Is Robinhood a good brokerage firm for beginners in 2019? New investor: how to buy your first stock or ETF on Robinhood?

Overview of Robinhood for Beginners

Robinhood Financial was one of the first app-based brokers to spearhead commission-free trading, and for that reason it has become increasingly popular, especially among millennials and those who are brand new to the markets. This article will walk reassure you how easy it is to actually setup a Robinhood account and then hopefully convince you that it’s even easier to start placing trades.

Opening an Account

Robinhood Financial wants your business and so it’s in their best interest to make the account opening process as easy and painless as possible - and that’s exactly how we would describe it. All you will need to open your Robinhood account is your contact details (i.e. name, address, phone, etc.), social security number, and a checking account to link to and fund your Robinhood account.

The whole process shouldn’t take more than 10 minutes, and if you are looking for detailed, step by step instructions we would recommend you check out our other article that specifically walks through this process.

Easy to Navigate

Robinhood doesn’t offer a lot of the bells and whistles you’ll find with the bigger more established brokers (i.e. advanced charting or order routing), but this is a blessing in disguise for beginners because it makes the app simpler and less cluttered. In fact, Robinhood started out as strictly an app (it wasn’t until recently that they opened a website as well) and so it was designed so you can do all your account and trading activity right from the comfort of your smartphone.

The Main Screen

Once you open the app the main screen shows you the basic account details you’ll be looking for – your account value, gain/loss and a chart of your personal account performance over time. Right below this is a newsfeed with market headlines from Yahoo Finance and company news tailored to your positions and any companies you’re following via your customized watchlist, which is right below the newsfeed. Your watchlist is just a list of stock tickers whose performance you want to monitor. That’s the Robinhood app in a nutshell; you will spend 90% of your time on the app right here on the main screen.

Robin Hood For Beginners

Placing a Trade

Now you’re probably wondering how to place your first trade, so let’s walk through this quick three step process with some screenshots. As you scroll down the main screen you will see the stock tickers that you currently own shares in as well as any tickers that you’ve added to your watchlist via the search icon (a magnifying glass) at the bottom of the screen. In the screenshot below, you can see that IEMG is one of the tickers we’re watching. If we want to place a trade in IEMG all we have to do is tap the ticker, which will automatically bring us to that stock’s summary page.

Is Robin Hood Good For Beginners

IEMG Summary Screen

After clicking on IEMG you should see the screenshot below, which tells us the name of this ETF is the iShares Core MSCI Emerging Markets and that it fell 39 cents today, or 0.74%, to a price of $52.43. From the chart, we can also see that the most of the price drop occurred in the latter half of the trading day. At the bottom of the screen, you will see a big button that says “Trade”. Tap this to place your trade and it will ask you whether you want to “Trade Options” or “Buy”. To buy the stock, we will click “Buy”. Note: If we already owned shares of IEMG, it would also include an option for us to sell as well.

Robin Hood For Beginners

The Trade Ticket

Next, Robinhood will prompt us for the trade details. The default order type is a “Market Buy” order, which basically means we are willing to pay whatever the current market price is for the shares we want to buy. The other popular order type that lots of people use is a limit order, which we’ll cover next. For now, let’s continue with the default market order type.

Robin Hood For Beginners

You can see in the below screenshot that we’ve entered the number of shares of IEMG that we’d like to purchase (100), and the other two fields are automatically populated. The market price was $52.43 at the time we created the order, but the actual price we pay for the shares can vary a little bit as the market price is changing every second and could be different when we actually submit the trade. Robinhood tells us the estimated cost to us is $5,243 based on this market price. Finally, we will click on “Review” to confirm we’ve entered the trade details correctly and then we can submit the order.

Changing the Order Type

Because you technically don’t know the exact price you would end up paying when using a market order, many people prefer to play it safe and use what’s called a limit order. You can change your order type to limit order by clicking where it says “Order Types” on the upper right corner of the previous screenshot. There are a couple of other order types Robinhood lets you choose from, but market order and limit order are the most popular ones.

Placing a Limit Order

A limit order is safer than a market order because it requires you to specify the highest price per share – or limit price – that you’re willing to pay for the shares you want. If you choose “Limit Order”, Robinhood will only purchase the shares you want if it can do so at a price that is lower than or equal to (but not above) the limit price you specified. In the screenshot below, you can see we changed our order to a limit order and the only difference is we now specified a limit price of $52.40, three cents below the current market price. The downside to this order type is that it may not get filled if the market price stays at or rises above $52.43, whereas market orders are executed immediately.

Robin Hood For Beginners

Robinhood for Beginners Summary

Robinhood is a very simple and intuitive app for beginners to use. The account opening process is quick and easy (and even easier when you use our step by step article on how to open the account), and placing trades on the app is even faster.


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