When the company was launched in 2013, the lack of a commission encouraged many consumers, and the broker’s following quickly grew. Furthermore, the cost was waived not just for stock and ETF trades, but also for options and cryptocurrency, which no one had previously offered, yet such an advantage was accompanied by drawbacks.
Of course, the company cannot be called a multifunctional broker, with a large list of services, but the platform is reliable enough and for a client whose goal is to make a transaction with minimal commissions, this broker is quite suitable.
- The overall rating of the company is 3.5
- Customer charges 3.5 out of 5
- Convenience of trading and trading accounts 3 out of 5
- Training materials and lots of research 3 out of 5
- Platforms for mobile devices 3.5 out of 5
- Great customer service experience 3 out of 5
The company works with a minimum trading deposit of $0, you won’t find commissions on mutual funds or ETFs.
Among the offered assets: stocks, cryptocurrencies, options, ETFs.
The company for customer service offers to send a request by email or use the services of a chat bot, where you can ask a question and get an instant response. The company charges a $75 fee per transaction for withdrawals.
The mobile app is available for download.
Nowadays, a mobile app is not only a convenience, but also a sign of a brokerage firm’s reliability and progress. Initially, Robinhood advertised itself as a broker that specialized in mobile trading. Of course, there aren’t many useful or instrumental items in this plan, but trading is simple enough, and opening a trade doesn’t take long.
For example, because the software isn’t cluttered with features that aren’t useful to beginners, you may quickly review a chart for any time period. Everything is loaded at a breakneck speed. You can use the news feed to stay up to date on current events across the world.
The procedure of initiating a transaction is as straightforward as possible; all you have to do is indicate the appropriate number of units and assets, and the section will open if you have the required amount on your balance.
Let’s look at the merits of this company:
The main benefit is that there are no trading commissions, which is beneficial to both seasoned and novice investors. If commission-free stock trading is no longer news, commission-free option trading is a rarity.
Without commission you can also work with digital currencies, for which – ask your broker. The main advantage of trades in cryptocurrencies is the possibility to open such a deal at any time of the day, including weekends.
How to open a trading account?
Because the organization does not require a minimum deposit to begin trading, the account opening process takes only a few minutes. The key benefit is that, regardless of how long it takes for funds to reach your trading account, the brokerage company credits your account instantly, rather than waiting for the payment to arrive, which is a significant benefit that allows you to start trading right away.
Company-Robinhood gold program
The goal of this program is to borrow funds from the corporation in order to purchase a big number of securities. You may gain access to MorningStar and NASDAQ quotes for for $5 per month.
The annual interest rate for using borrowed funds is only 2.5 percent. This interest is charged once a month. Keep in mind that you must have at least $2,000 in your account in order to use the funds.
By taking advantage of this program you will have an increased withdrawal threshold from $1,000 to $50,000.
It is convenient enough, you can buy only a part of shares of the company you are interested in, instead of saving up for a share for a long time. Moreover, the company offers to buy a fractional share, even if other brokerage companies do not allow it. The condition is that the value of the stock is above $1 and the capitalization must be more than $25 million.
Disadvantages of the company
For beginners, there won’t be enough educational resources, this is because the company minimizes its costs to provide free research and no commission for opening trades. For clients with experience, this will not be a problem, which is not the case for those who are new to the industry.
It should be noted that users of the program will receive ratings, a lot of financial news, analytical materials and, of course, the simplest chart the client can build, but this does not correspond to the typical idea of a broad spectrum brokerage company, such as Charles Schwab or E-Trade, which provides a lot of materials for clients with different levels of trading experience.
No mutual funds
The company does not operate on investment funds, whereas most brokers include funds in their list of trading assets
No variety of trading accounts
The taxable account is the only type of account available on Robinhood. There’s no need to look for joint accounts, savings accounts, or any other type of account. Although the targeted broker has the capacity to expand the number of accounts available to various clients, there is no reason to expect this will happen at this time. Clients who wish to work with large sums of money and have conditions adapted to their requirements face a hurdle.
The secret of the free trades
This broker offers its transaction flow to high-frequency traders, who are able to open deals faster than the client, resulting in a cheaper selling price and a higher buying price. This broker was investigated by the Securities Commission for three years, from 2015 to 2018, and was fined $65 million. The corporation did not need to admit to the fraud, but it did pay the fee and fix the algorithm.
For customers who work on long transactions will not be a problem, but customers who work on short transactions will feel the difference in price.
Having asked a question in the chat room you will receive an instant prepared answer in case your question is standard. For an individual request or a non-standard question, you will have to write an email, the response time can take up to several days.
The company is ideal for experienced investors who will not use any additional options. The benefits of trading without commission with options, stocks, cryptocurrencies depends on the extensive material associated with the training , but by using the Gold program you will receive some analytical material regularly. A great opportunity opens up for clients with a small balance, this is buying stocks in installments. The company offers one trading account for all clients. This can be frustrating for clients trading large volumes and wishing to get personalized service and some benefits.
Those traders who want more educational material can consider the following brokerage companies: Fidelity , Schwab or Merrill Edge. If you need a very robust mobile app for trading, your choice is likely to be the Power E-Trade platform from the E-Trade broker of the same name.
In general, Robinhood is not a full-service brokerage company, but if you want a classic brokerage company, you should read about Ameritrade.