Robinhood Review

This is the age of globalization and the role of financial institutions cannot be truncated at all in this respect. Business organizations have come up with nouveau financial products like securities, stocks, investments, and many more. Financial service providers strain every nerve to cater to individual customers and businesses. Robinhood is also an economic services provider company. In our Robinhood Review, you will go over how this company has set itself apart from other fiscal platforms.

What is Robinhood?

A FINRA-regulated online broker-dealer, Robinhood Markets, Inc. offers commission-free trades of stocks, exchange-traded funds, options, and cryptocurrencies at a single user-friendly platform. Robinhood was launched on April 18, 2013. Since that day, Robinhood is working to expand investors’ ability to invest and to hand over financial power to everyone irrespective of the intended money to invest. It, currently, provides its services to over 6 million Americans.

What is Robinhood?

Robinhood is registered with SEC (the U.S. Securities and Exchange Commission) and a member of SIPC (Securities Investor Protection Corporation). The company’s goal is to turn investing into an affordable and intuitive experience without considering the clients’ financial knowledge. With the mission to democratize finance for all, Robinhood offers trading in stocks, ETFs, options, and cryptocurrency through its subsidiaries i.e. Robinhood Financial LLC, and Robinhood Crypto, LLC.

Robinhood Review
  1. How Robinhood Makes Money?

    Robinhood collects its revenue through different streams.
    – Rebated
    – Robinhood Gold
    – Stock Loan
    – Uninvested Cash Income
    – Cash Management
    – Additional Sources

How Robinhood Works

Robinhood collects its revenue through different streams. These sources are:

  1. Rebates

This is of the main sources for Robinhood to make money. Customers’ selling and buying orders are sent to market makers for accomplishments. Market makers pay rebates to brokerages. Similarly, crypto trading venues pay volume rebates to Robinhood Crypto.

Robinhood Rebates
Robinhood Rebates
  1. Robinhood Gold

Robinhood charges a monthly fee of $5 for its Robinhood Gold suite. When investors invest on margin, they are lent funds. If consumers use more than $1,000, they pay 2.5% yearly interest on the margin amount used above $1,000.

  1. Stock Loan

This is another kind of income that Robinhood gets. It is earned from lending stocks purchased on margin.

  1. Uninvested Cash Income

Robinhood gains money on the cash which is not invested in the Cash Management network. This cash amount is deposited to interest-bearing bank accounts to earn income.

  1. Cash Management

Sutton Bank is the issuing authority of Robinhood debit cards. It receives an interchange fee to cover transaction processing and fraud loss. This interchange fee is transferred to Robinhood Financial. Program banks also pay fees to Robinhood when funds are swept to them.

  1. Additional Sources

Robinhood also makes money from some other small streams like proxy service revenue and listed fees.

How to Create Account on Robinhood ?

Eligibility:
– Minimum 18 years of age
– Valid SSN (Social Security Number)
– U.S. citizen/permanent resident/valid U.S. visa
– Legal U.S. residential address (exceptions for active U.S. military personnel)

Open Account

Technical Requirements

App

  • Robinhood supports all iOS devices e.g. iOS 11 and above
  • All Android devices with Android version 7 (Nougat) and newer

Web

  • Robinhood works on both Macs and PCs
  • Supported browsers: Chrome, Safari, Firefox, and Edge

To open an account in the Robinhood app:

  • Submit your application
  • You will get an email in 24 to 48 business hours either confirming your application or requiring more information
  • In case of providing more information, it will take 5 to 7 working days for reviewing and opening your Robinhood account
  • Robinhood may ask you to verify your identity. It requires personal information, and financial & tax identification information. Robinhood will keep records of your provided information just for regulatory purposes.

Robinhood can request you to submit the following documents to verify your identity.

  • Driver’s License
  • State I.D.
  • Passport Photo Page
  • Bank Statement
  • Social Security Card
  • Permanent Residency Card
  • 3210 Letter

Robinhood Accounts

Robinhood follows one account per customer policy and offers three types of accounts.

  1. Robinhood Instant

It is a margin account. It allows you to have access to instant deposits and extended-hours trading. There is no need to wait for funds to process when you sell stocks or make a deposit of up to $1,000. Whenever a new account is signed up, Robinhood Instant starts automatically.

  1. Robinhood Gold

This account functions like a Robinhood Instant account. The only difference is that it offers more buying power and larger instant deposits.

  1. Robinhood Cash

This Robinhood account offers commission-free trades on standard and extended-hours trading. Access to instant deposits and instant settlements is disabled. Customers can go down from their Instant or Gold account to a Cash account whenever they want.

Robinhood Features

No Account Minimums or Commissions

Robinhood believes in equal access for everyone to financial tools. Without considering investing power of its customers, Robinhood requires no account minimum and does not charge any commission when you buy or sell stocks, ETFs, or options on Robinhood.

Money Protection

Robinhood ensures protection for your possessions. Robinhood Financial and Robinhood Securities hold SIPC membership. SIPC provides up to $500,000 protection for its members. There is also an additional “excess of SIPC” aggregate coverage of $100 million for Robinhood customers.

High-Security Standards

Robinhood maintains high-security standards and offers racy tools to save its customers from any security mishap. Robinhood promises to cover 100% of cash, securities, and cryptocurrency direct losses if there is any unauthorized activity in your account.

Robinhood Snacks

Robinhood Snacks previously known as MarketSnacks is a media company that provides podcast service and financial news delivered daily and weekly to help you understand what’s the latest in business, tech, and industry. However, Snacks do not serve any recommendations to buy or sell securities or the basis of any investment decisions.

Watchlist

Robinhood allows you to produce customized stock and crypto Watchlist to track your assets. You can add or remove stock or cryptocurrency from your Watchlist on iOS, Android, and Web platforms. You can reorder your stocks in your Watchlist, but you are not allowed to reorder the asset types.

Cards

Robinhood Cards show relevant information. These Cards include:

  1. Feature Cards

Whenever new features or products are added to Robinhood, you will get Feature Cards about them.

  1. Account Cards

Account Cards notify you of your account updates by showing you the status of transfers, orders, and dividends.

  1. Top Movers Cards

These Cards keep you updated on percent gains and losses.

  1. Top News Cards

Top News Cards get financial market news to you. You can also read articles here.

Candlestick Charts

These charts help you better understand the movement of prices. The Candlestick charts show you the open, high, low, and close price information over a certain period of time.

Robinhood Stock
Robinhood Stock
  • Bullish Candlesticks

A Bullish Candlestick (green) demonstrates the increase in the stock’s price.

Bullish Candlestick
Bullish Candlestick
  • Bearish Candlesticks

A Bearish Candlestick (red) indicates the decrease in the stock’s price.

Indicators

With the inclusion of indicators on Robinhood Web, you can perceive the market situation and various technical trading strategies. These indicators are:

  • Volume
  • Simple Moving Average (SMA)
  • Exponential Moving Average (EMA)
  • Relative Strength Index (RSI), with Wilder’s Relative Strength Index (Wilder’s RSI)
  • Moving Average Convergence Divergence (MACD)

Robinhood Education

As Robinhood works for the financial betterment of its clients, it diligently works to educate the investors through good quality blog posts and investing basics articles, and library content. Robinhood also runs a YouTube channel devoted to research.

Robinhood Education
Robinhood Education

Referral Program

Robinhood has a referral program where you can earn up to %500 in reward stocks each calendar year.

Execution Quality

Robinhood’s Best Execution Committee regularly reviews and analyzes the execution quality of securities orders

Dedicated Support

Robinhood is keen to resolve issues fast. For this purpose, there are hundreds of registered representatives all over the US to answer your questions as early as possible.

Program Banks

The following banks are program banks of Robinhood. They are all members of FDIC.

  • Goldman Sachs Bank USA
  • HSBC Bank USA, N.A.
  • Wells Fargo Bank, N.A.
  • Citibank, N.A.
  • Bank of Baroda
  • U.S. Bank N.A.
  • Amerant Bank, N.A.

75,000+ ATMs

Partnering with Allpoint and MoneyPass, Robinhood offers 75,000+ ATMs including 15,000 international terminals. You do not have to pay any fee when you use an in-network ATM.

Robinhood Products

  1. Cash Management

Cash management is a part of the brokerage account and allows you to approach your uninvested cash. Your cash is moved to program banks, and you get 0.30% APY (annual percentage yield). However, it is important to note that 0.30% APY is subject to rising or fall at any time.

You get the following with Cash Management:

  • A customizable debit card
  • An ACH account number and routing number
  • Replacement of lost and stolen cards
  • Access to Apple Pay, Google Pay, or Samsung Pay

The free debit card is offered by Sutton Bank. It is available in 4 designs – Green, Black, White, and American Flag.

Robinhood Cash Management
Robinhood Cash Management

Robinhood Cash Management has no minimum balance and no minimum usage limit.

Robinhood Fees

  • Account opening fee – No
  • Account maintenance fee – No
  • Inactive account fee – No
  • Foreign transaction fee – No
  • In-network ATM fee – No
  1. Stocks and Funds

Robinhood offers access to stock markets where you can invest in individual companies or ETFs (bundles of investments) free of commission.

Buyers and sellers come together on the stock market to trade shares.

  • Exchange-Traded Funds (ETFs)

You can invest in a group of companies quickly with the help of funds. ETFs are those funds that you can invest in the stock market. The ETFs can be of different types e.g. clean energy, technology, social impact, etc. ETFs help you develop a diverse portfolio of investments.

  • Penny Stocks

Low-priced stocks are called Penny stocks. These stocks are issued by companies at less than $5/share.

  • Fractional Shares

These shares are actually pieces of whole shares of a company and can be as small as 1/1000000 of a share. Fractional shares are introduced to provide unique investment opportunities to those people who are unable to participate in the stock market as they can invest in thousands of stocks with as little as $1.

You can place fractional share orders in:

    • Dollar amounts
    • Share amounts
  • Recurring Investment

Through recurring investment options, Robinhood will buy fractional shares on your chosen schedule mechanically. The eligible securities for recurring investment must have a share price of more than $1 and a market cap of $25.

  • DRIP

Dividend Reinvest (DRIP) allows you to reinvest cash dividend payments back into stock or ETF automatically.

  • Order Types

Robinhood supports the following order types to trade in stocks.

    • Market Orders
    • Limit Orders
    • Stop Orders
    • Stop Limit Orders
    • Trailing Stop Orders
  1. Options

An option is a legally binding contract that enables the holder the right to buy or sell certain security, and it can be done at a certain price and until a certain date. Robinhood offers options trading at low cost with the ability to make state-of-the-art technology. The advanced traders can carry out more advanced strategies such as condors, straddles, strangles, and more.

  • Order Types
    • Limit Orders
    • Stop Limit Orders
  • Fees
    • No base fee
    • No exercise and assignment fee
    • No per-contract fee
  1. Robinhood Gold

A set of powerful tools, data, strategies, and research reports. Robinhood Gold offers you to trade on margin at a 2.5% annual rate. It also allows depositing bigger with quicker access to funds starting with just $5 a month.

  • Features
  • Bigger Instant Deposits – $5k to $50k
  • Professional research from Morningstar – about 1700 stocks
  • Level II Market Data from Nasdaq – multiple bids
  • Access to investing on margin – extra buying power, less waiting
  1. Robinhood Crypto

The commission-free offer goes with crypto investment also. Robinhood Crypto is registered with FinCEN and offered on a state-by-state (47 states) basis. Your purchased cryptocurrencies are kept in offline (cold) storage and online (hot) storage. The cold storage provides protection while the hot storage is for day-to-day operations.

  • Cryptocurrencies
  • BTC
  • BCH
  • BSV
  • DOGE
  • ETH
  • ETC
  • LTC
Robinhood Crypto
Robinhood Crypto
  • Cryptocurrencies with Real-time Market Data
  • BTG
  • DASH
  • LSK
  • XMR
  • NEO
  • OMG
  • QTUM
  • XRP
  • XLM
  • ZEC
  • Order Types
  • Market Orders
  • Limit Orders

Other Competitors

  • Ameritrade
  • InteractiveBrokers
  • Ally Invest
  • Public
  • Charles Schwab
  • E*TRADE
  • Firstrade
  • TradeStation
  • SpeedTrader
  • Merrill Edge
  • Webull
  • Lightspeed
PROS
  • Free trading
  • No minimum deposit
  • Sleek interface
  • Instant access to cash
  • Penny stocks
  • Mobile app and Web platforms
  • Educational material
  • Affiliate program
CONS
  • Limited customer support
  • Individual Retirement Account unavailable
  • No mutual funds, or futures trading
  • Confined functionality
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