Robinhood Trading has been around since 2013 and is an online brokerage that has successfully raised around $176 million till now. It offers free stock trading for US residents. It is known for its $0 commission trading and easy-to-use mobile application.
It is regulated by the SEC and is a registered member of the FINRA (CRD #165998) and the SIPC in the United States. The headquarters of the company is based in Palo Alto in California, United States.
The co-founders of the company are Vladimir Tenev and Baiju Bhatt, who have streamlined the product experience. Users can make trades on the mobile app, though its functionality is minimum in order to keep the costs low.
Robinhood Trading provides basic stock trading such as major public securities and no shorting or OTC/pink sheets. It does not support options like mutual funds, forex trading or trading in futures. It does not offer retirement accounts (IRAs), DRIPs or the traditional banking services such as saving accounts or current accounts, mortgages, and credit cards such as those offered by full-service brokerages.
A few of the features supported by Robinhood Trading among many others are listed below:
Advanced Order Support: It supports market orders, stop limit orders, limit orders and stop orders. Some of the orders can be good ’til canceled (GTC) or good for the day.
Scheduled Deposits: Users can plan automatic transfers on a quarterly, monthly, biweekly, or weekly basis.
Cryptocurrency Trading: Through Robinhood Trading, users can invest in cryptocurrency trading by investing in Bitcoin Cash, Bitcoin, Litecoin, Ethereum and Dogecoin. Users can also keep track of other currencies.
This is a good option for an active trader as it upgrades your account to a margin account where you have access for buying and selling stocks on credit. This is not advisable for new or inexperienced traders. If you’re a beginner who does not even know what a margin call is, you should stick to the free version. The requirement as per the federal regulations is that you must have a $2,000 minimum balance in order to open the Robinhood Gold account.
Is Robinhood Trading Risky?
Even though it is insured by the SIPC, there is still a risk that it may not be around for a long time since it is an online trading company and a free investment company. Most such companies do not do so well.
While Robinhood Trading is able to earn money through its Gold accounts and interest on the cash balance of its users, the risk is still there.
It allows free trades
It is easy to use
No fee on ACH transfers
There is no need for a minimum deposit
There are no retirement accounts
The customer service is poor
The data is generally delayed, which can be an issue in the fast-paced world of trading
No bonds or mutual funds are supported
This is a great trading option which has no fees on trading. Moreover, it keeps adding new features, which include cryptocurrency trading. Even though it is not powerful enough to stay as your only trading option if you are a serious trader, it can still do well as your only stock trading account. It may not be the perfect solution to all your trading needs, but it’s free and that makes up for its shortcomings.