. Read our best day trading platforms guide.

Ok, back to the review! Read on below.

Overall Summary

Rank: 15th (of 17)

If you have only a few hundred or several thousand dollars to trade, Robinhood is a good broker for conducting basic trades with ease. Beyond this, you may find Robinhood’s bare bones approach to investing not worth the commission savings.

Benefits

  • App is well designed and excellent for ease of use.
  • $0 trades provide great value for low balance accounts trading only 1 or 2 shares per trade as well as most casual investors.

Considerations

  • No phone support.
  • Little to no trading or research tools provided for free.
  • Access to Morningstar research and level II quotes requires subscribing to Robinhood Gold for $5 per month ($60 / year). For example, $60 is what it would cost for 12 paid trades at Fidelity or Charles Schwab, which both offer measurably more research, trading tools, better customer service, etc.
  • Similarly, trading on margin (which includes shorting stocks) also requires a monthly subscription to Robinhood Gold, as well as 5% annual interest on any margin balance beyond $1,000.

Commissions & Fees

Rank: 2nd (of 17)

Factoring in Robinhood’s profits from receiving payment for order flow (PFOF), Robinhood makes $.26 for every $1,000 in orders placed in your account. View cost examples.

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Benefits

  • The practice of receiving payments for routing orders to wholesale market makers is called payment for order flow (PFOF), and it is very common in the brokerage industry. Even with PFOF factored in, Robinhood still is a great deal for investors in the vast majority of cases.
  • The bottom line with Robinhood is that as your total trading volume increases, so does your net cost for being a customer. The less you trade, the better the overall savings Robinhood provides over traditional online brokers.

Considerations

  • Robinhood is technically a free service, just like Facebook. Instead of using your data to sell ads though, Robinhood is selling your order flow (the right to fill your order) to wholesale market makers. The market makers then execute your order, make a tiny profit off each trade, then share the profits with Robinhood.
  • Looking at Robinhood’s closest competitors, only two do not accept PFOF: Fidelity and Merrill Edge. This means they pass along any savings back to the customer, resulting in better executions (a higher price for each share sold or a lower purchase price for each share bought).
  • To trade on margin or short stocks, you have to subscribe to Robinhood Gold and pay a monthly fee of $5. Then, any margin balance above $1,000 is charged 5% annual interest.
  • There is no fee to transfer cash out of your account. However, if you want to transfer stock holdings out of your account to a competing broker, Robinhood charges a $75 ACAT fee.

Further Reading

Robinhood

Robinhood
Minimum Deposit$0.00
Stock Trade Fee (flat)$0.00
Options Base Fee$0.00
Options Per Contract Fee$0.00
Mutual Fund Trade FeeN/A
Commission-Free ETFsall
View all 23 data points

Platforms & Tools

Rank: 17th (of 17)

Robinhood offers a website and mobile app. All in all, Robinhood's trading tools are, well, meh. See: Best Day Trading Platforms

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Benefits

  • Robinhood offers its downloadable mobile app as well as a web platform (its website) for customers to use. Both platforms have similar feature sets.
  • In summary, although the web-based version of Robinhood is good, the app itself still provides a more immersive user experience. That said, the experiences are very similar.

Considerations

  • Looking at the entire offering of tools, Robinhood provides a minimalistic experience because it focuses on young investors attracted to idea of free trades. If you are looking for all the bells and whistles, consider a broker like TD Ameritrade or TradeStation.
  • Access to level II quotes requires subscribing to Robinhood Gold for $5 per month ($60 / year). For example, $60 is what it would cost for 12 paid trades at Fidelity or TradeStation, which both offer far more trading tools, measurably more research, better customer service, etc.

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Further Reading

Robinhood

Robinhood
Web Platform Yes
Desktop Platform (Windows) No
Watch Lists - Total Fields7
Charting - Drawing Tools0
Charting - Indicators / Studies0
Option Chains - Total Columns5
Streaming TV No
Paper Trading No
View all 59 data points

Mobile Trading

Rank: 8th (of 17)

Robinhood's mobile app is fast, simple, and my favorite for ease of use. That said, Robinhood’s focus on simplicity also has several notable drawbacks. See: Best Stock Trading Apps

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Benefits

  • For basic stock trading, Robinhood has the functionality required to be productive: basic watch lists, basic stock quotes with charts, key metrics, and recent news, alongside a simple trade order form.
  • Because the app is so simple, Robinhood is able to provide an extremely clean, crisp design that is very easy to use.

Considerations

  • The watch list functionality is extremely basic and includes few optional columns beyond last price and percentage change. Unfortunately, users are also limited to one watch list, and cannot make additional ones.
  • When pulling a stock quote, charts cannot be modified beyond six default date ranges, no technical analysis can be conducted, and even landscape mode is not supported for horizontal viewing. Pulling stock quotes using the free Yahoo Finance or CNBC mobile app, for example, provides a superior charting experience.
  • Robinhood currently only allows users to enable notifications for all of their positions or all of the stocks in their watch list. Basically, unless you hold shares in a stock, you cannot set price alerts for that symbol. This makes monitoring potential stocks to trade cumbersome and annoying.

Gallery

Further Reading:

Robinhood

Robinhood
iPhone App Yes
Android App Yes
Apple Watch App Yes
Watch List Syncing Yes
Stock Alerts - Basic Fields Yes
Charting - After Hours Yes
View all 52 data points

Research

Rank: 13th (of 17)

Robinhood uses primarily data from its users and third-party ratings to drive its research experience. No matter how you slice it, Robinhood is severely lacking across the board. See: Fidelity (#1 Research)

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Benefits

  • Robinhood offers analyst ratings, “people also bought,” and sections in its mobile app that enhance users’ experience. Analyst ratings come from Morningstar, while people also bought recommendations straight from Robinhood’s pool of six million customers.
  • The “about” section highlights company details such as CEO, headquarters, and number of employees.

Considerations

  • The overall research experience significantly trails industry leaders Fidelity and Charles Schwab. Unfortunately, it isn’t even close.
  • Access to Morningstar research and level II quotes requires subscribing to Robinhood Gold for $5 per month ($60 / year). For example, $60 is what it would cost for 12 paid trades at Fidelity or Charles Schwab, which both offer measurably more research, trading tools, better customer service, etc.

Gallery

Robinhood

Robinhood
Research - Stocks Yes
Stock Research - Reports0
Research - ETFs Yes
Research - Mutual Funds No
Research - Pink Sheets / OTCBB No
Research - Fixed Income No
Research - Futures No
Research - Forex No
View all 60 data points

Offering of Investments

Rank: 16th (of 17)

Robinhood offers only what is required to trade stocks, ETFs, options, and cryptocurrency.

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Benefits

  • Most online brokerages do not offer cryptocurrency trading. Robinhood does.

Considerations

  • Compared to its larger, full-service broker competitors such as TD Ameritrade, Fidelity, and E*TRADE, Robinhood’s total offering of investments is poor. For example, mutual funds and bonds are not supported, nor are basic advanced order types such as trailing stop orders.

Further Reading

Robinhood

Robinhood
Stock Trading Yes
OTCBB / Pink Sheets No
Options Trading Yes
Complex Options Max Legs4
Futures Trading No
Forex Trading No
Mutual Funds (No Load)0
Advisor Services No
View all 40 data points

Final Thoughts

Rank: 15th (of 17)

For investors looking to conduct the bare bones basics, Robinhood gets the job done well. Beyond that, the brokerage will leave you wanting more. See: Best Brokers for Beginners

For our 2019 Review we assessed, rated, and ranked 16 different online brokers over a period of six months. How we test.

Robinhood Q&A

Can I buy and sell Bitcoin with Robinhood? Yes. Robinhood currently offers seven tradeable cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Dogecoin (DOGE), Ethereum Classic (ETC), and Bitcoin SV (BSV). Ten additional cryptocurrencies can be added to any watch list.

Can you trade penny stocks with Robinhood? No. You cannot trade penny stocks on Robinhood. Over-the-counter (OTC) securities are not supported. However, Robinhood customers can trade company shares listed on the NASDAQ and NYSE whose stock price is currently below $1.00.

Can you trade international stocks with Robinhood? Yes. Robinhood offers customers the opportunity to buy and sell over 250 popular American Depositary Receipts (ADRs), including shares in companies such as Adidas (ADDYY), Tencent (TCEHY), and Nintendo (NTDOY).

Is Robinhood safe? Like its competitors, Robinhood is regulated by the SEC and is a registered member of the SIPC and FINRA (CRD #165998) in the United States. The company has its headquarters in Palo Alto, California, and has had no reported security breaches since its launch in 2013.

Is Robinhood completely free? Robinhood makes money primarily by routing customer orders to wholesale market makers that pay Robinhood for the right to fill its customers’ orders. This is a practice called payment for order flow (PFOF), and it is very common in the brokerage industry. Robinhood earns $.26 for every $1,000 traded on its platform.

Do any of Robinhood’s competitors offer $0 trading? Yes. Both Merrill Edge and Firstrade also offer free trading. To qualify for free trades with Merrill Edge, your combined brokerage and bank account balance must be at least $50,000. Compare Robinhood vs Merrill Edge vs Firstrade.

Does Robinhood offer bank accounts? No. Robinhood announced in late 2018 that through Robinhood Checking & Savings, customers could earn 3% on any free cash in their accounts, access over 75,000 ATMs, and use a debit card for purchases with no fees. However, it is important to note that Robinhood Checking & Savings would not be FDIC insured like a traditional bank and customer assets would not be not secured by the U.S. government. The service's launch was halted after the government intervened.

Does Robinhood offer drawing on charts? No. Robinhood does not currently offer any advanced studies (technical indicators) for performing technical analysis.

Does Robinhood offer an active trading platform? No. Robinhood does not offer a desktop downloadable trading platform for active trading.

Can I trade immediately after opening my Robinhood account? When you open and fund an account with Robinhood, the broker is unique in that it provides you access to up to $1,000 in funds, available immediately for trading while your ACH transfer deposit processes. Under normal ACH transfers, the average processing time is two to three days.

All pricing data was obtained from a published web site as of 02/18/2019 and is believed to be accurate, but is not guaranteed. The StockBrokers.com staff is constantly working with its online broker representatives to obtain the latest pricing data. If you believe any data listed above is inaccurate, please contact us using the link at the bottom of this page. For stock trade rates, advertised pricing is for a standard order size of 500 shares of stock priced at $30 per share. For options orders, an options regulatory fee per contract may apply.

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