Robinhood Review 2023 – Pros & Cons Revealed
Robinhood is a popular online brokerage that offers commission-free trading on stocks, crypto, options, and ETFs. If you’re thinking about using Robinhood – we would suggest reading this in-depth review first.
In this Robinhood review 2023 – we cover everything from supported markets, fees, payment types, trading tools, margin accounts, security, and more.
Robinhood History & Background
Launched in 2013 and founded by Vladimir Tenev and Baiju Bhatt, Robinhood is an online broker based in the US. The platform claims to be on a “mission to democratize finance for all”. It achieves this goal by allowing the Average Joe trader to invest without paying any commission and a no minimum stake.
Robinhood offers a reasonably large portfolio of stocks and ETFs – all of which are listed on US exchanges (NYSE and NASDAQ). It is also possible to invest in a number of crypto trading markets and even stock options. Perhaps the main draw with Robinhood – on top of its fee-free offering, is that the platform is really easy to use.
Signing up and investing in an asset takes minutes – and doesn’t require any prior experience. Robinhood has grown to exponential heights in recent years – with a client base that now exceeds 10 million traders. The broker is looking to expand into other markets – with the UK first on its list. Robinhood is expected to go public later in 2021.
Robinhood Pros & Cons
Before reading our Robinhood review in full – check out the pros and cons that we identified during the research process.
- Buy over 5,000 US-listed stocks and ETFs
- Cryptocurrencies and stock options trades
- No commissions
- No minimum account balance
- Trade with just a few dollars
- Heavily regulated
- Just 250+ international stocks supported
- No forex or commodity trading facility
- No mutual funds
- The recent Gamestop scandal prevented people from buying stocks
- No debit card or e-wallet deposits
- Too basic for experienced traders
Your capital is at risk
What Can You Trade and Invest in on Robinhood?
In this section of our Robinhood review, we are going to explore what assets and markets the broker allow you to access.
The vast majority of trading activity on the Robinhood platform can be found in the stock department. Other than a small selection of 250-ish international equities, all stock trading markets on Robinhood come from the US. This means that you will have access to the NYSE and NASDAQ.
Irrespective of whether you are looking to invest in the likes of Apple, IBM, Microsoft, Tesla, Salesforce, or Disney - you can be all but certain that Robinhood offers a market. What we really like is that Robinhood supports fractional shares - meaning that you can invest a couple of dollars into any company of your choosing.
This means that there is no longer a requirement to allocate thousands of dollars to buy a single stock in Amazon or Google, for example.
Our Robinhood review found that the broker is also a popular choice for those that wish to add some cryptocurrencies to their investment portfolio. In total, you will be able to buy and sell 7 digital coins directly from the Robinhood website or trading app.
Supported crypto markets include:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Litecoin (LTC)
There are both pros and cons to the cryptocurrency trading department at Robinhood. In terms of the positives, Robinhood supports fractional ownership when you buy digital coins - meaning that you can invest in crypto assets like Bitcoin and Ethereum with a few dollars.
This is crucial, as the cryptocurrency markets are overly volatile at times and thus - it's good that Robinhood allows you to enter this space with a small amount of capital.
On the other hand, the number and choice of cryptocurrencies offered by Robinhood could be better. For example, the broker has opted to offer the likes of Bitcoin SV instead of more popular coins like Ripple, EOS, or even Binance Coin.
If cryptocurrencies play a major role in your wider investment strategy - it might be worth considering eToro instead. This regulated broker allows Americans to buy cryptocurrencies from just $25 upwards on a commission-free basis. Plus, you'll have access to 19 digital currencies.
If you're looking to build a simple but well-diversified portfolio of assets in a passive manner - our Robinhood review found that the broker offers a great selection of ETFs. This largely centers on popular index funds like the S&P 500 and Dow Jones.
Robinhood Stock Options
Robinhood is also well-known for being the go-to place to trade stock options in the US. This allows you to speculate on the future value of a US-listed stock in a more sophisticated manner. Stock options at Robinhood require a much smaller capital outlay too - and the most you can lose on a trade is the premium itself.
And of course, by taking the stock options route on the Robinhood platform - you also have the option of going short via a put contract. This means that you are looking to profit from the downfall of a stock.
Robinhood Fees & Commissions
If you're wondering about Robinhood fees in the trading department - check out the table below.
Asset Commission Stocks 0% Crypto 0% Forex Not Supported ETFs 0% Commodities Not Supported Indices Not Supported Options 0%
In terms of other Robinhood fees that you need to be aware of - check out the table below.
Fee Type Charge Open an account FREE Platform fee FREE Gold account $5 per month ACH deposit FREE ACH withdrawal FREE Margin rate 2.50%
In the following sections of our Robinhood review, we will elaborate on the above fees in a bit more detail.
0% Commission Trading
As noted several times in this Robinhood review, the broker does not charge trading commissions. This is the case irrespective of how much you invest or trade. As such, you can enter and exit your chosen market as many times as you want and won't pay a single cent.
Robinhood charges a spread on all of its supported markets. This is based on a variable spread, meaning it will vary throughout the day depending on wider market conditions. In terms of competitiveness, this really does depend on the asset you are trading - so you'll need to be aware of this when placing orders.
Robinhood allows you to deposit and withdraw funds via ACH without paying any transaction fees.
We cover the Gold account in more detail later in this Robinhood review, this will cost you $5 per month nonetheless.
If you wish to access margin trading facilities - which requires a Gold brokerage account and a minimum balance of $2,000 - you will pay a rate of 2.5%. This is an annual rate that will be multiplied against the size and duration of your margin position.
Robinhood: Robinhood User Experience
If you're a newbie that has an interest in the stock markets but are somewhat reluctant because of a lack of experience, Robinhood is likely a good option. The platform has been designed specifically for the 'casual trader' that wants a simple and burden-free way of accessing the investment industry.
For example, once you go through the process of opening an account and making a deposit - you'll be able to find your preferred market with ease. There are plenty of filters and a search box that can help you navigate around the platform. There are also daily updates on market movers and losers - which can help you gauge wider sentiment.
The main Robinhood dashboard is clean and free of jargon, so you can easily view your current portfolio in real-time alongside custom watch lists. Cashing out an investment is also straightforward - and simply requires a click of the 'Sell' button. This user-friendliness extends to the mobile app, too.
Robinhood Features, Charting, and Analysis
Our Robinhood review found the platform - both online and the app, allows you to view charts on all supported markets. You can choose between line or candlestick charts and switch between the two with ease. The platform also supports a small selection of technical indicators - including the RSI, EMA, MACD, and SMA.
However, the level of charting and analysis on the platform is super basic. As such, this will not suffice for experienced traders that rely solely on advanced charting research.
Additionally, if you want access to Level II market data, you will need to upgrade to a Gold account. In terms of fundamental research, Robinhood offers in-depth reports on over 1,700 stocks. This is provided by Morningstar, albeit, you once again need to have a Gold account to gain access.
Robinhood App Account Types
Our Robinhood review found that the broker offers two account types. The Standard account gives you access to stocks, options trading, crypto, and ETFs on a commission-free basis. There is no account minimum and you can invest from just a few dollars. However, if you want access to additional features and perks - you might need to consider upgrading to a Gold account.
Robinhood Gold Account
The Robinhood Gold account will cost you $5 per month.
For this, you will get:
- Larger Instant Deposits: The Standard account will allow you to deposit up to $1,000 instantly, while the Gold account increases this to $5,000-$50,000 - depending on your balance.
- Research and Data: As noted above, the Gold account gets you access to Level II data and professional stock research reports.
- Margin Trading: The Gold account allows you to trade on margin. As per US laws, this requires a minimum margin balance of $2,000.
Although the features that come with the Gold account are somewhat modest, this is reflected in the monthly price of just $5.
Robinhood App Review
At first glance, we found that the Robinhood app is relatively straightforward to use. Once you download it to your iOS or Android phone - you can log in with your usual Robinhoood credentials. Then, you will have access to stock, crypto, options, and ETF trading at the click of a button.
Finding a market is simple too - as you can use the search facility that the app offers. Placing orders is also a breeze - as the app has been well optimized for small screen sizes. However, our Robinhood review found that the app has really poor reviews in the public domain.
For example, across more than 10 million downloads and 386k individual reviews - the Robinhood app has a rating of just 2.9/5 on Google Play. Complaints range from ongoing glitches, missing orders, incorrect balances, and non-existent customer support. On the other hand, the iOS version of the app has a much better rating at 4.1/5.
Robinhood only accepts deposits and withdrawals via ACH - which is free of transaction charges. If you're on the Standard account the first $1,000 of your deposit will be credited instantly.
- For example, if you deposit $3,000 - $1,000 will appear in your account straight away while the balance of $2,000 might take a couple of days to arrive.
- By upgrading to the Gold account, you can increase your instant deposit threshold by up to $50,.000.
If you want to deposit funds with a debit/credit card or Paypal - you'll be out of luck. You can, however, do this at eToro without paying any deposit fees - and you won't be capped to an instant funding threshold of $1,000!
Robinhood Minimum Deposit
There is no minimum deposit at Robinhood.
Robinhood is still offering its popular new customer promotion of one free stock upon signing up and linking your bank account. The value of your stock will be randomly selected by the Robinhood platform. Although this can be as high as $225 - 98% will sit between $2.50 and $10. You can sell your free stock on the Robinhood platform after two days of receiving it.
Robinhood Contact and Customer Service
Robinhood is known for offering below-par customer support. This is large because of the sheer number of clients that are now using the platform. The only way to contact Robinhood is by logging into your account and raising a support ticket. Response times can run into the days - so do bear this in mind before joining Robinhood.
Is the Robinhood App Safe?
Wondering if Robinhood is safe? In a nutshell, you should have no concerns about the safety of your funds when using Robinhood. The broker is regulated by all relevant bodies in the US and thus - Robinhood is required to take investor protection seriously.
At the forefront of this is Robinhood's membership of the SIPC. For those unaware, this protects your capital up to the first $500,000 ($250 cash balances) in the event Robinhood collapsed.
Robinhood vs Other Brokers
Overall Robinhood is perfectly suited to beginners with little trading experience who want to trade US shares and ETFs without paying a penny in commission. However, these aren't just empty words, as we have pinned Robinhood against other widely popular online brokers in the following comparison reviews:
- Stash vs Robinhood
- Coinbase vs Robinhood
- Acorns vs Robinhood
- Webull vs Robinhood
- M1 Finance vs Robinhood
- Fidelity vs Robinhood
- Robinhood vs Charles Schwab
- Robinhood vs Ally Invest
- TD Ameritrade vs Robinhood
How to Start Trading with Robinhood
Although there are much better options in the market for Americans - this section of our Robinhood review will show you how to get started. Perhaps consider reading our eToro vs Robinhood comparison in the following section before signing up!
Step 1: Join Robinhood
The first step is to open an account with Robinhood.
As is industry standard with all online brokers - you'll need to supply your:
- Personal information
- Contact details
- Social security number
You'll also need to verify your email address.
Step 2: Link ACH to Robinhood
Now you will be asked to link your ACH account with Robinhood. You will be guided through the process step-by-step and this should not take more than a couple of minutes to complete.
Step 3: Deposit Funds
Once your ACH account is linked with Robinhood - you can transfer funds. There is no fee and any deposit up to the first $1,000 will be credited instantly. Anything over this amount could take a couple of days to arrive - unless you are on the Gold account.
Step 4: How to Buy on Robinhood
As soon as your Robinhood account is credited you can proceed to start making investments. The easiest way to do this is to search for the asset or market you want to trade. Then, you just need to enter the size of your investment and confirm the order!
Step 6: How to Sell on Robinhood
Once you have completed your trade - the assets will appear in your portfolio. At any time during standard market hours, you can sell your investment from within your portfolio dashboard. You won't pay any commission to sell on Robinhood.
Robinhood vs eToro
Before opening an account with Robinhood, we would suggest considering whether or not a better alternative is available. After all, Robinhood has faced a lot of bad press in recent months - much of which began when the broker blocked people from buying Gamestop shares.
Past performance is not an indication of future results
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
We have reviewed dozens of brokers here at TradingPlatforms.com and found that eToro is a much better option.
- Assets: eToro offers a much larger suite of assets - which covers thousands of stocks across 17 US and international markets, indices, forex, cryptocurrencies, ETFs, and more.
- Copy Trading: eToro allows you to trade passively through its Copy Trading feature. Once you choose a seasoned investor that you like - you will then copy all of their ongoing positions like-for-like.
- Social Trading: In addition to Copy Trading, eToro also offers a Social Trading tool. This allows you to engage with other eToro traders through posts, comments, and Likes!
- Payments: eToro allows you to instantly deposit funds with a debit/credit card, Paypal, Neteller, and more. Unlike Robinhood, instant deposits are not capped to $1,000.
- Management Portfolios: Robinhood is solely a self-directed broker. eToro, on the other hand, offers managed portfolios across a full range of assets and strategies.
- Demo Account: eToro offers a fully-fledged day trading simulator that comes pre-loaded with $100k in paper funds. This gives you access to live market conditions in a risk-free setting. There is no paper trading facility at Robinhood.
Crucially, eToro is also a commission-free broker with super-tight spreads, and the minimum stake size starts at $25 on cryptocurrencies and $50 on other assets.
Robinhood Review: The Verdict
If you are a newbie trader that is looking to buy and sell a few stocks or ETFs - then Robinhood is a good option. The platform allows you to trade without paying any commission and the platform itself is simple to use. With that said, our Robinhood review found that eToro is a much better option.
eToro offers commission-free trading on thousands of US and international markets across stocks, ETFs, forex, commodities, cryptocurrencies, and more. The platform accepts debit/credit cards and e-wallets, is heavily regulated, and even offers passive investment services via its Copy Trading tool.
eToro - Best Trading Platform with Zero Commission to Trade Stocks
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Does Robinhood have a demo account?No, Robinhood does not offer a demo account. If you want to trade in a risk-free environment, eToro offers a free demo account with $100k in paper funds.
How does Robinhood make money?Our Robinhood review found that the broker makes money from the spread, as well as via its margin trading services. Our Robinhood trading review also found that the provider makes money through its Gold account subscriptions.
What is Robinhood?Robinhood is a US-based broker that allows you to invest in stocks, ETFs, and cryptocurrencies. Our Robinhood trading review found that the broker also offers stock options.
How to use Robinhood?Our Robinhood trading review found that the broker is simple to use. All you need to do is register, link your ACH account, make a deposit, and then choose which assets you wish to invest in.
How much is Robinhood Gold?Robinhood Gold costs $5 per month. You can cancel your subscription at any time and revert back to the Standard account.
How to withdraw money from Robinhood?You can request a withdrawal from within your Robinhood account. The funds will be transferred back to your bank account via ACH.
How to make money on Robinhood?Robinhood is merely an online broker - so to make money, you need to correctly predict the future price of an asset. For example, if you buy stocks on Robinhood, you will make money if you sell them at a higher price.
How to delete Robinhood account?You close your Robinhood account by clicking on 'Settings', 'Account Information', and then 'Deactivate Account'.
Is Robinhood safe?If you're wondering is Robinhood safe - you should know that the broker is heavily regulated. This includes FINRA and the SEC. It is a member of the SIPC - which also covers its Cash Management account. This feature offers 0.3% interest rates on uninvested cash.