Robinhood® Review 2019

James Royal is a reporter covering investing and wealth management. Before joining Bankrate, he worked as a writer for NerdWallet and a stock analyst for The Motley Fool. He holds a doctorate in literature from the University of Florida.

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Robinhood Logo

Best For

  • Free trading
  • Trading cryptocurrency
  • Customers who prefer trading from a mobile device

Robinhood is one of the newest brokers in the industry, but that hasn’t stopped it from amassing millions of customers since its debut in 2013. The big draw for customers is the free trading of stocks, options and exchange-traded funds (ETFs). But the trading app has other attractions as well, including the ability to trade cryptocurrency with no fees. Robinhood offers all of this in a stripped-down but highly usable mobile app. While it’s far from the feature-rich experience of a full-service broker, Robinhood can serve as a solid trading platform for those who need to get a trade done at the lowest possible cost.

Robinhood at a glance

Star Rating

3.5
  • Affordability: 5 of 5
  • Usability: 4 of 5
  • Tools & Research: 2 of 5
  • Mobile: 5 of 5
  • Scalability: 2 of 5
  • Minimum Balance:
    $0
  • Cost per stock trade:
    $0
  • Cost per options trade:
    $0
  • Promotion:
    Free share of stock
  • Commission-free mutual funds or ETFs:
    2,000+
  • No-transaction-fee mutual funds:
    None
  • Securities tradable:
    Stocks, ETFs, options, cryptocurrency
  • Customer service:
    Limited email and chatbot
  • Account fees:
    $75 transfer out fee
  • Mobile app:
    Robinhood offers the “Robinhood” app on the Apple App Store and Google Play Store

Features you’ll love

Intuitive mobile app: While investors can also use the web-based interface to trade, Robinhood just feels like a mobile-first company, and so its most recognizable trading platform is their mobile app. The app is stripped-down, making it simple to navigate, especially once you understand how the app’s icons function. You can quickly move from screen-to-screen, investigating stocks and placing orders.

From a convenient search bar at the top of the screen you can pull up a stock and see the stock’s chart over any time frame. It functions smoothly and without delay, so you’re not hanging around waiting for it to load. You’ll get the stock’s vital statistics – its highs and lows, market cap and dividend yield. It also provides a news feed, a composite of analysts’ rankings, and a brief profile. If you’re ready to buy or sell, a trade button scrolls with you down the page, allowing you to submit an order at any moment.

A simple order entry allows you to type in the number of shares or options contracts you want and shows how much buying power you have. From there, just swipe up to place the trade. You can place market orders, limit orders and stop orders.

Beyond placing trades, you can also quickly maneuver around the app to find your portfolio, account value and access a number of account management options.

Where Robinhood rocks

Free trading: Stocks, ETFs, options, cryptocurrency. Check, check, check, check! You can trade them all for free on Robinhood, and that’s a huge boon to investors, especially options investors. While go-getter investors can find free stock trades at Merrill Edge, as an example, and commission-free ETF trading at Fidelity and Schwab, the real differentiator for Robinhood is its free options trading.

As options traders know, it’s easy to rack up a huge bill if you’re trading in and out of the market. That’s because brokers usually charge a base fee and then an additional fee for each contract. That structure quickly piles on the costs. But at Robinhood? Zilch. It’s a great choice for options investors looking to get into the market.

And while other brokerages have a few hundred fee-free ETFs, Robinhood offers more than 2,000. Given the abundance of choice, Robinhood seems like a top contender.

Of course, beyond all these freebies, Robinhood allows you to trade some cryptocurrencies commission-free, too. The service is available in most states, and the company is adding more.

Account minimum and quick funding: With no account minimum, Robinhood is super-friendly to investors, but it’s funding process is even better. If you’ve ever tried to fund a brokerage account before, you know it can take a while to get the funds into the account, even if you move the cash right as you’re opening the account. That’s why Robinhood’s funding stands out.

Robinhood gets some money into your account immediately. By using instant verification with major banks, Robinhood allows you to avoid the hassle of traditional verification of reporting tiny deposits into your bank account. This means the app can move up to $1,000 of any deposit into the account immediately, with the rest following a few days later. It gets you in the game faster.

Robinhood Gold: Robinhood Gold is the company’s program to allow you to buy securities with borrowed money, or margin. It takes an unusual approach, though investors may like it once they understand how it works. Robinhood Gold can increase your account’s buying power by up to two times. However, instead of charging you on a daily rate as most brokers do, Robinhood charges you a flat monthly fee for the loan based on how much you borrow, with no extra fees.

If you don’t have cash in the account to pay the monthly fee, it’s rolled into your margin balance. The broker charges loan interest to your account every 30 days. The program also gives you immediate access to funds after you sell any stock. Potential borrowers should note that any margin account must have at least $2,000 in it, per industry rules.

 

Quick comparison of Brokerage options:
Brokerage Overall Rating Avg. Cost Per Trade Usability Rating
Robinhood logo
$0 4 of 5
Charles Schwab® Review 2019 logo Read Our Review
$4.95 5 of 5
Merrill Edge® Review 2019 logo Read Our Review
$6.95 3 of 5
TradeStation® Review 2019 logo Read Our Review
$5* 3 of 5

Where Robinhood could improve

Limited research and education: You can’t have it all when you’re not paying anything for trades, and it really shows in the limited research and educational components being offered at Robinhood. This is not a killer for the right kind of investor – savvy and experienced – but may be a turnoff to newer investors who often need more direction from their broker.

That’s not to say that Robinhood doesn’t offer any research. The broker provides ratings from Morningstar, while offering a feed of news and analysis from popular websites for each stock. And the app does offer some basic charting functionality too. But it’s just not nearly at the level of full-service brokers such as Charles Schwab or E-Trade. Both of these also offer solid education for investors who want to power up their skills and knowledge.

Extremely limited account types: Robinhood is not a full-service brokerage, so don’t expect the same level of account types that you’d find at rivals. In fact, expect just one account type, the individual taxable account. So no IRAs, no joint accounts, no education accounts.

Customer support: Robinhood’s customer support is fine if you have one of the many questions that’s easily answered by the pre-packaged set of responses on the broker’s help page or that is available by the chatbot. Move farther afield, however, and you may be  hard-pressed to find a solution without emailing customer service. Those needing an immediate response via phone may have to search a bit to find the number, however.

Selling your order flow: So here’s one of the secrets to how Robinhood can offer you free trades – the company is selling its order flow to high-frequency traders so that they can anticipate the market and get better prices on their trades from people like you. That is, Robinhood’s practice allows these traders to frontrun you (or other clients) to squeeze out pennies (or fractions of pennies) on each trade, buying from you at a lower price and selling to you at a higher price.

For long-term investors, this is not a substantial issue. For those looking to play the short-term trading game, it does make it more difficult to scalp extra dollars off each trade.

Bottom line

Robinhood isn’t perfect, but investors who know what they want will likely be able to overlook these faults in exchange for the overwhelming positive of making free trades.

  • Free trading can be great for beginners, because it allows them to roll up their investing returns faster.
  • However, newer investors may want more support, research and education.
  • Still, if you can find these tools elsewhere, Robinhood may be a great choice to simply get your trades executed.

Investors who need research and support at a fair price, however, should check out Charles Schwab and Fidelity Investments. Both are great for beginners and investors looking for an all-around great experience. Those on the hunt for extensive research and education should take a look at Merrill Edge, which gives you access to Merrill’s analyst reports — and with enough deposited at the broker (or parent company Bank of America), you can get free trades anyway.

 

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