Home News Robinhood-Free Trading Broker Review 2020 | Pros & Cons

Robinhood-Free Trading Broker Review 2020 | Pros & Cons

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Robinhood Review

Robinhood-Free Trading Broker of USA they are providing no fee for trading and investing Review 2020 | Pros & ConsThe stock market in the USA is one of the biggest market in the world. If one sees from the outside then it might not look like an advantageous one, but on the inside it is a great pool of opportunities. Trading is flourishing in the USA day by day. More and more people are showing interest and getting involved in the process. Every trader needs a broker in trading, and choosing the right broker is a great responsibility. A right broker may guide you well and level up the chances of profits from your investment.Robinhood Review

How Robinhood Become No. 1 Broker of USA?

There are several stockbrokers in the USA and all of them are quite capable and deserving in their own ways. One such broker is Robinhood and in this article, we will be having a look at how the big name can help you and guide you through your journey to a great investment.

Robinhood is a famous name in the trading world, and mostly because they do not charge anything or any commission for stock, options, or cryptocurrency trading. The trading industry has changed over time and it had grown bigger and wider, hence it is not the only name we hear now.

There are several competitors in the market playing the same game. One of the features which make Robinhood unique from the others is that their target audience is young traders. Their main customers are the one who are new to investing and want to try their hand at that. Following the principle of “free” and “democratization”, they have outgrown the market and now holds millions of account as their customers.

In recent times, the company is facing extensive outages. The sharp decline which took place in late February and early March 2020, shook the company affecting its users ability to access the platform. These hard times came with a number of lawsuits filed against them. However the case can fall in their favor as the customers before connecting with the company sign an electronically agreement which might resolve the situation.

Robinhood Company Details

Robinhood is one of the stockbrokers especially attracting young and new traders in the market. Those interested in small trading quantities, including fractional shares suits to this company. The platform seems simpler with easy to use interface also adds to its features. The company was established in the year 2013 and is regulated by the top-tier financial authorities like the US Securities and Exchange Commission and the Financial Industry Regulatory Authority. Besides providing brokerage services Robinhood also offer services like Cash Management Service.

Robinhood Charges and AMC 2020

Account Minimum $0 FOR BROKERAGE ACCOUNT AND FOR rOBINHOOD gOLD ACOUNT; $2,000 FOR A MARGIN ACCOUNT
sTOCK TRADING COSTS $0
opTIONS TRADE $0
aCCOUNT FEES( ANNUAL, TRANSFER, CLOSING, INACTIVITY) No annual, inactivity or ACH transfer fees.

$75 ACAT outgoing transfer fee

Robinhood Gold costs $5 a month.

Tradable Securities 1.       Stocks

2.       ETFS

3.       Options

4.       Cryptocurrency

5.       American Depository Receipts for over 250 global companies.

number of commission-free ETFs All available ETFs trade commission free
Number of no-transaction-fee mutual funds None
trading platforms Web platform is simple but fulfills basic investor needs.
Mobile app Mobile platform includes alerts, news feed, candlestick charts and ability to listen live to earning calls.
Research and data Free but limited.
Customer support options Email and social media

 

Robinhood was involved in commission free stock, ETF and options trades, but as the market flourished and competitors grew they also started to offer free cryptocurrency trading. The bottom-line for the company is its account minimum is $0.

Why Robinhood is best for you?

Robinhood has been excelling since its start and has gained customer trust over the years. Moreover the offers and schemes they offer to their customers is kind off attractive and investors prefer them over any other brand because of that. Let us have a look at some of the interesting features of the brand.

Robinhood Commission

There are several stockbrokers in the market and each one of them claims to be the best. And that is somewhere true also as each one of them have something which the others don’t, hence it justifies their placement in the market. Similarly when we talk about Robinhood, one thing which makes it different from the others is it does not charge or ask for any commission. What can be better than this? Robinhood commits to give 100% commission-free stock, options, ETF and cryptocurrency trading to their customers. For this the customers adore them and admire them and hence they made their name in the market. This scheme excites the investors as every dollar you save on the commission is added to your return. Robinhood also focusses on keeping other costs low for the investors.

Robinhood Minimum Balance

There is no account minimum thing in Robinhood, this gives an advantage to the investors as they can start trading right away without any fuss. But obviously, in the beginning you need to have enough to purchase the investment which you are eyeing upon.

Robinhood Fractional Shares

Just like other brokers Robinhood has also introduced fractional shares, that means you can pay as little as $1 for a portion of a share, even if that share’s full price is in the hundreds of dollars.

Robinhood High Yield Saving

In December 2019, Robinhood started offering a cash management account to their customers that right now pays 0.30%. The account comes with a debit card and a free atm. The atm allows withdrawals from more than 75,000 atms and offers up to $1.25 million of FDIC insurance.

Robinhood’s “Robinhood Gold”

Another interesting scheme is provided by Robinhood for the investors that is it provides the investors the ability to trade on margin, also known as borrowed money. The opt-in service carries a flat monthly fee of $5. For all the new investors it is very important to understand what is margin trading as it is risky. The investor is trading on the borrowed money from the broker.

Pros and Cons of Robinhood

Pros Robinhood

  1. Cryptocurrency trader can be placed in small quantities.
  2. Trading costs are very low.
  3. The interface is extremely simple and easy to use.
  4. Customers can access to deposited cash instantly.
  5. Efficient in getting cash to the market.

Cons of Robinhood

  1. No commission is charged for trades, but the spread for cryptocurrency transactions is higher than the other platforms.
  2. The updates are delayed, doesn’t match with the real time data.
  3. Small amount of research and resources are available for the new investors.
  4. Mutual funds and bonds are not supported on this platform.
  5. It supports only individual taxable accounts.

Usability of Robinhood

Trading on Robinhood is very easy, especially for those who are used to smartphones. The mobile interface is super simple and easy to use. Starting with the signup and account funding process and it will lead you to the further steps very easily. Within a few clicks your account will be ready to use. They use instant verification with major banks which reduces time. Unlike some stockbrokers, the services do not offer all the bells and whistles, hence it can become complicated at times. But for the investors who knows what they want its quite simple for them, as the platform is more than enough to quickly execute trades. It also supports market orders, limit orders, stop limit orders and stop orders.

There are two modes on which Robinhood can be operated, the mobile version and the web version. The brand initially started with a mobile version later on in November 2017 the website was released. Hence both website and mobile version gives the same feel in looks. There are very less options available for customizing. Opening and funding a new account can be performed on either of the platforms within a few steps.Robinhood Review

Costs of Robinhood (2020)

All equity trades Commission free
Option trade $0; no per leg-fee; no per contact fee
Robinhood gold subscription $5 per month
Account transfer fee $75
Exercise and assignment fee $0
Wire fees to send or receive(domestic) $25
Wire fees to send or receive(international) $50
Check fee $35 to send a domestic check overnight
Live broker fee $10 per transaction
 

 

The overall verdict comes at if you are a trader who is new to the market and is interested in trading with a small amount, Robinhood can be helpful to them. If someone wants to start trading with a small balance then it is advisable to go with Robinhood as the interface is easy to understand and use. But in case you are a trader who plays big then, it is not advisable for them to go with Robinhood.

Especially those investors who are active in trading and uses charts, screeners, and analyst research, then it is better to opt for another broker that provides with those amenities. Other brokers charge per-contract commissions on options, but you will get a better research, data, customer service and helpful knowledge in exchange. Robinhood provides no commission fee but it lacks certain tools which is a drawback in their interface and this also directly affects your profitability. Robinhood is good in its own ways but there are more transparent brokers in the market.

Note: News135 is a solely independent company and provides unbiased review and ratings to all kind of broker and doesn’t associate with any broker in the USA or anywhere in the world.