Estimated valuation: Unknown

Product: Mobile stock/ETF trading platform

IPO Timeline: TBD

Date Founded: 2013

Robinhood wants to level the financial markets playing field with its free stock and ETF trading platform. It was founded by Stanford roommates Vladimir Tenev and Baiju Bhatt who initially built trading platforms for major international financial institutions. Their experience illuminated that it’s essentially free for an institution to place an electronic trade—and that the customer is charged up to $10 for that transaction. This is what motivated the duo to create Robinhood.

Robinhood's Secret Free Sauce

Robinhood is a mobile investment trading platform that doesn't charge fees or commissions. Robinhood, which has received $66 million in funding in three rounds from 25 investors, supports investing and securities trading that is suitable for most investors. It supports most U.S equities and exchange traded funds (ETFs) listed on major U.S. exchanges. There are certain types of securities you can’t trade on Robinhood: most foreign domiciled securities (except some Canadian and Israeli stocks trading at $5 or more), OTC equities, options, preferred stocks, tracking stocks, warrants, mutual funds, bonds, and currencies. Robinhood also doesn’t provide access to IPOs.

Investors seeking pre- and after-market trading should look elsewhere, unless you're interested in Robinhood Gold, a premium service. The free Robinhood app supports trading between normal market hours, 9:30 a.m. Eastern Standard Time (EST) to 4:00 p.m.

Robinhood supports typical order types including market, limit, stop limit and stop orders. Certain orders may also be created as good for the day or good till canceled (GTC). At present, the firm doesn't offer short selling but hopes to add it in the future.

Using the app is pretty intuitive. Tap on the buy button on your watch list or the stock’s profile page. Next, tap on “order types” to choose your order type. Confirm the order and, finally, swipe up to submit. To sell, swipe left on the stock or tap to sell from the stock’s profile page.

Robinhood's Premium Service

Robinhood recently rolled out additional investing opportunities with its Robinhood Gold platform. Continuing its mission to democratize trading, its new add-on strives to create a simple and cost-effective tool for advanced stock market investors. Robinhood Gold costs $10 a month for the initial tier, with higher price points for greater buying power. Users have access to additional features including extended-hours trading and various types of trades. Robinhood Gold also offers instant settlement instead of waiting several days to reinvest funds after selling shares or transferring from a client's bank.

Robinhood Gold Buying Power is a margin account included with the monthly fee and is available to users who have substantial experience, which is determined from a questionnaire—and a minimum of $2,000. Unlike a typical margin account, Robinhood Gold Buying Power charges no fees or interest charges on top of the fixed monthly charge of the tier you select. The flat monthly fee makes using leverage more transparent. You can invest using Gold Buying Power up to twice the value of your account. There are additional caveats of this feature listed on the Robinhood website.

Investors should be aware that investing on margin is a risky practice and only the most sophisticated traders should do it.

Robinhood China

Without external regulatory approval, Robinhood is bringing zero commissions to Chinese stock traders. The company is integrating with Chinese search giant Baidu’s Stockmaster finance app. This partnership will allow Chinese citizens to buy and sell U.S. stocks with no fees, account minimums or commissions from their phones. This is a huge opportunity for Chinese investors who lack affordable mobile stock trading options. (For related reading, see: How Robinhood Makes Money.)

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