Robinhood App 2024 Review – Is “Free” Worth it for Fewer Features?

Robinhood was founded in 2013 and was one of the first online brokers to offer commission-free trading. While it is commission-free, it is by no means no-cost. There are still fees involved in trading with Robinhood.

It only offers its services to US citizens, and you can trade either through the investment app or by logging into the website. Robinhood is regulated and investors are protected in the event the company fails in most cases, but not all.

Robinhood has had some issues in the past with restricting client trades, and the lack of advanced features may not be ideal for advanced or professional traders. For casual investors or beginner traders, however, it is a solid choice.

Keep reading to learn how Robinhood excels, and where it falters.

Is Robinhood Regulated and Safe to Trade With

Robinhood is regulated in the United States under the Financial Industry Regulatory Authority (FINRA), and this is confirmed on the FINRA BrokerCheck site.

Users are also covered under the Securities Investor Protection Corporation (SIPC) up to $500,000 in the event Robinhood fails and you can’t access your cash or securities. Cash in the account can earn interest with partner banks and is insured by the Federal Deposit Insurance Corporation up to $2 million.

Robinhood Crypto, LLC, which provides services for crypto trading, is not regulated and is not covered by SIPC.

In 2020, when the pandemic hit, the Robinhood app faced several outages. In 2021, when internet users famously rallied around GameStop stock, Robinhood restricted trading activity by freezing trades on GameStop and other adjacent stocks, citing their reasoning as issues with stock volatility and regulatory requirements.

This move upset many users and attracted negative media attention.

Due to these events, FINRA, which regulates Robinhood, issued a $57 million fine to the brokerage platform for supervisory failures and lack of transparent pricing. Additionally, Robinhood was ordered to pay $12.6 million in restitution to customers affected.

Starting in 2021, Robinhood is under investigation by the SEC for restricting stock buying activity and failure to disclose its practices.

Understandably, this may give users pause when they are considering signing up with Robinhood in 2023. However, the Robinhood app is still generally considered safe to use and has nearly 23 million users according to Statista as of mid-2022.

It is a publicly-traded company (NASDAQ: HOOD) which means it is subject to additional oversight by the exchanges.

Robinhood Trading Fees and Other Fees

Robinhood is commission-free, but not free of fees.

Robinhood does not charge commissions on trades, but regulatory fees, which are mandatory (and out of the broker’s hands) are still charged on transactions. Users can choose to pay a monthly subscription fee for a Gold membership. If you trade on margin, there is also a fee for interest on the amount borrowed.

Here is a breakdown of the fees:

• Regulatory fee: $8 per $1 million in trade value on sell transactions. Prorated based on the amount traded.
  
• Trading Activity fee: $0.000145 per share on equities (when you sell) and $0.00244 per option when you sell.

• American Depositary Receipt fee: $0.01 to $0.03 per share, only if trading ADRs (foreign stocks listed on US exchanges).
  
• 7.75% yearly interest on margin/borrowed funds, prorated based on the time the position is held. It is an 11.75% margin rate without a Gold membership. Interest rates are subject to change.
  
• $5 per month for Gold membership (see the difference between Gold and basic accounts in the Account Types section below). The first 30 days of Gold are free subject to change.

Robinhood Trading Product Offerings

Robinhood offers trading in stocks, ETFs, cryptocurrencies, and options. This is great for those who want to trade these assets, but if you want to trade futures or forex, or invest in mutual funds, Robinhood can’t help you.

Stocks and ETFs include all the most commonly traded US securities, including Apple (AAPL), Tesla (TSLA), and the SPDR S&P 500 Trust (SPY). Robinhood does not allow short selling, but you can benefit from falling prices by buying inverse ETFs.

With Robinhood, you’re able to trade Bitcoin, Ethereum, and other popular cryptocurrencies from the same account (non-IRA). If you are interested in cryptocurrency trading, Trading.biz offers daily-updated forecasts on Bitcoin and Ethereum.

For options contracts, you can buy and sell calls and puts on US options. This is another way to possibly take advantage of falling asset prices (use a put option) since you can’t short a stock directly through Robinhood.

The Cash Card is not a trading product. Rather, it is a debit card you can use to earn rewards like free stocks or crypto in your Robinhood account.

Robinhood Deposit and Withdrawal Methods

Withdrawal and deposit options are limited to bank transfers and debit cards with Robinhood. There is no minimum deposit amount.

You can initiate deposits and withdrawals from within your account by selecting Account, then Transfer Money. Simply choose the desired From and To accounts, and click Transfer.

There are no fees for deposits and withdrawals, but if you choose an Instant Transfer, there is a 1.5% fee of the amount incurred.

Withdrawals are limited to $5,000 per day on debit cards and $50,000 when transferring to a bank directly. You can make up to five withdrawals and deposits per day.

Instant transfers typically go through within 10 minutes, while regular transfers take 4-5 business days to complete.

Robinhood Account Types

Robinhood offers two trading account types: basic and Gold.

Gold offers additional features for a $5 per month fee.

These features include:

• Level II market data from Nasdaq (see all the bids and offers are different prices)
  
• Research from Morningstar
  
• Bigger instant deposits (if your account is in good standing your Instant Deposit status if good)
  
• Access margin trading (if approved) with an interest rate of 7.75% (11.75% for a basic account).
  
• Earn interest at 4.65% on uninvested cash in your account (1.5% without Gold)

Note that all interest rates are subject to frequent change.

With a basic account, you can access stocks, ETFs, crypto, and options. With Gold, you can trade with these, plus you can also trade on margin, meaning you can buy positions that are worth more than the capital you have in the account. This allows for bigger profits (and losses).

Robinhood also offers Retirement accounts. For example, you can set up an IRA with Robinhood. As an added bonus, they will top up your deposits by 1% if you keep your contributions in the account for at least 5 years. A traditional IRA and Roth IRA are both offered. Only stocks, ETFs, and some options trades are allowed in IRA accounts.

Robinhood Trading App

The Robinhood app works great for regular investments, such as buying stocks, ETFs, crypto, or options.

Within the Robinhood investment platform, you have access to advanced trading and a wide range of technical indicators, as well as Morningstar research if you are a Gold member. Within the app, you see your current position, portfolio composition, and returns on your investments.

You’ll also have access to a number of order types:

• Market orders (stocks, crypto)
• Limit orders (stocks, options)
• Stop orders (stocks, crypto)
• Stop limit orders (stocks, options, crypto)
• Trailing stop orders (stocks)

Notice that there is a lack of bracket orders or one-cancels-other orders. These order types are used by advanced users to place an entry, stop loss, and profit-taking orders all at the same time.

The inability to short stocks is also a major deterrent for advanced or active traders.

There are also no “on close” or “on open” orders which some traders use to get the opening or closing price of an asset.

Overall, Robinhood is easy to use and place trades with, especially for the long-term investor. The low fees are great and the charting tools are easy to navigate. However, for day traders or sophisticated investors, the app doesn’t stack up against more robust trading platforms like thinkorswim, NinjaTrader, MetaTrader 4 or 5, or Sterling Trader Pro.

One additional benefit of the Robinhood app is that you can trade in fractional shares. If you can’t afford a whole share of stock, you can put as little as $1 into a trade by buying a fractional share.

Robinhood Support and Trading Education

Live support is available for registered users 24 hours a day, 7 days a week.

On the app or website, select Account, and then Menu or Settings (Help on the website). Select Robinhood Support and “Contact Us.” Choose a topic you are having trouble with, then choose between chat or phone support. Enter your question and then click Continue.

You don’t need to sit on the line for a phone call, as they will notify you when you are next in the queue, and that they are calling (and the number they will call from).

In terms of trading education, Robinhood offers a wide range of “investing basics” tutorials on its website under the Learn section.

How Does Robinhood Make Money?

Robinhood doesn’t charge commissions, but rather utilizes its user base and its transactions to make money behind the scenes in three ways.

Robinhood Payment for Order Flow

Robinhood generates revenue from payment for order flow (PFOF), where market makers pay Robinhood to execute client trades.

For Robinhood, the procedure would be as follows:

• First, an investor uses the Robinhood app to place an order to buy or sell shares.
• The order is passed on to a market maker, who will complete the transaction. The market maker compensates Robinhood in fractions of a penny for those orders.
• The market maker then conducts the trade and gains from the transaction by potentially getting a better price for themselves than the price the client agreed to.

Robinhood Interest Revenue

Robinhood’s second-largest source of income is interest revenue. This includes the money made through securities lending and margin loans.

Margin lending enables Robinhood clients to purchase stocks using cash borrowed from the company. This allows traders to capture opportunities and invest in instruments without having cash on hand. Margin loans provide traders more freedom to make timely investments. 

Margin calls happen when investors’ investments in their margin account fall below the required level. The account holder must deposit extra cash or sell assets in this situation. 

Robinhood Subscription Services

Robinhood also generates subscription money via its premium membership service. Robinhood Gold is currently $5 per month, which millions of users pay.

Robinhood FAQs

How to buy stock on the Robinhood app?

To buy, you need to first select the asset. Afterward, you need to go to the bottom of the app and hit BUY. After that, you need to enter the amount you want to invest and confirm your order. 

How to sell a stock on the Robinhood app?

Go to your open trading positions to sell the asset. Then go to the bottom of the app and select SELL. After confirmation, you can exit your positions. Remember that Robinhood doesn’t allow short-selling. 

How to buy Bitcoin on the Robinhood app?

First, you need to select the BTC from the crypto asset list to buy. Then, go to the bottom of the app and hit BUY. After that, enter the amount you want to invest and confirm your order. 

How to buy DogeCoin on the Robinhood app?

First, select DOGE from the crypto asset list to buy. Then, go to the bottom of the screen and hit BUY. Then enter the amount you want to invest and confirm your order. 

How to see RSI on the Robinhood app?

To use the RSI indicator, you first need to select an asset. After selecting a particular stock or cryptocurrency, click on the expand button. This opens up more advanced charting features and allows you to select from many indicators including the RSI. 

How to see how much money you made on the Robinhood app?

Go to the app’s homepage and the “ALL” option to see how much you made. Here you need to click on the Portfolio Total. It will bring your total profits and losses. 

How do I log out of the Robinhood app?

To log out, go to the Settings menu. Here you can find all the log-in and out details. Click on the logout option. It will log you out of your account. You’ll need to log back in to trade or contact support.

What app is better than Robinhood?

There are a lot of apps out there that offer feasible trading solutions. These apps include TD Ameritrade, Webull, Binance, and eTrade. Active traders generally want to trade off a desktop so they can do a more thorough and detailed analysis. Interactive Brokers, TD, NinjaTrader, and other companies offer more robust trading platforms for active traders.

Final Thoughts on Robinhood App

Robinhood is a solid app for low-cost trading and investing, especially for beginner traders and investors. Low fees provide a higher chance of being profitable since profits aren’t reduced and losses aren’t increased by large commission costs.

For active trading, Robinhood isn’t a viable option as it doesn’t allow bracket orders or short selling. It also doesn’t offer forex or futures trading, but it does provide stock, ETF, crypto, and options trading.

If you’re looking for a forex broker, see our Forex Broker Reviews section for the top choices.

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