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Robinhood was the first broker to market and promote commission-free trading. But before placing trades with Robinhood it is essential to know completely about Robinhood. tradingcritique.com provides you with a solution through this updated Robinhood Broker Review 2023. This review gives you a Detailed product guide of the Robinhood trading platform with its regulations, account types, fees, commission, products, bonus, etc.
Robinhood was founded in the year 2013. Vladimir Tenev and Baiju Bhatt were their founders. It’s headquartered in Menlo Park, California. Overall, about 1281 employees work at Robinhood. They offer commission-free trades of Stocks and Exchange-Traded Funds (ETF) via a mobile app introduced in March 2015. The subsidiaries of Robinhood are Robinhood Financial, Robinhood Crypto, Robinhood Securities.
Robinhood (https://robinhood.com/us/en/) is one of the US-based trading companies. They offer Commission-free trades on Stocks, ETFs, Options, and Cryptocurrencies.
Robinhood Financial currently supports the following instruments,
U.S. Exchange-Listed Stocks and ETFs,
Options Contracts for U.S. Exchange-Listed Stocks and ETFs, and
ADRs for over 650 Globally-Listed Companies.
They offer trading and other services through mobile apps and web platforms. The trading operation of the mobile app is similar to a website, so it is simple and very easy to use. Customer service is provided through Email.
Image 1: Home Page of Robinhood Site
Robinhood Financial is regulated under the Financial Industry Regulatory Authority (FINRA) and it is also a member of FINRA. A Keypoint to note here is that Robinhood Financial LLC is also a member of Securities Investor Production Corporation (SIPC). The important use of SPIC is that it protects the investments made by the traders in Robinhood. Protection of investments to about $500,000 along with the cash claims up to $250,000 is available under SIPC.
Robinhood Financial LLC (RHF) currently has legal authorization to do business in all the 50 states of the U.S.A. This also includes the Washington D.C., U.S. Virgin Islands, and the Commonwealth of Puerto Rico. RHF does not offer foreign investment accounts now.
The Robinhood Security Team uses several high-level measures. This protects and secures your trading account. Your account password in Robinhood is never stored in plaintext and it is hashed using the industry-standard BCrypt hashing algorithm. Sensitive details such as your social security number are encrypted before they are stored.
Robinhood uses the Transport Layer Protection (TLS) protocol. So, the mobile and web applications communicate securely with their servers. You can access your mobile application with biometric sensors such as the Touch ID, Face ID or through a customized PIN code. They offer two-factor authentication via external authentication application or SMS.
Robinhood provides a safe, secure, simple, and user-friendly web trading platform. They offer Android and iPhone applications for mobile trade.
Robinhood Web is supported well in Chrome, Safari, Firefox, and Edge. It works on both the Mac OS and Windows PCs. The web platform is very simple, and it helps with basic investor needs.
Robinhood mobile app is available for iPhone and Apple Watch on the App Store. It supports all iOS devices running iOS 11 and newer.
The mobile app is also available for Android on the Google Play Store. It supports all Android devices running Android version 7 (Nougat) and above.
Robinhood provides three different types of accounts. They are Robinhood Instant, Robinhood Gold, and Robinhood Cash. When you create a Robinhood account, the following conditions are mandatory,
You should be 18 years or older.
You can only open an account when you have a valid Social Security Number(not a Taxpayer Identification Number).
You should have a legal U.S. residential address within the 50 mentioned states of the U.S.A in Robinhood.
You should either be a or a U.S. permanent resident or have a valid U.S. visa.
Robinhood provides an Instant account. The deposit amount is up to $1,000 for this Instant Account. You can trade on unsettled funds, which means you won’t have to wait for your funds to process when you sell securities. If you are approved for options trading, you will be able to enter options trades that require a margin account.
Robinhood instant account does not have an option to purchase securities on credit.
All customers at Robinhood will start with their instant accounts and it is also a margin account. This helps the traders to access funds before they have settled and entered options trades if they are approved.
Even if you have never borrowed money in your account, this account type is still classified as a “margin” account from a regulatory standpoint. As a result, it will appear in your annual tax report and monthly accounts statements.
Robinhood Gold account has an Instant deposit amount of $50,000. It is the real margin account. These types of accounts will give you more purchasing power.
There is no interest on the first $1,000 of the margin loan. You get access to premium features with your first $1,000 margin for $5 a month. You will be charged $5 every 30 days at the start of your billing cycle upon completion of your free trial.
When you use more than $1,000 of margin, you’ll pay 2.5% yearly interest on the amount you use above $1,000. Your interest is calculated on daily basis, and it will be charged to your account at the end of each billing cycle.
If the gold fee or the margin interest rate changes, you will be notified 30 days before their alert. This helps you to continue or cancel your subscription. The Gold account provides additional research tools such as Morningstar Recommendations.
Robinhood Cash account has a feature where you can downgrade to Robinhood Cash from Robinhood Instant or Gold at any time.
Robinhood’s Customer service team provides trade-relevant information via Email and Robinhood Support page.
But unfortunately, there is no interaction between the customers and the company via phone call or chat support. tradingcritique.com thinks this to be the major drawback of their customer service.
The products and instruments that are available in Robinhood are Cash Management, Stocks & Funds, Options, Gold, and Cryptocurrency. The features provided by FXTM to trade with these instruments are given in below.
Cash Management is offered as a part of your brokerage account and lets you access your uninvested cash for everyday spending. Your uninvested cash is swept to program banks where it starts earning 0.30% Annual Percentage Yield (APY). With Cash Management, you are offered a customizable debit card that’s offered in partnership with Sutton Bank and can be used where Mastercard is accepted.
Robinhood can make your money work for you. You have a variety of financial assets, instruments and markets to invest in. You can do direct stock trading to derivative trading such as options. About 5,000 stocks mostly the U.S. equities and Exchange-Traded Funds (ETFs) are available to trade and invest in Robinhood Financial. They have access to over 650 global stocks through American Depositary Receipts (ADRs). You can also do options trading using these stocks.
Robinhood provides commission-free options trading. You can select the financial assets in which you like to do your options trading. Implementation of sophisticated techniques such as iron capacitors, strangulation, barriers, etc is easy with Robinhood Options trading. Advanced traders can do their options trading more comfortably with Robinhood.
Image 3: Options trading in Robinhood
Robinhood Gold investment gives access to research reports. You can also trade on margin at a 2.5% annual rate, and make big deposits with quick access to funds. The fee for using these features is only $5 per month.
You will have instant access to $5k – $50k when you deposit with Robinhood Gold. The accessibility depends on your account balance. They work with Morningstar to provide unlimited access to in-depth stock research reports on approximately 1700 stocks.
Image 4: An introduction to Robinhood Gold account
Robinhood Crypto provides Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies. You can trade in cryptocurrency 24/7. You can purchase cryptocurrency through Robinhood Crypto using any funds you have deposited into your brokerage account.
Robinhood Crypto is not a member of SIPC or FINRA. There are no regulations for cryptocurrency trading, so your crypto investments are not protected by either FDIC or SIPC.
Image 5: Cryptocurrency trading in Robinhood
Robinhood serves best with Education and Research. The Education and Research tools available in Robinhood are articles, posts, library, snacks, blogs, press, etc. The Educational related articles and posts are found in the Learn section of the website. All the doubts and clarification on trading is available in the library field.
Robinhood’s snacks section presents financial and trade-related videos with articles. They upload it on a daily and weekly basis. The snacks section is useful to understand what is happening in business, technology, research, mining, financial, production, industrial and many more fields. You can get the daily snacks feed through a subscription pack. On successfully subscribing to the Robinhood snacks, you can also enjoy audio from the apps like Apple Podcasts, Google Podcasts, and Spotify podcasts.
You get the idea or knowledge for investment when you click Investing basics field in Robinhood. They feed investment and trading-related education content here (i.e. what is an investment? what is stock? etc.
Image 6 : Snacks section from Robinhood Education and research
Robinhood’s minimum deposit amount is 0. They Charge no commission for trading stocks, ETFs, options, and cryptocurrency. You can make up to 5 deposits per business day, and a transfer of $50,000 per business day can be done into your account.
Automatic deposits are also available for Robinhood account. Like a recurring deposit, the money gets debited from your bank account and credits automatically into your Robinhood account at regular intervals set by you. You can select the amount and cadence for the automatic deposits according to your investment goals.
It’s easy to link your bank accounts in the Robinhood app when you use major banks like Bank of America or Wells Fargo. In case you don’t see your bank or credit union listed, you’ll need to verify your account manually.
The withdrawals are limited to 5 per business day. You can withdraw up to $50,000 per business day from your Robinhood account. They offer withdrawal options via your mobile app also.
You will need to maintain a brokerage account value of at least $2,000 to meet the minimum requirements to borrow using margin from the Robinhood Gold account. You should turn off the margin in the Settings if you wish to withdraw below $2,000.
When you recommend Robinhood to your friends to avail rewards. In case your friend joins Robinhood, you and your friend will receive a Reward stock worth $500 from Robinhood. If you don’t claim that Reward stock within 60 days, it will expire.
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