Robinhood Review 2018

Free trading
· 4.1 · 15 June, 2018
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Robinhood logo

Robinhood is a US-based zero-fee broker, a fintech startup. The company was founded in 2014, it is the member of FINRA, the US regulator and provides a maximum of $500,000 investor protection which includes a $250,000 limit for cash. Robinhood is not listed on any stock exchanges and doesn't have a banking background.

As a plus

Robinhood provides US stock trading is free, and there is no withdrawal or inactivity fee. Furthermore, it provides user-friendly mobile and web trading platforms. Finally, the account opening process is seamless, fully digital, and really fast.

On the flip side

At the time of the review, Robinhood's service was only available for US and Australian clients. The customer support is slow and you can only e-mail them. Furthermore, the product portfolio is mostly limited to the US market.

Recommended for beginners and buy and hold investors focusing on the US stock market.

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Robinhood review
Investor protection and regulation

There are two major entities within Robinhood: Robinhood Financial LLC and Robinhood Crypto LLC. The prior provides the stock and options trading, while the latter the cryptos trading.

Robinhood Financial LLC is the member of the Financial Industry Regulation Authority and falls under the US investor protection scheme, the SIPC. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.

On the flip side, Robinhood Crypto LLC is not the member of FINRA or SIPC. It means the trading with cryptocurrencies is not protected by any investor protection scheme. 

Robinhood doesn't have banking background, and it is not listed on any stock exchanges. A brokerage having a bank as a parent company is more stable. Furthermore, a broker listed on any stock exchange is more transparent as it is required to release its financial statements publicly. Also good to know that Robinhood doesn't provide negative balance protection.

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Robinhood review
Account opening

Account opening is seamless and fully digital. Your account will be opened within a day. On the flip side, the account opening is only available for US and Australian clients.

Who can open an account?

At the time of the review, account opening was only available in the US and Australia. However, Robinhood is planning to expand its services into Europe and other continents, but not yet confirmed when. 

Minimum funding requirements

There is no minimum account balance at the standard Robinhood account. You can upgrade your standard account to Robinhood Gold which requires a minimum account balance of $2,000.

Account types

At Robinhood there are three account types:

  Cash Account Robinhood Standard/Instant Account Robinhood Gold
Advantages

- Day trading is not limited

- Instant deposit up to $1,000 per week

- Instant deposit up to $50,000 per week

- Leverage up to 2:1

- Extended trading hours

Disadvantages

- Transferring money takes 4-5 days

- No available leverage

- Instant deposit is not available

- Day trading is limited

- No available leverage

- Day trading is limited

When you sign up, you will automatically open a Robinhood Standard/Instant account. After that, you can downgrade your account to Cash Account or upgrade to Robinhood Gold.

One main difference between accounts is the limitation of day trading. Day trading means that you buy and sell a stock the same day. At Robinhood Standard and Robinhood Gold accounts, only three day trades are possible per week. If you do more, your account will be blocked for 90 days except there is at least $25,000 on your account. The Cash account doesn't have such requirements, you can make as many day trades as you want without a minimum required account balance. 

Another important difference is the availability of leverage. The leverage means that you trade with money borrowed from the broker. At Robinhood, this leverage is called Buying Power. At Cash and Robinhood Standard accounts you can't trade with leverage, while at Robinhood gold a maximum of 2:1 leverage is available. Be aware of the higher risks associated with the higher leverage. You can gain more profit, but you can also lose more money. 

Thirdly, the accounts differ from each other in the availability and the amount of instant deposit. 

Also good to know that Robinhood does not provide demo account, but you can check the platform for free as there is no minimum deposit.

Account Base Currencies

Your account will be denominated in USD in the US, and  AUD in Australia.

Account Opening Process

The account opening process is user-friendly, fast and fully digital. Opening an account in the US requires the following criteria:

  • Be 18 years or older
  • Have a valid social security number
  • Have a legal U.S. residential address
  • Be a U.S. citizen, U.S. permanent resident, or have a valid U.S. visa

We opened our account via mobile, but the process via the web trading platform is the same. Opening an account is really fast, it took around 10 minutes to submit the application, and the verifying process was less than a day.

The first step of the account opening is to submit an application. You have to give your personal information, like your address, the birth of date, and your social security number. After giving your personal information, you need to answer short questions relating your experience in trading.

Robinhood_review_account_opening_investment_experience

At the end of the process, you have to verify your identity. Robinhood accepts the following three documents for verifying: driving license, identity card, and passport. You have to take a picture of the document, and you can do it via your phone's camera which is really comfortable.

Robinhood_review_account_opening_verification

Robinhood review
Funding and withdrawal

Funding and withdrawal process is really easy and user-friendly. On the flip side, you can only transfer money via a bank transfer.

Funding options

The funding is free, however, you can use only bank transfer to deposit money. There is an instant deposit at the standard Robinhood and the Robinhood Gold account, but it is not available at the Cash account. Instant deposit means that your money will be immediately on your account. However, the instant deposit at the standard Robinhood account has a $1,000 per week limitation.

All transfer above the $1,000 amount per a week will be deposited after 4 to 5 business days. If you transfer $1,500 to your account, $1,000 will be credited immediately and the remaining will arrive after 4 to 5 business days. This 4-5 business days period is quite long compared to competitor brokers. If you upgrade your account to the Robinhood Gold, you can deposit instantly up to $50,000 on a week.

You can transfer to your Robinhood account regularly using the automatic deposits function. You can set it for weekly, twice a month, monthly or quarterly periods.

Furthermore, you can also link your bank account to your Robinhood account, and so make the deposit process faster. If you click on linking your account tab you will see the logos of the bigger banks, it helps you to find more easily your bank.

Robinhood_review_funding_and_withdrawal_linking_banking_account

Withdrawal options

Just like the deposit, the withdrawal is free and you can withdraw your money only via bank transfer. Furthermore, you have to keep in mind the following restrictions:

  • There is a withdrawal limit of $50,000 per day.  
  • When you deposit money, but you do nothing with that, the withdrawal takes 5 business days.
  • After you sell your stocks, the withdrawal takes three business days. 

Stock transfer

It is possible to transfer your stocks from your prior broker to Robinhood. Keep in mind that you can transfer only the stocks which are also available at Robinhood. Also good to know that transferring stocks out of Robinhood has a price of $75 per transaction.

More funding and withdrawal info

Robinhood review
Product portfolio

Robinhood’s product portfolio is limited to the US market.

Asset classes available for trading:

  • Equities
  • ETFs
  • Options
  • Cryptos

Stocks and ETFs

Robinhood will give you access to around 5,000 stocks and ETFs. The most of the available stock and ETFs are listed on the major US stock exchanges, but you will find some European and Canadian stocks as well.

Furthermore, you can trade with some low-priced stocks or “penny stocks”. The low-priced stocks have a price of less than $5 and they are usually issued by small companies. Keep in mind that the penny stocks are more volatile, and so more risky.

Options

At Robinhood, you can trade with stock options and stock index options, but only for bigger companies. 

Cryptocurrencies

You can trade with Bitcoin and Ethereum. It is important that you can't withdraw your coins from your Robinhood account. However, you will find real-time news and market data related to other cryptos, like Litecoin or Ripple.

At the time of the review, cryptos are available only in the following 16 states: Arizona, California, Colorado, Florida, Indiana, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Mexico, Pennsylvania, Texas, Utah, Virginia, Wisconsin. Robinhood is planning to expand cryptocurrency trading in more states.

Robinhood review
Fee structure

US stock trading is free at Robinhood. There are no inactivity fee and withdrawal fee either. On the flip side, Robinhood applies a really high commission for non-US stocks and the financing cost is not competitive either.

Robinhood is usually called a commission-free discount broker. If you don't know what discount broker means, read our blog post about the best discount brokers in 2018

Trading Fees

Yes, it is true. Robinhood charges zero commission for US stock trading. Zero is less than something, but to to give you a feeling how much less, we show you the costs of typical $2,000 trades at Interactive BrokersDEGIRO, Saxo Bank.

  Robinhood IB DEGIRO SAXO
Cost of $2,000 US stock trading $0 $1 $0.7 $15

Robinhood’s zero fees can save you a lot when trading US stocks. Furthermore, trading with options and cryptocurrencies are also commission-free.

On the flip side, Robinhood’s commission on all non-US stocks is high. To give you a perspective we summarized German and UK stock trading costs among Robinhood and IBDEGIRO, Saxo Bank

  Robinhood IB DEGIRO SAXO
Cost of $2,000 German stock trading $50.0 $4.6 $5.4 $13.7
Cost of $2,000 UK stock trading $50.0 $8.7 $5.4 $11.6

With $50, Robinhood charges the highest fee by far when trading European stocks.

Non-trading fees

Robinhood has really attractive non-trading fees. For example, there aren't a withdrawal or an inactivity fee. On the flip side, the financing rate is not the most competitive.

Non-trading fees
Account fee No
Inactivity fee No
Deposit fee No
Withdrawal fee No
Custody fee No

At Robinhood Gold, you can trade with leverage. The leverage is when you borrow money for trading from your broker company. Just like the loan, the leverage has a cost, this is the financing cost. 

At Robinhood, the financing cost differs based on the amount you borrow. Higher the amount you borrow, lower the financing cost you pay. If you borrow $1,000, you have to pay a fix monthly fee of $6 which means a 7.2% financing cost on a yearly base. However, if you borrow $50,000, a fix monthly fee of $200 is applied which means a 4,8% financing cost on a yearly base.

Just to give you a feeling of how much Robinhood's annual financing rate is costly, we compare it to other brokers' annual financing rate. 

Annual financing rate Robinhood IB DEGIRO Saxo Bank
USD 4.8% to 7.2%

2.6%

2.4% 9.5%

Robinhood's financing cost is at the mid-range, while DEGIRO has the most favorable financing cost.

For further comparison of Robinhood's and other broker's fees, visit our comparison table.

Robinhood review
Web trading platform

Robinhood provides a well-designed and user-friendly web trading platform.

First, Robinhood came out with a mobile platform. Three years later it launched the web trading platform which has some plus functions comparing to the mobile trading platform. 

Look and feel

Robinhood's web trading platform is easy to use, comfortable from the first use providing great user-experience and design.  

On the main page, you see your portfolio's performance, the recommended stocks, your watchlist and the actual news. When you click on a stock, you will see a basic chart of the stock price and some other research tool. If you want to read about Ronbinhood's research go to that section in the review. 

After you decided to buy a stock, you have to place an order inputting the number of shares and the order type. After this, you will see the stock's actual price and the estimated costs of your transaction. It is really easy to execute a transaction via the web trading platform and you can easily calculate the costs.

Robinhood-web-trading-platform

On the flip side, the customizability is totally missing which is important if you trade frequently and want to set up your own environment.

Robinhood-review-web-trading-platform-home-page

Login and security

You can log in with your e-mail and your password. Moreover, you can set a two-step authentication. There is a clear description of what steps you have to do to set up this feature.

Search functions and chart

You can search by typing the name of a given stock. When you click on a stock, you will see some tags including the company's sector and the products or services it makes. If you click on one of these tags, you will see all stocks having the same tag. It is really helpful to make a side-by-side comparison. For example, if you are interested only in the social media companies, you just click on that tag and you will get the full list. 

Robinhood_review_research_collection_list

In the selected list, you can filter along many criteria, like price change, market capitalization, popularity and or analyst ratings. The popularity means the number of people owning the share at Robinhood. The analyst ratings mean the percentage of the analysts that recommending the share.

The charts are really basic at Robinhood. You can see only the price change of the stock you want to trade with. If you prefer a detailed chart analysis, you have to use another application.

Placing orders

You can use the following order types:

  • Market
  • Limit
  • Stop Loss
  • Stop Limit

If you don't know, what these orders mean, find these order types explained in our education section.

Furthermore, you can set the time-in-force of your order. You can choose between the good-for-day (GFD) and the good-'till-canceled (GTC). The good-for-day means that if your order is not executed, it will automatically be canceled at the end of the trading day. In contrast, the good-'till-canceled will last until your manual cancellation.

Alerts and notifications

You can set up alerts and push notifications. The available alert types:

  • Dividends payments
  • Price movements
  • Money transfers
  • Earnings announcements
  • Corporate actions
  • Orders

Probably it is not clear what the corporate actions mean. Corporate actions include the events, like a stock split or a merger, having a big impact on the price of the company's stocks.

Portfolio and fee reports

You will find a really easy-to-understand portfolio and fee report function. You can see the average cost and the return of your stock. You will also see a pie chart which shows how much your portfolio is diversified. 

Robinhood-review-web-trading-platform-report

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Robinhood review
Mobile trading platform

Robinhood provides a well-designed and user-friendly mobile platform.

Robinhood is mobile, first. It launched its mobile service in 2014 for IOS. Later, Robinhood introduced Android, and the web platform was set up later on. In this review, we tested mobile platform for Android.

Look and feel

Just like the web trading platform, Robinhood's mobile trading platform is well-designed and really easy-to-use.

 Robinhood_review_mobile_platform_home_page

Login and security

The login is really simple, you have to add the PIN code which you set at the registration.

Moreover, you can set a two-step authentication. You can easily select if you want to get the verification code via SMS, the Google Authenticator or another authentication app.

Robinhood_review_mobile_two_steps_authentication

Search function

The search function is the same as in the web platform You can only search by typing manually the name of the stock. In contrast to the web trading platform, here you won't find tags.

The charts are really basics at Robinhood, you can see only the movement of the selected stock. If you prefer a detailed chart analysis, you have to use another application.

Placing orders

It is the same as at the web trading platform.

Alerts and notifications

It is the same as at the web trading platform.

Robinhood_review_mobile_notifications

Portfolio and Fee reports

On the main page, a chart shows your portfolio performance. Furthermore, you can easily check how your positions perform. You will see the given position's return and costs. 

Robinhood_review_mobile_report

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Robinhood review
Desktop trading platform

Desktop trading platform is not provided.

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Robinhood review
Research

Robinhood provides basic fundamental data. However, it is not suitable for more thorough research.

Both on mobile and on web trading platform, you can see some basic fundamental data, like P/E, the number of employees, and the market capitalization.

Robinhood_review_research_fundamental_data

Furthermore, you can read the news related to the given product. The news is provided by top-tier third-parties, like Seeking Alpha or Yahoo! Finance. 

There are some functions only available on the web trading platform: the collections, the price paid, and the analyst ratings.

The collection means each stock has own tags like social media or internet.

Robinhood_review_research_collections

This helps you to find the similar companies and make a side-by-side comparison. 

Robinhood_review_research_collection_list
In the paid price section, you can check the one-year average price paid for a stock by other investors. You will see analyst ratings from experts which also helps you to make a better investment. The ratings show what percentage of the analysts suggest the stock to buy, to hold and to sell.

Robinhood_review_research_analyst_rating

Compare research pros and cons

Robinhood review
Education

Education is not provided.

Robinhood review
Customer service

Robinhood support team provides relevant information about your inquiry. On the flip side, there is no phone or chat support, it is rather slow taking several days until you get an answer.

Customer support is Robinhood's weak point,  you can only e-mail Robinhood support team, and there is no phone or live chat. When you submit a request, you can select among topics, like account opening or funding.

Robinhood_review_customer_service

After you choose the topic, you have to write a short description of your problem.

Robinhood_review_customer_service_submit

The support team will get back to you via e-mail. The response we got was really helpful and contained all information we asked for. However, it took more days until we got a response. 

Contact customer service

Robinhood review
Bottom line

Robinhood fees are very favorable. US stocks trading is commission-free, and there is no withdrawal or inactivity fee. Robinhood has awesome, user-friendly mobile and web trading platforms. Finally, the account opening process is easy, fully digital, and fast.

Robinhood has some drawbacks though. Firstly, its service is available only for US and Australian clients. The customer support is below expectations, you can only reach e-mail them and it takes time to get an answer. The product portfolio is mostly limited to the US market. 

If you want to trade with US stocks for free and prefer an easy-to-use platform, Robinhood is the best choice. 

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Robinhood logo

Robinhood is a US-based zero-fee broker, a fintech startup. The company was founded in 2014, it is the member of FINRA, the US regulator and provides a maximum of $500,000 investor protection which includes a $250,000 limit for cash. Robinhood is not listed on any stock exchanges and doesn't have a banking background.

Recommended for beginners and buy and hold investors focusing on the US stock market.

Compare to other brokers

Overall

Pros
  • Commission-free US stock trading
  • Great and well-designed mobile and web trading platforms
  • Fast and fully digital account opening process
Cons
  • Available only for US and Australian clients
  • Weak customer support
  • Limited product portfolio

Investor protection and regulation

Pros
  • Regulated by top tier financial authority
  • High amount of account protection
Cons
  • Does not hold a banking license
  • Negative balance protection not available

Account opening

Pros
  • Fast account opening
  • Account opening fully digital
  • No minimum account balance
  • User-friendly
Cons
  • It is only availalbe for the US and the Australian clients

Funding and withdrawal

Pros
  • User-friendly
  • Instant deposit up to $1,000 per week
Cons
  • Credit/Debit card deposit and withdrawal not available
  • Lengthy funding process if you don't use the instant deposit

Product portfolio

The available asset classes to trade:

  • Stock
  • ETF
  • Options
  • Crypto

Fee structure

Pros
  • No inactivity fee
  • Competitive trading fees of US stock
Cons
  • High financing rate
  • High trading fees of non-US stocks

Web trading platform

Pros
  • Clear fee report
  • Looks nice
Cons
  • Customizability is missing

Mobile trading platform

Pros
  • Looks nice
  • Many alerts and notifications are available
Cons
None

Research

Pros
  • User-friendly
  • Fundamental data available
Cons
  • Limited interactive charting
  • No/limited set of analytic tools

Customer service

Pros
  • Relevant answers
  • Professional tone
Cons
  • No phone support
  • No live chat
  • Slow support

AUTHOR OF THIS REVIEW

Gergely Korpos
Gergely Korpos
Co-founder, CPO
Gergely's aim is to bring more clarity into personal investing. He has 10 years of experience in financial markets with GE Money, KPMG and MOL. He concluded thousands of trades as a commodity trader and financial portfolio manager
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