Robinhood Rating:   3-star brokerage firm rating

Robinhood Investing firm review. Brokerage fees and commissions, pros and cons, minimum requirements and promotion offer for opening a new online trading account.

Robinhood Overview

Instead of dying out, America’s first $0 brokerage firm has actually expanded over the past few years. With new software, investment vehicles, and services, this company is definitely worth taking a look at.

Range of Investments

Robinhood Investments Rating

Robinhood customers can trade stocks, ETF’s, closed-end funds, option contracts, and cryptocurrencies. Missing are bonds, old school currencies, futures, warrants, contracts for differences, precious metals, mutual funds, CD’s, and options on futures. Robinhood does offer penny stocks that trade on the big exchanges in the United States. It also offers a limited supply of securities in the over-the-counter market.

Pricing

Robinhood Cost Rating

Robinhood is the quintessential low-cost broker in America. With its $0 commission, it started the revolution toward lower and lower fees. The broker continues its commitment to zero trading fees by today offering options with no per-contract charges. In fact, all products that can be traded at Robinhood carry zero commissions, and that’s exactly how the broker plans to continue operating in the future.

Some charges have actually been eliminated. Robinhood used to charge $10 for broker-assisted trades, but now charges nothing for the service.

There are some current fees that help keep the company in business. For example, Robinhood passes on exchange and regulatory fees to the customer. These are usually just pennies per sale. Also, paper statements are $5, and hard copy confirmations are $2. Transferring a Robinhood account to another brokerage firm costs $75.

Gold accounts at Robinhood come with instant deposits, Morningstar research, and borrowing capacity (margin). The price is $5 per month for up to $1,000 of margin. Higher amounts of margin require larger account balances and higher fees (up to $200 per month).

Customer Support

Robinhood Customer Rating

Because Robinhood charges so little for a variety of services, it has to cut costs somewhere. One such area is customer service. The broker has an e-mail form on its website where customers and guests can submit a help ticket to a support desk. Some traders have reported wait times of several days. A service e-mail address (support@robinhood.com) is also available.

In the past, Robinhood had associates on the phone during regular market hours (9:30 in the morning until 4:00 in the afternoon, EST). Today, it no longer lists its phone number online. We’re not sure if the company even offers phone support anymore.

Robinhood has never had any branch locations and probably never will. The company does have some social media sites, but they aren’t very active. We looked for a self-service section inside of our trial account, but didn’t find much.

Cash Management

Robinhood Management Rating

Several months ago, Robinhood advertised new checking and savings accounts paying a high rate of interest. So far, the brokerage firm has failed to deliver on this promise. There are no checking or savings accounts available currently, and we have no idea if or when they will ever become a reality. Checks and a debit card also aren’t available as an add-on to a brokerage account. So there are effectively no banking options at Robinhood right now.

Robinhood does not offer an FDIC sweep program for uninvested cash, which means SIPC protection is the only option for uninvested funds. Interest is not currently paid on free cash balances, either.

Portfolio Management and Financial Advice

Robinhood Financial Rating

Self-directed accounts are currently the limit at Robinhood. The company does not provide any managed account services, which is a little surprising, given Robinhood’s formula as a modern innovative broker. A robo system would be a good fit for the company.

In addition to not offering any type of portfolio management, Robinhood fails to deliver human investment advisors at any price.

Website Trading

Robinhood Trading Rating

Robinhood’s website is rather basic, but it does offer some effective trading tools. During our investigation, we found a passable charting program. There are two graph styles (line and candlestick), up to five years of price history, and five technical indicators. A chart can be displayed the full width of a computer monitor. Company events are not included, there are no drawing tools, and comparisons cannot be made. To get to the advanced charting mode, you have to click on the ‘Expand’ icon beneath the basic chart, which appears at the top of a security’s profile.


Robin Hood Charts


The broker’s order ticket appears directly to the right of this simple chart. Market, limit, and stop orders are available. Missing are OCO, trailing, and so many others. Also missing is direct-access routing. An order can be tagged to be eligible for extended-hours trading, one notable highlight.

The broker’s website has a default watchlist, and stocks can be removed and added quite easily. One unique feature that Robinhood’s site has is ‘Popular Collections.’ These are tags like ‘Upcoming Earnings’ and ‘Consumer Products’ that return lists of stocks in that category. A list can be narrowed by manipulating the price range, selecting a market cap, and selecting analyst ratings.

The broker’s website displays the market day’s top movers. On the day of our research, we found stocks up or down more than 30%.

Missing on the Robinhood site are alerts, a robo chat function, video news, Level II quotes, and many other features that can be found at more expensive brokers.

There is no desktop platform as of yet from Robinhood, and given the broker’s emphasis on low-cost trading, there may never be one.


Robin Hood Investing Review


Mobile App

Robinhood App Rating

Robinhood’s mobile app takes its design and interface from the broker’s website platform. The mobile platform doesn’t have Touch ID, the first failure in this category. Instead, the software requires a PIN to enter.

When we did get in, we found a few short articles on how to invest with Robinhood, a certain help to beginners. User-friendly tiles help users add funds, sign up for a Gold account, and invite friends.

A security’s profile shows both regular market and extended-hours performance. A small graph offers both line and candlestick formats, and up to 5 years of data can be displayed. One disappointment is the inability to get a graph to display in horizontal mode.

The app’s order ticket offers the same tools that its website cousin provides: market, limit, and stop orders, and an extended-hours feature. Options can be traded on the app.


Robin Hood Most Popular Stocks


A unique feature the app provides is a list of the 100 most popular stocks on Robinhood. Another perk is a platform for Apple Watch. It can display a watchlist, order confirmation, and a small chart with current price.

What we couldn’t find on the broker’s mobile app was live streaming of video financial news. We also didn’t locate a mobile check deposit feature, another failure here.

Mutual Funds and ETF’s

Robinhood Mutual Funds Rating

Robinhood doesn’t offer any mutual funds at all, which obviously is going to deduct some stars in this category. It does provide ETF’s that are listed on U.S. exchanges. As we have already mentioned, all of these ETF’s are commission-free, which gives Robinhood a huge advantage over brokers that provide only a select few without trading fees.

ETF profile pages at Robinhood, like the broker’s stock profiles, have a small chart at the top of the page. It can be expanded full screen. Information on a particular ETF include the same basic data points that stocks have; and actually, during our research, fund profiles had less information. For example, the iShares Core S&P 500 fund (ticker IVV), one of the largest ETF’s in the United States, didn’t have any news articles or analyst ratings.

An ETF can be quickly added to a watchlist, and option chains are available for funds that have them. We were disappointed not to find an ETF screener anywhere on Robinhood’s site. It wouldn’t cost very much for Robinhood to add one, and it would make researching more convenient for its customers.

Stock Research & Financial Education

Robinhood Education Rating

There is a minimal amount of educational tools on Robinhood’s trading platforms. On the mobile app, we found an article on how to read the broker’s price charts. There is another article on the mobile app that explains the basics of ETF’s and company earnings.

Stocks profiles have limited stats, such as market cap and average volume. News articles are displayed for individual stocks. Some of the sources include Yahoo Finance, The Wall Street Journal, and Seeking Alpha. General market news articles appear on the dashboard. These come from similar sources as stock articles.

We did not find third-party reports on stocks or ETF’s, which is a significant drawback.

Retirement and Education Accounts

Robinhood IRA Rating

Taxable accounts are currently the only option for Robinhood customers. The brokerage firm does not provide any type of educational or retirement accounts.

Option Tools

Robinhood Investments Rating

A recent addition to Robinhood’s selection of tradable assets is option contracts. Strangely, Robinhood has done away with traditional option chains. Instead, it has a system where the user clicks on call or put and then clicks on buy or sell, and then selects the specific contract he wants to trade. During our trial of this system, we found it easy to use.


Robin Hood Options


Although multi-leg strategies are not programmed into Robinhood’s software, it is possible to build your own. It’s also possible to increase or decrease the number of contracts in each leg.

Missing in this category is a host of option research tools that other brokers do have. There are no profit-loss diagrams, probability calculators, or option screeners, for example.

Cryptocurrency Trading

Robinhood Cryptocurrency Rating

Robinhood is one of the few securities brokers to offer trading in cryptocurrencies. Presently, the broker-dealer provides trading in seven of them: Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Dogecoin, Ethereum Classic, and Bitcoin SV. Other digital currencies have data on the Robinhood app, but they aren’t tradable.


Robin Hood Trading Bitcoin


A currency’s profile displays news articles and up to 1 year of price data. Robinhood’s app also displays the level of volatility the currency has historically experienced.


Robin Hood Crypto Trading Review


Comparison

Robinhood Comparison Rating

A few other firms do offer $0 stock and ETF commissions. These companies include Firstrade, Webull, and M1 Finance. One advantage that Firstrade has among these four zero-commission firms is the availability of mutual funds. And mutual fund transactions qualify for Firstrade’s $0 commission.

Firstrade also provides a website with more information on it than Robinhood’s. Fixed-income securities are available for trading (although not with a $0 commission). Another great feature Firstrade offers is a trade bar on its website. It is able to submit orders for stocks, ETF’s, and options. We found it convenient and easy to use. Firstrade’s mobile app has more advanced features than Robinhood’s, such as horizontal charting.

M1 Finance and Firstrade both offer Individual Retirement Accounts. As already mentioned, Robinhood does not offer any retirement services. Both Firstrade and M1 also have cash management tools.

During our testing, we found Firstrade’s customer service to be more responsive than Robinhood’s. The Firstrade website has an online chat service, and the broker offers phone support at consistent hours.

WeBull’s mobile app offers information on equities that trade on the London Stock Exchange and the Frankfurt Stock Exchange. Robinhood provides no data on global stocks. Webull also provides a simulated trading mode on both its mobile app and desktop platform. Robinhood’s software does not offer this valuable service.

On the positive side, Robinhood is the only broker of these four $0 firms to offer trading in cryptocurrencies.

Recommendations

Based on the above comparison, it’s hard to recommend Robinhood for most trading activities. It seems to underperform its low-cost rivals in most categories except crypto trading.

Several low-cost brokers offer a lot more than Robinhood does for minimal cost. Ally Invest, for example, provides forex trading, IRA’s, robo-advisory accounts, mutual funds, bonds, and an advanced desktop platform for active traders. The commission for active traders is just $3.95. We think Ally Invest will be an overall better value than Robinhood for many traders.

Robinhood Review Summary

Robinhood provides minimal services at a $0 price point. Although budget traders may find the company worthwhile, other firms provide more for the same cost or a lot more for a little more.


Firstrade


Robinhood Investing reviewed by TopRatedFirms.com Rating: 3