Robinhood Review 2018

By Claire Boyte-White  | January 2, 2018

A lean, mean app-based brokerage touting commission-free stock and ETF trading and an intuitive, though basic, trading interface.

You should always independently verify and/or seek information from your legal, finance, or tax advisor as to whether a specific broker is right for you. Please note that not all brokers reviewed by Investopedia offer services in your geographic region. Additionally, Investopedia may receive compensation from certain broker-dealers referral programs when you click on links to their services, and/or submit an application or get approved for a brokerage account.

Overall Rating

Robinhood Fast Facts

Each year, Investopedia goes through a process to complete a detailed review of all of the major brokers in the industry. As a breakout player in the space, Robinhood is a brokerage that was founded specifically to bring the market to the masses. Developed in 2013 by Stanford University students Vlad Tenev and Baiju Bhatt, Robinhood's streamlined structure is meant to make trading stocks and ETFs quick, simple, and, most important, free. This new take on investing has garnered plenty of attention and earned the startup a whopping $3 million in investments even before it had a product to launch. Due to the success of the apps, Robinhood has launched a web-based platform. The company also has commission free cryptocurrency trading in 19 U.S. States. Our comprehensive Robinhood review will cover all of its important aspects so you can decide if it's a service that would work for you.

pros

  • Streamlined Interface
    No frills platform is simple and intuitive to use
  • Commission Free
    Robinhood never charges any fees for buying or selling stocks and ETFs
  • No Account Minimum for Basic Accounts
    Opening an account is free and cash accounts have no account minimums
  • Easy to Understand Margin Fees
    Instead of using APRs, margin loans incur a simple monthly fee based on the amount borrowed
  • Free Bank Transfers
    ACH transfers to or from your account are always free

cons

  • Bare Bones Charts
    Charts show only tick information and historical price data and cannot be customized
  • Negligible Research and Education
    Neither the website nor the app provides educational resources, in-depth analysis, or research tools
  • Real Time Data Not Guaranteed
    Though actual app use shows quote data is real-time and streaming, terms and conditions specify that data may be delayed by up to 20 minutes
  • Payment for Order Flow
    Robinhood routs customers' orders to market makers for execution in exchange for a rebate of $0.00025 per dollar traded. That doesn't affect small traders, but if you're trading more than a few hundred shares at a time, it will eat into the savings on commissions
2013
Founded
Available Margin Trading
On Robinhood Gold
3 Million+
Number of Users

Products & Fees

Our Robinhood review covers the fees that their customers will face on the platform. While they are commission-free, their method to be profitable, payment or order flow, can be especially costly for customers who dabble in larger trading volumes. While the platform doesn't offer a wide range of securities, focusing instead on stocks and ETFs, there's never a commission on in-application trades. What's more, Robinhood has reinvented the traditional margin account framework. Instead of charging an annual interest rate, which can be confusing to inexperienced traders, this brokerage has attempted to make margin trading more accessible by breaking its margin rates into flat monthly fees based on total account equity and amount borrowed. Robinhood Gold makes it easy for clients to borrow as much or as little as they need, with a tiered loan structure that focuses on smaller margin loans. Just like its trading commissions, Robinhood's focus on keeping costs low translates to some of the most competitive margin rates in the industry. While Robinhood can be quite inexpensive, it's important to understand that the more you trade, the more costs can build up due to their order routing methods.

  • Stock/ETF
    FREE
  • *US Listed Foreign Securities
    $50
  • Euroclear Stocks
    $35
  • Canadian Stocks
    $35
  • Options
    FREE
  • **Cryptocurrencies
    FREE
  • Futures
    Not Available
  • OTC/Pink Sheet
    Not Available
  • Preferred Shares
    Not Available
  • IPOs
    Not Available
  • Mutual Funds
    Not Available
  • Annuities
    Not Available
  • Bonds/Fixed Income
    Not Available
  • Forex
    Not Available

Trust

With the intent on making a comprehensive Robinhood review, It's important for us to look at just how trustworthy their service is and how transparent they are. After all, you need to be confident when putting your own money on the line. Like any good brokerage, Robinhood is a member of both FINRA and the SIPC. It has insurance under the SIPC that provides a per-client limit of $500,000, with a $250,000 sublimit for cash claims. Robinhood has also secured additional insurance through Lloyd's of London and other London Underwriters to provide excess coverage for clients should the standard SIPC limits not suffice. Robinhood will insure you in any event, but their transparency in regard to what users will be charged for order routing and payment for order flow is questionable.

$37.5 M
Total Aggregate Insurance
$900,000
Total Aggregate Cash Insurance

What you need to know

Besides providing insurance, Robinhood takes your online security very seriously. In addition to using TPS encryption and cookies on its website, Robinhood's apps offer multiple layers of security. Standard username and password login credentials can be paired with two-factor authentication using SMS security codes for each login attempt to ensure no one but you can access your account. If you already have fingerprint ID set up on your iPhone, the Robinhood app will automatically enable touch ID login, making jumping in and out of the app a breeze.

Special Features

Special Features

The Robinhood platform is built to be as lean as possible so it's not particularly heavy on special features. This is not a platform for data junkies or day traders, though you can day trade as long as you have $25,000 or more in equity in your account. While Robinhood's fees are quite possibly the lowest in the industry, you'll have to look elsewhere for your research, backtesting tools, or screeners. The platform is built for new investors, who may be overwhelmed by all those bells and whistles, as well as those who know what they want to do and just need a quick, cheap brokerage through which to execute pre-researched trades.

Free Stock
For Referring Friends
As a new user, you can earn one free share of stock by signing up a friend.
Robinhood Instant
Deposits up to $1,000 instantly accessible
Funds from sales instantly available as well
Day Trade Tracking
Limited to 3 trades per rolling five days
For the same security

What you need to know

This platform is not built for traders who need all their tools and resources in one place. However, for active traders who DIY their research and data analysis anyway, Robinhood is a great tool for cutting down costs. If fees are a concern, you might consider using another free platform that has a more robust selection of features for research, and then placing trades on Robinhood. The app's built-in consumer protections provide training wheels for new investors and are designed to help prevent high-risk investing by inexperienced users. But for day traders who understand and are comfortable with the risks of trading high-volatility securities and who want to take advantage of margin trading leverage, those consumer protections may make this platform a bad fit.

Desktop Experience

Desktop Platform Experience

Robinhood launched a web-based platform in early 2018. As anticipated, the new platform is somewhat more robust than the original mobile app, but still doesn't include quite the suite of features other free platforms tout. That being said, there's been no hint that Robinhood's bargain-basement price structure will be changing, so the new web-based platform is still a good option for those who are fee-conscious and know how to do their research elsewhere. Again, it's important to keep in mind that Robinhood's fees will add up to a more significant amount when executing larger trades due to their order routing techniques.

Pros

-Collections - Analyst Ratings Check analysts' buy, hold, and sell ratings for any ticker, and read commentary from Morningstar.
- Price Paid Seeing aggregate data for the average price paid for a given security, as well as the current share price, can help investors effectively time position entry.
- People Also Bought Each ticker profile will provide a list of stocks and ETFs other investors frequently purchased to help users identify upstream suppliers, competitors, and more.
- New Features for the Apps All features of the web-based platform will be available in the iOS and Android apps later in 2018.

Cons

- No Advertised Advance Tools Though there may be surprise additions, no advanced charting, backtesting, or analysis tools are currently planned for the web-based platform.
- No New Securities Based on published information, the new platform won't offer options, futures, forex, or mutual fund trading.
-We Still Have to Wait The primary downside to the web-based platform is that it won't be out until 2018.

Mobile Experience

Mobile Platform Experience

In our Robinhood review, we focused on the mobile app experience as it is the linchpin of its product. While the app (available on iOS and Android) doesn't have a lot of bells and whistles, it is extremely intuitive, aesthetically pleasing, and user-friendly. Most importantly, it is a very simple and easy to understand introduction into the world of trading. As noted already, you won't be able to do a lot of in-depth research using the app, but you can easily and quickly catch up on relevant news, check streaming stock prices, deposit or withdraw cash from your account, and place trades, all from your handheld device.

Pros

One of the primary advantages of the app is that it's simple to use even for beginning traders, and the app setup is highly intuitive. Every process is clearly labeled and step-by-step instructions are offered for more complex operations, like bank transfers.When you first open the app, or any time there is an update, cards will pop up to explain how to use the app or where to find new features, or to suggest handy shortcuts that make trading even simpler. Accessing help articles and customer support is also just one tap away, and the app has all the same support resources as the website.

There's also no need to head to the website for any account maintenance, as you can transfer money to or from your bank, update your account settings and investment profile, and change security requirements, all right from the app. You can even transfer stocks from another brokerage to your Robinhood account or set up automated recurring bank transfers to ensure your account is always funded..

If you have touch ID set up on your iPhone, the iOS app automatically allows you to log in with your fingerprint once you've registered your account - a relatively minor feature that makes hopping in and out of the app quick and easy.

Executing trades is incredibly simple. You can either access the trade screen from a ticker profile, or simply swipe left on a ticker in a watchlist to reveal a "Buy" button. Swiping on a ticker will also reveal a "Delete" button, and you can remove a ticker from your watchlist by continuing to swipe left off-screen.

Cons

The Robinhood app's simplicity - which may be a big benefit for casual traders or new investors - could be a hindrance to more advanced investors and day traders. It lacks almost all research and analysis tools, meaning users need to have a pretty good idea of what they want to do before they open the app. In addition, Robinhood doesn't provide any conditional ordering capabilities or advanced routing options, so traders who utilize more advanced strategies or need to have a lot of in-depth data available at a glance may need to weigh the relative benefits of Robinhood's rock-bottom prices against the convenience of trading on the same platform they use for research.

Customer Support

Robinhood offers multiple ways for users to get in touch, as well as broker-assisted trading for an additional fee. However, none of these resources are available 24/7, so if you need support outside of market hours, you'll be out of luck until the next business day.

What you need to know

Robinhood does provide some social media support, with a dedicated Twitter handle for user questions. There is also a Facebook page, though it is not as regularly updated, as well as links to its Google+ and LinkedIn profiles. Robinhood's support page also specifies that brokerage assistance may only be available for urgent requests, so its one-on-one services are limited.

Research & Insights

The Robinhood website has no research resources or tools. Again, it is built for those who already know what they're doing or are only executing basic trade strategies. Since the platform only offers stock and ETF trading, there is no information about other securities, like options or futures, though the site does specify that the company hopes to add those trading capabilities in the future.
The mobile app, however, does offer some minimal research tools, including a basic tick chart, some at-a-glance fundamentals, valuation statistics, and a news feed.

News
Curated stream of company, economic, and market news relevant to your portfolio and watchlist.
Historical Data
Tap and hold on the tick chart to see the closing price and % change
Statistics
Each ticker profile displays the stock's key figures
Earnings
Ticker profiles display earnings expectations and results for the past four quarters
Volatility
Easy-to-interpret volatility indicator that reads high, medium, or low.

Pros

Once again, the app's simplicity is its primary selling point. All the data listed above is available on the ticker profile, with no tabs or additional pages to click through. Just type in a ticker symbol or company name in the search bar and click the relevant result. All data is displayed clearly in a scroll-through format, making a cursory analysis of any available security quick and easy.

Cons

If you want to dive deeper into the numbers, plot studies or indicators alongside tick data, or use advanced tools like screeners, this isn't the platform for you - unless you want to do your research elsewhere and then use Robinhood solely for placing trades. If you're looking for conditional orders, in-depth fundamentals, or searchable news and market updates, Robinhood will likely disappoint.

Education

The Robinhood website also doesn't really provide anything in the way of educational resources, except those that help the user experience. The blog has additional information, but only about Robinhood features, new developments, and industry awards. In terms of articles, videos, or other media that could help investors learn about stocks and other securities, trading strategies, or how to invest for specific goals (like retirement), the site comes up short.

FAQs
Support Articles
Learn more about the Robinhood app
Submit Request
Contact the Support Team
Lacking Education
No Analyst Musings
No advanced trading strategies to learn

What you need to know

The app offers the exact same collection of explanatory support articles as the site, so those looking to read up on analyst musings or learn about advanced trading strategies won't find anything helpful. The support section provides thorough and helpful articles on how to navigate the platform, set up an account, and use margin trading or other features, but that's where the resource library's offerings end.

Bottom Line

Robinhood's founders took a look at the investment industry and found that the barrier for entry was simply too high for the average person. By trimming the fat and ditching the brick-and-mortar storefronts and investment managers, they've created a platform that's within everyone's budget - fulfilling their goal of democratizing the investment industry. The tradeoff, of course, is that lowering overheads meant cutting the high-tech features, personal assistance, and maintenance-heavy educational resources and research tools that many investors have come to expect.

For investors who are happy to do their research and analysis elsewhere but are tired of trading commissions eating into their returns, the free Robinhood app is the cheapest, most user-friendly option around. For investors just starting out, the simple interface and intuitive design can make trading seem easy, maybe even fun. Built-in consumer protections also help inexperienced users avoid unnecessary risk and the danger of crashing and burning.

While the current apps are likely not a good fit for day traders or those who need a lot of data all in one place, Robinhood is still in its infancy. With a web-based platform finally released this everyman brokerage for the modern age may just be getting started.

Frequently Asked Questions about Robinhood

Why don't all stocks have options?

Robinhood only offers options on certain stocks due to regulatory standards. Some of these include stocks with low prices, stocks low trading volumes, or stocks with low market caps.

What happens if I own a stock that's delisted?

When a stock you own is delisted on Robinhood you will no longer be able to purchase additional shares. You will be able to sell it in the market by finding the stock quote elsewhere to get an idea of what price your sell order will execute at should you choose to sell your position.

Why can't I place a buy order on cryptocurrency?

There are a number of reasons that could prevent you from placing a buy order on cryptocurrency. You may not have enough buying power to place a trade, you could not have enough equity to reach our margin minimum, you could be flagged for pattern day trading, or your account could have been placed on a buying restriction for stock purchases, which will also restrict you from purchasing cryptocurrencies. You can learn more about what each of these problems mean for you and how to fix them on Robinhoods website with the link below.

How old do I need to be to trade with Robinhood?

The age requirement to trade with Robinhood is a minimum of 18 years old. You will also need to have your social security number, have a legal U.S. residential address, and be a U.S. citizen, permanent resident, or at least have a valid U.S. visa.

Can you day trade using Robinhood?

The quantity of trades you can make is determined by equity in an account. Robinhood users are limited to three-day trades in a five day trading period unless you have a minimum of $25,000 of equity on your instant or Gold account at the end of the previous day. In other words, if you would like today trade today, you had to have an account value of more than $25,000 at the end of yesterday.

Claire Boyte-White
Reviewed by Claire Boyte-White

  • • Investopedia Contributor since 2014
  • • Lead Writer for NapkinFinance.com
  • • Co-Author of I Am Net Worthy, a Millennial-focused book on financial independence

Experience

Claire has been writing about personal and corporate finance, retirement planning, investing, and tax policy since 2013.

Claire believes that financial literacy resources and investing education should be readily available to everyone, so she enjoys making complex topics accessible and engaging. Her keen attention to detail and head for numbers have made her a perfect fit for Investopedia.

Education

Claire received her Bachelors from Willamette University with a degree in Psychology.

Quote from Claire

"I know many people find investing and financial topics overwhelming. As our cultural and economic landscape continues to change rapidly, it's more important than ever for everyone - from new college grads to retirees - to feel comfortable and competent when it comes to financial planning. I consider my role in the industry to be that of a facilitator: breaking down intimidating concepts and making financial literacy accessible to all."

Follow Claire

LinkedIn

Investopedia and Dotdash

Investopedia helps you understand complex financial concepts, learn and improve your investing skills, and learn how to manage your money. Whether you’re in a classroom, a boardroom or your living room, our editors and network of financial advisors and experts have answered your questions and proudly earned your trust since 1999. Investopedia is part of Dotdash, a collection of some of the web’s largest and most trusted digital media brands.

About Our Broker Review Methodology
Investopedia's mission is to provide online investors with the most unbiased, comprehensive reviews and ratings of self-directed brokers. Vetted by multiple industry experts - including a financial research firm with more than 20 years of experience in broker ratings - Investopedia's Broker Ratings and Reviews embody industry best practices for research design.

Investopedia consulted independent researchers, and financial institutions, and conducted multiple tests, to design a system that rates brokers based on 10 categories and 149 carefully selected variables. Selection of ratings elements was a culmination of 5,498 survey responses, 100+ hours of industry research, and 100 hours of user feedback. Each category encapsulates the key elements needed for thorough evaluation. All have been tested for replicable results with a battery of evaluators. Every review goes through a rigorous verification process to maintain editorial separation and ensure an unbiased ratings result.

Robinhood News