Is Robinhood A Good App? (Pros And Cons)

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There’s no denying Robinhood’s popularity. It has over 13 million users right now and growth is showing no signs of slowing anytime soon.

But, is Robinhood a good app?

If you’re new to the stock trading world and are attracted to making free trades on a streamlined app, then Robinhood is likely going to be perfect for you. If you are an advanced trader you will probably want a brokerage with more charts and analysis capabilities.

I first downloaded the app out of sheer curiosity, but I know a lot of people with little trading knowledge who were attracted to Robinhood because of how accessible it was to them.

In this article, I’ll be diving deep into how Robinhood works, who it’s for, and what you can do with it. This should help you determine whether or not the app is right for you.

Who Is Robinhood For?

The premise of the Robinhood platform that was launched in 2012 is to make stock trading accessible to those who have little to no experience.

So far, it has done a great job of doing just that with its free trading platform.

With that said, it’s important to determine if you are the type of user that can benefit from an app like Robinhood. Looking to try it out?

In order to use the platform there are just a few requirements.

You must be a U.S. Citizen, permanent resident or hold a valid U.S. Visa
You must be at least 18 years of age
You must have a valid Social Security number
You must have a legal U.S. residential address

Robinhood can be an excellent trading platform if you are new to investing and would like to dip your toes in the water without too much commitment.

It has the ability to help people start thinking about long term investment goals and how it is possible to achieve them.

The platform’s unique fractional shares model is a great way to introduce yourself to online trading without the large cost of investing on your own.

I also love that the application itself is streamlined in a way that makes it fun and extremely easy to use.

It can also be used by seasoned investors who trade frequently and like to watch their investments grow.

But the catch is that new online investors need to ensure they have the experience and forethought to not sell at first sign of a dip in the market in order to use Robinhood safely.

The Benefits Of Using Robinhood

The great thing about Robinhood is that the younger generation is finding the stock market to be accessible to them, and not just their wealthy grandparents.

Robinhood is a great application for investing for a few reasons.

No Fees For Trades

First and most importantly, you will not be charged for trading.

Almost all other apps charge a fee per trade. Robinhood chose to let us learn trading for free.

Accessibility

Another great thing about Robinhood is that there is no minimum deposit.

This along with their fractional shares model lets the average Joe invest in TESLA without needing a few thousand dollars burning a hole in their pocket.

This is huge for people who need to save to start an online investment portfolio or are just getting started with their investing.

Fast & Simple Way To Start Trading

Their online trading platform is hands down the easiest and most accessible app for those who have never traded before, and that is huge for the financial wellbeing of our friends and neighbors.

You can download the trading app and be doing live trading within the hour.

Streamlined App

The Robinhood application has gamified the stock market in a way to make it easy and self explanatory for us all.

The easy to use platform makes trading fun and financial security easier than ever to achieve. Before you know it you will be submitting trades and monitoring market volatility like a master.

High-Yield Savings

They also have good high yield savings accounts that pay a .30 percent annual percentage yield and all uninvested money gets pushed into your savings account.

This keeps your money earning as much as possible instead of just sitting there.

One Free Stock For All New Users

If all of those reasons do not sway you to download and start trading on the Robinhood app, they actually give away one free stock to all it’s new members!

That free stock might only be worth 10 dollars when you sign up, but it could be worth up to $200 in the future, and they often grow.

You can also be awarded a free stock if you refer members and they join.

The Downsides Of Using Robinhood

As no one person is exactly the same, neither are investors and so there are a few reasons why Robinhood might not be the best trading app for you.

Robinhood was created for people who are new to online trading and along with that comes missing functions that would be present in other apps designed for more seasoned investors.

Lackluster Trading Platform

For example, one of those issues is the poor trading platform.

There are real time trading lags, inaccuracies in cryptocurrency prices, payment order flow issues and you cannot trade conditional orders if that is something you manage in your trading.

Poor, Almost Non-Existent Customer Service

Also a big downfall is the customer service for the app, which can be abysmal or downright non-existent at times.

No live phone or chat support is available, which can really be detrimental to the brand new investor.

Devoid of Basic Investment Features

As a gamified app it is really just that, an online trading game that lets you earn real money with your own investments.

It cannot do much else like offer joint accounts, IRA’s or many other financial services which most other apps offer.

Limited Research Capabilities

The biggest downside to Robinhood in my opinion is the lack of research capabilities. As a new online investor you probably want to learn a bit about a company before you invest.

Unfortunately, Robinhood does not give you much to work with here.

The other trading accounts you can choose from will offer more robust candlestick charts and watch lists to better monitor your investments.

Attracts Uneducated Investors

Another problem with Robinhood is the influx of uneducated investors who want to buy options or get rich quick stocks.

The problem with that is you can easily get overwhelmed and lose your entire investment. If that investment is small then losing it might not hurt too bad.

However, if it keeps you from investing in the market in the future it could seriously hurt your 401k or IRA making it difficult to retire in the future.

Encourages Frequent Trading

Last but not least the gamification of the online trading app actually encourages trading.

It gives you incentives via congratulatory messages and clean and inviting graphics that can persuade new investors into making decisions based on instant gratification instead of sound investing principles.

What Are Some Robinhood Alternatives?

It is hard to compare Robinhood to others as it has given a fresh new perspective on trading but one such company that is similar is Webull.

Other competitors are starting to change their policies in order to compete with Robinhood so more and more brokerages are offering free stock and options trades now.

Personally I use Robinhood for trading small amounts and use Firstrade (that also offers free trades) for my Roth IRA account.

Do Any Other Similar Apps Offer Free Trades?

When Robinhood started there weren’t any other companies offering free trades.

Now there are other apps that are offering $0 dollar online trades. Some of these brokerages that now offer that are Charles Schwab, Fidelity, Webull, Firstrade, and more.

It’s likely that many other brokerages will continue following suit so they don’t lose investors.

Is Robinhood Free?

Robinhood is mostly free.

The basic level of membership is free, but they do offer a gold level option which costs 5 dollars a month.

The differences are the Gold level is the only way to gain access to the research needed to make sound financial trading decisions.

They also have extra hidden fees to be aware of such as 75$ to transfer your portfolio to another investment company.

They also participate in PFOF, which means they will be making money off of your trading activity.

How Do I Get A Hold Of Robinhood Customer Support?

As I said before, Robinhood does not have the best customer service, but you can email them at [email protected] and communicate through their social media pages, as well.

Can I Start Trading As Soon As I Open A Robinhood Account?

Usually when you open a Robinhood account you can be live trading within the hour as long as your initial deposit is 1,000 or less.

Larger deposits take up to a week to be available.

This is made possible through Robinhood’s instant deposits. Essentially Robinhood loans you the amount of your transfer (up to $1,000) so you can start trading immediately while the transfer is being processed.

Can I Day Trade On Robinhood?

Yes, you can day trade on Robinhood however there are limits to the number of day trades you can make if your account balance is under $25,000.

The problem with day trading is it is usually a very risky prospect that can make you lose your initial investment quickly if you aren’t careful.

Those that are successful due to hours of study and research are still prone to heavy capital gains taxes and the lack of the research data needed to do it successfully.