Robinhood has come on leaps and bounds since it was founded back in April 2013 by Vladimir Tenev and Baiju Bhatt, two New York-based financial developers. The name, of course, is a nod to Robin Hood, the historical outlaw of Sherwood Forest, who stole from the rich and gave to the poor. The founders are quoted as saying they want to ‘provide everyone with access to the financial markets, not just the wealthy’. Did they achieve what they set out to?
Let’s find out…
- Commission-free stock, ETF and options trading, fractional shares trading, and free cryptocurrency trading – what more could a serious trader want from their exchange? Perhaps recurring investments, well, fortunately, Robinhood is introducing those too, so long-term strategists will feel very comfortable on this platform.
- Robinhood was the first platform of its kind to remove commission fees for their users, helping them to stand out and establish themselves in the marketplace. The idea grew wings and placed Robinhood as a thought leader, with other major platforms now following suit and coining the term ‘zero-fee trading’.
- The minimum account balance is $0, so you don’t need to make a deposit in order to open the account. This is another feature that has helped them attract around 10 million account holders!
- Web and mobile trading are both enabled, with the setup taking just a few minutes to accomplish. Users must have a Social Security Number to sign up and verify their account, which can be done in less than an hour (rather than days like many crypto exchanges!). Of course, an SSN is something only an American will have, so if you’re outside the US, no matter how great this platform is, it’s not going to help you.
- Despite having one of the broadest ranges of options for traders and investors, the platform is incredibly simple to use, allowing them to serve as a comprehensive marketplace for beginners.
- Instant access to deposited cash, however, price quotes on the site are delayed, rather than streamed, so the market prices are not always accurate.
- You can claim a free stock to get started!
- Security on the site is very good, with no significant breaches reported. Biometric logins, 2-Factor Authentication, and text codes sent out when trying to log in from a new device all suggest individual privacy is well-valued here.
- Robinhood is only available in the US at this time, however, they had planned to launch in both the UK and Australia in 2020, but like everything, 2020 had other plans for us all. Expect to see them enter the AUS and UK market in 2021.
- Whilst there are many trading options available, more than most of their competitors in truth, it is not possible for users to buy bonds or invest in mutual funds.
- The platform has had some major outages during trading surges, notably at the start of international lockdowns in March 2020, and then again when Bitcoin prices surged in November 2020. When you sign the terms and agreements, you legally absolve them of any responsibility for losses during an outage. More recently, Robinhood’s users were in an uproar over the company suspension of trading activities of GameStop stock and other securities during a frenzy reportedly orchestrated by retail traders on a Reddit forum.
- For US users who want to invest through Robinhood, verification checks must go through and the account must be fully verified by contacting your bank so that the government can efficiently tax the contents. The accounts are thus known as ‘individual taxable accounts’.
- The app is among the less popular in the cryptosphere, mostly because of how basic it is compared to the web version, giving a very lean trading experience.
- No support available over the phone or via a live agent, so all help must be procured by email, which could be seen as a little weak for a platform of this magnitude.
- The platform has not invested in SPIC – Securities Investor Protection Corporation insurance.
- Robinhood has a reputation for overpromising and underdelivering, announcing products that then take years to actually deliver.
Which cryptocurrencies can you find on Robinhood?
Robinhood currently features 17 actively tradeable cryptocurrencies, seen below:
- Bitcoin SV – BSV
- OmiseGO – OMG
- Lisk – LSK
- Bitcoin Gold – BTG
- Dash – DASH
- Monero – XMR
- Zcash – ZEC
- NEO – NEO
- Stellar – XLM
- Ethereum Classic – ETC
- Qtum – QTUM
- Ripple – XRP
- Dogecoin – DOGE
- Litecoin – LTC
- Bitcoin Cash – BCH
- Ethereum – ETH
- Bitcoin – BTC
Some more information on fees
Free, free, and free. Robinhood has done everything they can to remove commissions and costs for the user so that their funds are entirely theirs to trade. Saying that, there’s no such thing as a free lunch, so there are a couple of things to be aware of.
If you start trading and building portfolios on Robinhood and later decide you want to move your portfolio over to another broker, there is a $75 outgoing account transfer fee, which is more or less standard in this industry.
For those looking to trade on the margins, Robinhood requires a minimum balance of $2,000, as is stipulated by the Financial Industry Regulation Authority. There’s also a subscription fee of $5 to unlock the margin trading feature.
The final say
Remember, we can only provide an opinion, not financial advice. Firstly, if you’re outside the US, move on, this is not the platform for you. If you are in the US, you have a small balance you want to learn trading with, and you want a platform that won’t intimidate or overwhelm you, then this might be the place for you. Since the platform leans more towards stocks and less towards crypto, you should ask yourself whether you are looking to be a crypto-trader, or a general trader-slash-investor, because if you want to deal exclusively in crypto, there are better platforms.
For advanced traders, we think you should avoid this platform for a number of reasons. The options trading design is poor, the platform is bare-bones, they lack transparency, and some of the features are counterproductive for users in order to benefit Robinhood. That being said, having a zero-commission platform with options, stocks, ETFs, and crypto all in one place may well justify the negatives.