Robinhood Trading Platform

There is an unprecedented surge in new traders recently, and with Robinhood’s claim of being “commission-free, now and free”, no wonder newcomers flock the platform.

Today’s subject is Robinhood Trading Platform. We are going to review its features, pros and cons, and whether it is really a commission free brokerage.

Despite Robinhood saying that they do not intend to gamify the trading realm, millennial traders who are to the scene seem to think otherwise.

But the consequences of this very dangerous game could cost you your life, like what happened to a Robinhood trader who took their own life.

Find out the details in this Robinhood Trading Platform Review!

Robinhood Trading Platform: What Is Robinhood Trading Platform

Robinhood Trading Platform is an online brokerage that disrupted the brokerage industry with their zero commission investing.

The company is headquartered in Menlo Park, California and with a mission to democratize finance to all, which is really attention grabbing, not going to lie.

It first started out as a mobile application in 2013 but then snowballed into a web application in 2017 due to its explosive growth and popularity.

Because of its massive popularity, other storied brokerage firms like E*TRADE and TD Ameritrade scrambled to copy their formula of removing commissions.

Presently, Robinhood has scaled to 13 million users, many of those are new to investing and trading and have probably signed up because of boredom.

Robinhood Trading Platform -  Robinhood Trading
Robinhood Trading

Robinhood has become synonymous with millennial retail traders with Jim Cramer of CNBC commenting it “brought iPhone toting millennials who like owning individual stocks”.

The key feature of Robinhood that made it so successful is its simplicity and how easy and frictionless the interface is to use.

With little to no knowledge of investing or trading, you can open an account without funding it and even get a stock worth $500 for free.

Let us be real here. Who would not be enticed, right?

With just a simple swipe here, a tap there, and digital confetti “congratulating” you for your first trade, it really seems like everything in Robinhood is a game.

The company rebuffed critics, but with how it nudges you with push notifications and its previously simple way to upgrade into options account, it just does not seem like reality.

Then again, having an intuitive platform does not mean you know what you are getting into, especially options, which are more complicated than stocks.

Robinhood Trading Platform: Who Are The Founders Of Robinhood

Robinhood Trading Platform -  Robinhood co-CEO's Baiju Bhatt and Vladimir Tenev
Robinhood co-CEO’s Baiju Bhatt and Vladimir Tenev

Vladimir Tenev and Baiju Bhatt are the founders of Robinhood. The two met while at Stanford University and after graduating, they started Celeris, a high-frequency trading company.

By January 2011, they cast it aside and formed Chronos Research, a company that sold low-latency software to other hedge funds and banks.

They realized that it was important to build products that would provide everyone with access to the financial markets, so after two years in New York they headed back to California.

Tenev and Bhatt believed that the more people that have access to the markets and can start investing earlier, the better off the economy will be.

They saw an opportunity to build a product that appealed to the millennials, who felt frustrated and disenfranchised with the way the system worked.

In 2013, Tenev and Bhatt built Robinhood. It leveraged technology to encourage the normal citizens to participate in the financial systems.

According to Tenev, Robinhood focuses on three things.

1. To get as many first time investors into the markets and opening up access.

2. To grow with their clientele by filling a variety of financial needs, not just on investing.

3. International expansion for Robinhood to reach foreign markets.

Robinhood Products And Features: The Good

Stock Trading

Robinhood Trading Platform - Robinhood Interface
Robinhood Interface

The simple portfolio instantly displays your portfolio once you log in to the mobile app or the web app. There are also timeframes which you can toggle your portfolio.

Underneath your portfolio is the Robinhood Cards that features all the stock related news that might affect your holdings and give you some general information about what is happening in the market.

You can organize how you want it to sort the stocks You can display data according to Last Price, Percentage Change, Total Equity, Today’s Return and Total Return.

The process of buying or selling as stock is simple. You just have to tap the Trade button and input the number of shares or fractional shares you want and swipe up.

It is really that simple.

Robinhood Trading Platform - Robinhood Easy Swipe Trade Set Up
Robinhood Easy Swipe Trade Set Up

Options Trading

For the advanced traders, Robinhood integrated options trading into the platform. They made it simpler to the point that you can call it bare bones.

Look at the photos below and see how it makes the movement in the option price seem like a guessing game.

If you are a beginner trader who wants to learn more about options, go ahead and read our How To Trade Options For 100% Gains!

Robinhood Trading Platform - Robinhood AMD Options Trading
Robinhood AMD Options Trading
Robinhood Trading Platform - Robinhood Options Trading
Robinhood Options Trading

Cash Management

This feature lets you earn 0.30% Annual Percentage Yield on your uninvested cash. This is great if you have a balance in Robinhood that you have not taken out.

This means that if you start January 1st with $1,000 in uninvested cash that is swept to the program banks and do not deposit or withdraw any funds for the entire year.

You will earn $3.00 by January of the following year, compounding included.

Cash Management is offered through Robinhood Financial and interest is paid monthly based on the uninvested cash in your brokerage account.

There are no account minimums, no transfer fees, no foreign transaction fees, and your cash in the program banks is eligible for up to $1.25 million of FDIC insurance, or up to $250K per bank, subject to FDIC rules. 

Robinhood Trading Platform - Robinhood Cash Management
Robinhood Cash Management

Crypto

Robinhood Trading Platform -  Robinhood Crypto Trading
Robinhood Crypto Trading

This feature allows you to trade cryptocurrencies in your Robinhood account. Cryptocurrency trading is offered through an account with Robinhood Crypto.

Remember that Robinhood Crypto is not a member of SIPC or FINRA and cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC.

Robinhood Trading Platform -  Robinhood Crypto Trading
Robinhood Crypto Trading

Watchlist

This feature helps you to keep track of stocks you are interested in and looking to buy which could be handy if you want to take advantage of share price changes.

Analyst Rating

This feature will help you in your buying/selling or holding decisions by reading through what the analyst recommends.

A helping hand from an expert would not be too bad, especially if you are contemplating to buy a stock or not and to creating your own watch list.

Robinhood Trading Platform - Robinhood Analyst Ratings
Robinhood Analyst Ratings
Robinhood Trading Platform -  Robinhood Analyst Recommendations
Robinhood Analyst Recommendations

Fractional Share Trading

This feature helps you to invest in a share that has a high share price with as little as a dollar. For example Tesla, Inc.

You can buy a little piece of Tesla, which at the time of publishing is at $308, choose how much to invest in thousands of stocks available on the platform.

Robinhood rounds all holdings of fractional shares to the sixth decimal place, the value of fractional shares to the nearest cent, and any dividends paid on fractional shares to the nearest cent.

They will not accept dollar-based purchases or sales of less than $1.00. And you will receive proceeds from the sale of any whole or fractional shares rounded to the nearest $0.01.

Note that, Fractional shares are illiquid outside of Robinhood and not transferable and may only be liquidated and the proceeds are withdrawn or transferred out

Robinhood Trading Platform - Robinhood Fractional Shares
Robinhood Fractional Shares

Robinhood Gold

This is a paid version of Robinhood that starts at $5. With this feature, you can get instant margin access to $5k – $50k, depending on your account balance.

This means you have extra buying power, and less time waiting to access your deposited funds.

Understand that, with a margin account, you are using a borrowed money to leverage will magnify profits and losses for you.

Robinhood Trading Platform - Robinhood Gold
Robinhood Gold

Mobile and Web App

Robinhood really plays into their strength, which is simplicity. Both the mobile and web application are seamless and frictionless.

Although, it is really not robust like other online brokerage platforms and can be considered as bare bones.

Robinhood Trading Fees

Below is the Robinhood trading fees:

Robinhood Trading Platform - Robinhood Trading Fees
Robinhood Trading Fees

Robinhood Investigation and Controversies: The Bad

FINRA vs Robinhood

In December 2019, FINRA fined Robinhood $1.25M for not giving its users the optimal price for orders between October 2016 to November 2017.

With Bloomberg News reporting that Robinhood received nearly half of its revenue from payment for order flows to High-Frequency Traders or Money Makers in October 2018.

To which the company confirmed when prodded by CNBC and in an article by The Wall Street Journal, they reported that RH “appears to be taking more cash for orders than rivals”.

The difference between RH and its competitors are 60-to-1 ratio based on its SEC filings.

SEC vs Robinhood

SEC recently started investigating Robinhood for failing to fully disclose how RH sells its customers’ orders to High-Frequency Traders as reported in The Wall Street Journal.

This means RH is facing a potential fine of more than $10M for not being honest how they earn money by selling their customers order data.

Robinhood vs Wallstreetbets

Wallstreetbets is a subreddit where traders go all in or nothing on a single trade. They take the word “YOLO” by heart and with their cash.

They also call each other degenerates. What a joy.

By wading through the forum, you have to admit that they are either not right in the head or are risk takers who does not believe in risk management whatsoever.

One such user called ControlTheNarrative found a glitch in Robinhood Gold that allowed them to borrow unlimited funds which he exploited mindlessly.

This resulted in the original account balance of $2,000 to have leverage all the way up to roughly $50,000, resulting in a ratio of approximately 25:1 leverage.

To which they dubbed the “infinite money glitch”.

The glitch was swiftly patched up and the accounts who exploited it were suspended but not before some accounts raking six-figure losses.

Another user, 1R0NYMAN sold a box spread creating a $300,000 credit that should have netted $40,000-$50,000 over the course of 2 years.

He described the trade as a way to make “risk free money”, but he was unaware of the assignment risk.

A few days later some options were exercised against him, causing a loss of over $60,000; calculating from the original amount in the user account, $5,000, the negative return of the trade was -1832.99%.

Because of this, Robinhood decided soon after that it would no longer allow the trading of box spreads.

The user somehow withdrew $10,000 from the account before the positions were closed and are believed that the brokerage itself took the brunt of the loss.

Hacking Incidences

In July 2019, 2000 RH customers suffered a hacking spree, looting their accounts dry as RH previously stored customers passwords in a cleartext.

RH, at first, did not confirm how many of its customers were affected but later on acknowledged the wide spread hacking problem in 2020.

Outages During The Highest Stock Rally In March

On March 2. 20202, RH suffered a systemwide failure during the largest daily point gain in the Dow Jones’ history.

This prevented users from performing most actions on the platform, including opening and closing positions on a trading day that the S&P 500 climbed over 4.6%.

On March 9, RH experienced another major systemwide and are currently facing three lawsuits because of the outages.

Alexander E. Kearns Suicide

This is by far the most shocking and chilling of the controversies surrounding Robinhood.

Kearns, a 20-year-old student from the University of Nebraska, committed suicide after believing that he had raked a negative balance of $730,0000 in his RH Gold account.

It was only a temporary negative balance due to unsettled trading activity, and in his suicide note; he accused of RH of allowing him to take on too much risk.

This is shocking in the sense that how can a 20-year-old have the access to a margin account that let him take on options trading, which are riskier.

RH recently revamped their options authorization with added additional criteria and educational verification.

Robinhood Trading Reviews: What People Say

Better Business Bureau

Mary 07/13/2020

While trying to transfer my available funds from Robinhood LLC, they have restricted my funds’ siting security concerns even after I have proven my identity. Easy to take your money, not so easy to get it back. I would never do business with this company again.

Christopher P 07/10/2020

This app is a scam on some fraud sh*t. I transferred money over to my Robinhood account to have buying power. Tell me why these crooks took my money, and now my buying power is in the negative. Customer service is not responsive. The dumb automated developer response here is also not responsive. They tell you to send an email to reviews@robinhood – but no one responds. They basically stole my money. These transactions show as completed transactions from my bank. I’m taking legal action.

Kevin Q. 07/09/2020

This company has to have the worst customer service in the world. There’s no way to talk to a person directly, they’re solely keyboard warriors with pre-written responses and do not offer any commitment at all. I am trying to withdraw money from my account and I kept getting an error message stating that I had to withdraw it to the same account I opened it with. No matter how many times I told them that it WAS the same account they never acknowledged me and made me resubmit bank statements, IDs, bank account numbers, and an explanation as to why I’m requesting to withdraw it to a different account. It’s not a different account!!! After days of arguing with what seemed to be a robot I resubmitted all my paperwork, got a confirmation that the withdraw is underway only to wake up today and still see my account just as it was yesterday. Did I expect to see the money in my account today? Of course not. Did I expect to see a pending transaction that withdrew my funds? Absolutely. I still have no resolve to this case and it is still pending but anyone reading this needs to never sign up for an account with Robinhood, save the trouble, and go over to TD Ameritrade where they actually have real-life people to talk to on THE PHONE instead of these cowards. GOOD RIDDANCE. Shout out to Nick and Edith at Robinhood for being the absolute worst people to ever work in Customer Service.

Patricia B 07/04/2020

PB My account was hacked on June 27, 2020 I have been sending numerous emails to Robinhood trying to access my account which had approximately $12,000 in shares and funds. I have emailed them several times each day for the last seven days and no response from Robinhood support or security to change my password user ID and email associated with my account I am distraught and beside myself I do not recommend RobinHood and I hope to God that I can Receive a response from RobinHood soon and get my money I live in New York if I lived in California I would go directly to their offices And find out exactly what’s going on with my account this has been an absolute nightmare

Chase M 07/03/2020

Horrific customer service. No phone or live chat support. Keep your money and run. If you’re reading this – KNOW that their customer service is borderline NON EXISTENT.

You have to do some serious homework and ninja skills to figure out if they have a phone number etc. Educate yourself because you can’t count on them for any sort of real-time help.

Mario B 07/01/2020

Costumer service s****, they rely on automated emails with generic messages. No phone number to contact. I’ve emailed multiple bots with my issue and still no cares that o can’t get into the app where I have money invested. Can’t be trusted.

Sherell 06/29/2020

I have had the worse experience with their customer service. They’ve restricted my account with almost $2000 in it and won’t respond as to why or what I may do to resolve their request. It’s a robbery! I’ve emailed them everyday for over two weeks with no response. I’m a single mother placed on sudden disability in need of my funds. This is ridiculous!! They don’t have a number for human contact. I don’t see how they’re still in business. I’m currently seeking legal representation.

Lloyd V 06/25/2020

Robinhood lets me trade but will not take off a withdrawal restriction for the last 4 weeks. The trouble started when I did not recognize the location of my logon device. Since then I followed the direction to secure the acct logon & off and send pic id. That’s been 4 weeks ago. Every day I send an email to customer service & or picture of my ID. Never get a solution to the freezing of my acct. I get only from emails. I finally today found a customer complaint # that only directs you to send more emails. I can trade but can not withdraw any of my money not even $5 to send to my bank or withdrawal from an ATM. I have already reported this to the SEC. I am still waiting. I had fun for awhile trading but now?

Brian W 06/24/2020

Absolutely horrible customer service. Please do not ever use this institution if you need any sort of liquidity. I’ve recently gone into escrow on a home purchase and am completely unable to withdraw my funds. No phone lines provided by Robinhood actually work and redirect you to send more emails that never actually get responded to. If I still receive no response I will end up taking legal action against them to get my funds out. tl;dr Stick with established brokerages for your investments, otherwise it will bite you later when you’re money is locked away.

Angry Customer 06/23/2020

Good luck getting a response from customer service. I’ve had 4,700 stolen from my account by scammers. Robinhood does not and will not get back to you. I’ve filed a police report and contacted my attorney general. They are aiding and abetting the criminals. The scammers who called, already had most of my Robinhood and personal information which leads me to believe they’ve been breached.

Stephen W. 06/19/2020

I decided to transfer my stockpile to Robinhood just to try it out. Since I started with my first week they tried to take a deposit twice from my bank account, put me in the hole. Then the first deposit was reversed now they put me restricted from buying stock. I’ve tried contacting them. They don’t get back to people. So I sold my stock. I am waiting for my stuff to clear so I can transfer my funds back to my bank and in my stockpile account again. It is not my loss. It’s theirs. Customers are always right. Lousy customer service.

Nik 06/16/2020

Terrible customer service with no responsibility for their actions. Besides constant lag spikes on heavy green days and blackouts, they blocked my ability to sell an option. Just completely removed it and claimed they are not responsible. REJECTED the order to sell during market hours. The price of stock tanked while I was restricted from selling (SELLING, not BUYING) and they re-enabled it after it lost 90% of value a day later.

Gloria W 06/09/2020

I don’t recommend Robinhood to anyone because of their terrible customer service. I encountered problems shortly after opening the Robinhood account on 5/16/20. On 5/19/20, I was unable to login into the account using the username and password. Customer service was emailed several times requesting a password reset link it took a week and a half to get a reply. On 5/28/20, customer Service finally sent a password reset link. I changed the password and log in successfully then I log off. I returned 1 day later and the password didn’t work. I have been requesting a password reset link since May 29, all way up till now 6/9/20. The Password Request issue still unresolved. Whenever I can get access to the account. I will CLOSE the account ASAP.

A 06/06/2020

Robinhood app had problems for a long time (eg app shutting down in March 2020). Recently I lost several thousand when their app did not display the day trading number correctly; and they tried to block my trade erroneously stating I exceed 3-day trade per week limit when I did not. The first customer serviceperson blames me and tells me to deposit over $25000 to continue. The second serviceperson acknowledges the error and reversed the block, but the damage to my money and account had already been done. Justice needs to be served to these people one day, but for now, I am withdrawing all money and leaving this app.

Tom N 06/05/2020

I can’t for the love of God get a hold off of their customer service team. They are making it an extremely painful experience to work with them. I reached out to their support more than a week ago to downgrade my account to a Cash account but no response. Today, I wanted to transfer everything from Robinhood to my bank but it won’t let me. I can’t get in touch with their support and neither they are responding on Twitter. Stay away from this BS company.

Brandon C 06/03/2020

I’ve invested with Robinhood for over 4 years now. My account got disabled randomly a few months ago and I got locked out of it. After emailing for a couple of months which getting ahold of ANYONE there is like trying to jump up to the moon. It doesn’t happen. After a couple of months of resending credentials, my account got unlocked but then relocked AGAIN. It got disabled for literally no reason both times as I’ve never made a trade on it in awhile. Just holding stocks. I am still waiting for an email that supposedly a higher up will contact me. Nope, nothing. That was said on 4-7-20. Getting ahold of someone. I am pissed off about this sketchy business. Do not invest with Robinhood!!! They don’t care about you or your money!!!

Quora

Ben Lunsford April 5, 2017

My experience has been extremely positive. But Robinhood is set up to be optimal for people who invest like me, and less so for the day traders or high rollers who choose other types of brokerages. Their focus on doing “free” so well has allowed them to rapidly gain market share among “people like me.”

So who am I? I currently work a normal 9–5 job and save in the neighborhood of $750 to $1,000 per paycheck (every two weeks). I’m not saving the money for retirement, but more for the down payment on a co-op, condo, or brownstone (townhome) at some point in the next half-decade.

I like, and am knowledgeable enough, to pick my own stocks without losing out to index funds in the long run. I’m also aware of all the ETF choices, should I choose to index, and I pick several stocks to invest in per paycheck. It’s almost never just one that gets the entire $875 or whatever, as though I like to pick stocks myself I also like to diversify my choices! I also almost always enter limit orders and wait patiently for my trades to execute at the price I want, and always have.

Given these investing habits, the friction costs of paying commissions (even at the $5 that Schwab, Fidelity, and E*Trade have recently lowered themselves to in response to the Robinhood threat) would absolutely kill my returns over the long run if I was paying $5 to buy my measly 5 shares of X at $50 each (or whatever… plus $250 into Y, $250 into XY, and $250 into Z) each paycheck. Friction costs are usually what kills even good investors when competing with index funds.

With Robinhood, my $0 commissions equal a 0.0% expense ratio for my personal “fund,” which unlike an actively managed mutual fund charging 1.3% on average, is actually less than the best index funds which charge just 0.2%. What’s more is that I can tax-manage my own account to never take a short-term capital gain, something that actively managed funds greatly struggle with (because they almost assume, in many cases, that they are working with IRA, 401k, or other tax-shielded capital). So while there are two strikes against an active manager beating the indexes, the wind is ever-so-slightly at my back at Robinhood rather than in my face.

That “0% expense ratio” comes with Robinhood, and only with Robinhood. With any other broker, the commissions making up my “expense ratio” would add up to much more than the index funds charge. So this makes Robinhood an invaluable tool in the long run as I try to stay ahead of the indexes.

Of course, there are some downsides to using Robinhood. Luckily, none of them are downsides to me and my way of investing.

(1) They transfer $1000 of your deposit immediately, but anything over that amount may take 4–6 business days. Since I’m transferring $750 to $1000 each paycheck anyway, that’s fine with me. Robinhood Gold allows more to be immediately available.

(2) Their market order fills aren’t the best. Since I’m placing limit orders, as I believe most people should do, most of the time, that’s fine with me.

(3) They don’t have a desktop or browser-based version of the app. I am one with my iPhone, and probably wouldn’t use these other options even if available.

(4) They don’t have an IRA account option. If this money were my retirement money, it would not be at Robinhood.

(5) They aren’t available in Canada yet. I live in the United States, but c’mon people… who expands to Australia before even going to Canada?

Needless to say, I don’t day-trade. Heck, I don’t week-trade or even month-trade. I’m after outsized long-term capital gains and getting there by investing small amounts, frequently, over months and years. Yet for day traders (who like market orders) and people who invest large sums of money in single trades (unaffected by $5 commissions on $5,000 trades), there may be better options.

But if you are someone like me, who invests not-a-lot (by brokerage standards) at one time, but invests frequently and yet doesn’t much care about the quickest possible market order fills, you’ll absolutely love Robinhood and make out like a true bandit.

Vaishali Sharma November 19, 2019

In my opinion, the Robinhood app is the best bet for a beginner in the investment and trading field. With a user-friendly and compelling interface, the company continues to give its users the opportunity to stock trades at no price.

Recently Robinhood app redesign was in the news. The company has added a newsfeed feature into its app where financial reports from trusted sources like Wall Street Journal, Reuters, Barrons, etc will be made available to its users at no additional charge.

Also, all such news content including videos is available to Robinhood app subscribers totally ad-free.

Vic Jackson March 6

Robinhood has a clean and easy interface. Functions like ‘100 Most Popular’ is helpful as it allows you to see what other people are purchasing. It offers a cash management account which means you get paid for interests, but the interest rate they offer is not extremely competitive compared to some of the big banks. It’s good if you are just starting out in stocks but there are many comments about RH’s lackluster customer service which makes me nervous about the overall quality of their customer support. Another thing that people tend to complain about is the lack of research and advanced charting on RH. You can still conduct your research and analysis using other websites/apps but for a mobile app, it would be much helpful to have built-in educational resources/materials to support trading on the go. In terms of execution, it may lag for a long time, which influenced my purchase price of the stock. RH just had another outage as its infrastructure failed to cope with “unprecedented load” and it took them two days to restore services. Customers, as the result, missed out on the biggest one-day point gain in the Dow Jones Industrial Average in history. This again shows how little they are investing in their technology. There are other things like you have to upgrade to Gold to access Level II market data, limited alerts, limited order types (for example no trailing stop), delayed quotes, etc.—things that essentially make it not the best trading platform for more experienced investors.

Webull is great, more tools, and much more professional than RH, but because the app is packed with so many features, it may seem chunky to some. I think TradeUP is a great app as well. Both first-time and experienced investors are able to use it, the app also is commission-free. It’s Fintech-based and invests vastly in its infrastructure and technology to ensure a satisfying user experience. it has a streamlined in-app account opening, complete with a few clicks. The interface is well-designed and intuitive. You are able to place orders when the market is closed which is handy for those who do not operate under Eastern Time. The platform supports real-time quotes, tick-by-tick transaction details, economic calendar, stock screeners, a wide range of technical tools, timely notifications, advanced charting, paper trading, and more. Also, the customer service is pretty responsive. There are also sign up and referral bonuses. Most of all, the app updates itself once every two weeks maybe even faster, the system is reliable and it won’t have an outage problem like RH which took two whole days to restore services.

Kayee Tong April 9, 2019

I like that the name says it all. They take from the rich and give to the needy.

It’s great for the needy — beginners or those trading small amounts of shares because the $0 commission savings is a better trade-off for a bare-bones broker so you end up making more profits at a much lower cost. You also can get roughly 4.2% in the margin for $30k if you are looking for a cheap margin to execute. At current rates, that is one of the most competitive options out there. I also like that they have a simple, easy-to-use interface. So I do use Robinhood if I’m looking for a small-time trade for options or shares and I’m too cheap to pay $5 in commission.

It’s great for testing the waters with small-time moderate frequency options trading without commission, which is what I usually use Robinhood for since I don’t usually have huge amounts of options trading going on. The crypto chat is also highly entertaining.

Once you actually start getting rich, Robinhood takes from you. Around starting trading 500+ shares per trade, you should absolutely get a different broker instead of giving away $10 per trade to Citadel and Robinhood. IB or Schwab is a good option that I like for a better price improvement at those levels. At starting with 100–300 shares TD Ameritrade is also a better option than Robinhood as the price improvement gains can more than makeup for the commission. If you’re just doing index funds though, you might as well go to Vanguard.

Gaurav Chakravorty September 2, 2017

Being in finance, I just can’t get past the sheer audacity of firm marketing itself as “trade-for-free” and selling-order-flow for an average of $3 a trade.

Hey, Robinhood-management please focus on building a great app, why the need for false advertisement?

No seriously, they were something else earlier. They are just another broker now, trying to find every possible reason for you to sell your winners and covering 40% of the real estate in the app is giving you “news” for you to react and buy or sell. The best advice for you most of the time would probably be to not do anything at all! Did they ever bother to tell you “Dude, you are selling a bunch of short-term capital gains? Don’t”? Or perhaps “Hey I saw that you are selling and buying way more than you should give the amount of money you are making from investing. You might want to trade less”?

The fact is that DIY investing is hard and I have lost a lot of money in my earlier years doing it.

Will Caruthers August 25, 2017

Robinhood has no commissions, and you get what you pay for. If all you want to do is casual stock or ETF purchasing, then it’s fine.

It’s worth pointing out that E*TRADE is not necessarily the best option if you are wanting to do more than what Robinhood is capable of (which is not a whole lot, of course, but doesn’t need to be for the casual buy-and-holder).

If you are thinking of getting into a more involved type of trading then you first need to begin your education in books and websites (careful with both, hucksters abound). This process will serve to answer your broker/platform questions as well as give you some good ideas to start with.

After that, move on to paper trading, or simulated trading. Most brokers are going to have paper trading (or a ‘demo’ account) built-in. If you want to hold off on the broker, go to TradingView.com for free stock charts and quotes online and you can paper trade for free. That is also a great resource to read and share trading ideas for really anything you’re looking to do.

AFTER that, when you’re confident in a simulator, you can try trading. Unless it’s day trading. If you want to do that, you really owe it to yourself to stretch out the education, do simulations on a higher-end platform (preferably the one you’ll trade with), and make sure you understand the Fair Trade and Pattern Day Trader laws (if you are in the US). There is a lot more that goes into it than in swing trading, and if you skip the prep you will very likely not succeed.

That’s it!

Reddit

MBA2016 2 years ago

The big catch is that Robinhood sells the data that you are trying to purchase stock to high-frequency traders so that the HFT can buy it before you and sell it to you at a higher price. This Robinhood is stealing from the middle class to give to the ultra-wealthy.

IGoAllTheWayUp 1 year ago

Robinhood touts “free” crypto, however, they are far from free. Robinhood has done a fantastic job of hiding all of the complexity and making things simple. At the same time, they are taking advantage of this by hiding the true cost of the trade you are doing.

Let’s look at a few examples:

Example #1 – Buying $100 of Bitcoin

I buy $100 of Bitcoin on Robinhood.

I actually get $99 worth of Bitcoin in my wallet.

I just paid a $1 fee for that trade.

This indicates that you just paid a 1% fee to Robinhood

Example #2 – Buying 1 bitcoin valued at $6500

I buy $6500 (which should be 1 Bitcoin)

I actually get $6435 worth of bitcoin

I just paid a $65 fee for that trade.

Same 1% Fee but this time it cost me $65 for one bitcoin.

How are they doing this?

It’s really simple, they are manipulating the quotes to create wider spreads for the trade. They source their quotes & liquidity from other exchanges and market makers which they mark up and pass on to the customer. Since their tools are so “simple”, you the customer are not able to tell what is actually going on.

When you pay a 1% fee on Robinhood, here’s what your effective spread (or Bid / Ask Difference) is going to be:

If Bitcoin is $6,500 Robinhood’s 1% Fee = $65 each time you buy or sell 1 bitcoin. Your effective spread is going to be BID $6,435 X $6,565 Robinhood spread on bitcoin = $130 for one bitcoin

This means that if you buy and immediately sell 1 bitcoin on Robinhood, you will pay a $135 fee.

To be fair, they are not keeping 100% of that fee since they have to pay Coinbase Pro a fee of .30% for that trade. So after paying $19.50 to Coinbase pro, Robinhood gets to keep a cool $45 fee for your trade.

uvw9977 1 year ago

One of the BIGGEST DRAWBACKS, which is also a catch, with Robinhood is that they do NOT allow you to sell with Specific-ID. Specific-ID selling is wherein you choose to sell which tranche (set) of a stock you’ve bought long multiple times. They ONLY have support for FIFO (first-in-first-out) selling and that ensures that you almost always end up getting caught against the wash-sale-rule. The whole strategy behind going long on a stock gets defeated outright and you always end up getting shafted with a loss as you’re never allowed to choose to sell the latest (/later) tranche of a stock you bought. So, your approach of making just a few long trades a year will take a major hit (loss) with an RHF account.

Also, the info about the stocks they present, viz., dividends, yields, etc., are notoriously untrustworthy (as some have already pointed out), even downright wrong, and so are the Options info. So you have to have an account with a reliable broker like Etrade/Fidelity (or use marketwatch/cnbc if data is shown), look up info there to make decisions and then try to execute Options on your RHF account. Using RHF account for long trading is just being a sucker.

Also, their website support for trading is rudimentary at best. So you can forget having the luxury of using a large, full-service screenful of data at your disposal. You have to make do with a small-screen “App” and I personally HATE “App”s.

meepstone 2 years ago

Robinhood is like any broker you would use to buy/sell stocks. You could use charles schwab or tdameritrade and all three will do the same thing.

There is nothing to be skeptical about except the other’s websites give information like the companies financials, profit/loss, income statement, cash flows, debts, etc.

Robinhood at this time does not supply this information. Although, that information is easy to find by googling it for any company.

The benefit of Robinhood is you do not pay the fee to buy and sell stocks. I think Td Ameritrade is like $8 to buy and another $8 to sell. So starting off with a small amount of money the $8 per trade adds up to a decent percentage of your account.

What you need is a strategy of what you plan on trading and how. How are you choosing stocks? Are they successful companies? Do you want growth or dividends? Do you know when you should enter into a stock or have patience and wait for better entry?

SirGlass 2 years ago

I have used it and like it. It works great.

My only concern is I see people investing in Robinhood that does not support IRA or retirement accounts.

Before you start “Trading for fun” I always advise people to make sure they are investing in their tax-advantaged retirement accounts.

bms0430 2 years ago

It is a good app, I use it and never had any problems. My concern is that because there are no trading fees, some people are using it to gamble on extremely risky investments without doing much research. I think beginners should be starting with companies that earn a profit and have a market cap of over $1 billion, not the leveraged ETFs and random biotechs that proliferate on r/robinhood.

Stevegasbro 2 years ago

They sell your trade activity to third party high frequency trading firms. Robinhood ain’t bad though. Good for the average investor.

What We Like And Don’t Like About Robinhood

The one thing that we liked about Robinhood is its simplicity. There is no way to deny it. But then again, as we stated above, simplicity does not mean you understand what you see.

There is little to no educational value in Robinhood, and their information is notoriously inconsistent.

If you really want to get a clear picture of a stock or the market, we suggest looking into other financial websites that offer free stock and market news.

There is also a

How To Make Money With Robinhood

You can take advantage of Robinhoods low barriers to trading and investing by setting up your own account.

One excellent example is our Gang$ta trader, jackchng who have a first hand experience with trading in Robinhood.

Robinhood Trading Platform -  jackchng Winning With Gang$ta Strategy
jackchng Winning With Gang$ta Strategy

As you can see in the photo above, they sold two NFLX shares and winning a fat total return of +$1,008, a 59.36% gain by using Gang$ta Strategy!

*We are currently conducting an interview with jackchng, so look forward to it!*

Set you FREE 30-Minute Consultation today!

How To Contact Robinhood

Robinhood does not have a phone number and can only be contacted through email:  support@robinhood.com.

Or you can message them directly inside the application by tapping on the Contact Us button.

Pros And Cons

Pros

  • Simple and user-friendly interface
  • Started the trend for zero commission amongst brokerages

Cons

  • Not really zero commission as you have to pay for a higher-order flow
  • Not forthcoming with company details
  • Horrible customer support which is a nightmare
  • Limited application features

Final Thoughts: Is Robinhood Really Zero Commission?

Robinhood is a business, and no there is no business that does not intend to make money and Robinhood is among them.

We learned in this Robinhood Trading Platform Review that it is really not a zero commission when you have to pay a higher-order flow compared to its competitors.

The way they hide that fact in plain sight is so clever you, would not see it the first time which we find deceptive.

If you really are serious in learning how to trade and want to have a reliable brokerage, then Robinhood might not be suited for you.

But if you are a beginner who wants to explore investing and or trading, then you can give Robinhood a try, provided that you do not put actual money in it yet.

Study first, do your due diligence and practice first in a paper trading account. When you are more confident, then you can do so as you please.

Thoughts? Comment them down below!

Robinhood Trading

7.1

Data Accuracy

8.2/10

Ease of Use

9.4/10

Collaboration

2.1/10

Features

8.6/10

Pros

  • Simple and user-friendly interface
  • Started the trend for zero commission amongst brokerages

Cons

  • Not really zero commission as you have to pay for a higher order flow
  • Not forthcoming with company details
  • Horrible customer support which is a nightmare
  • Limited application features

Leave a Comment