Robinhood
TRADE FEES: (A)
https://robinhood.com/us/en/support/articles/trading-fees-on-robinhood/
STOCKS:
Per Trade Rate:
.00019 per share (plus small FINRA fee)
.01-.03 Per share of ADR (plus small FINRA fee)
For all of Robinhood’s many flaws, their fees are definitely NOT one of them. To their credit Robinhood is another commission-free broker, only passing on minor regulator fees to the consumer. They do not charge a platform opening fee, do not charge fees for transferring funds into the account and do not charge any maintenance fees. There are small fees for doing things like overnight check delivery, but they are reasonable. And they do NOT pass on any fees to small customers (example- customers with > $500). If there is one thing Robinhood does well, it is avoiding bleeding their retail traders dry. Even the options contract fees remain more than competitive (though there are HUGE issues with their options to be discussed later).
It is important to note that they do have a subscription service (Robinhood Gold) for $5 a month (first 30 days free).
Robinhood Gold supposedly gives you access to:
-Up to $5,000 instant deposit
-Margin
-Level 2 Market Data (from Nasdaq TotalView)
-Professional Research from Morningstar (reports on companies near earnings/major events)
I cannot speak to the quality of the information and data you will receive from Robinhood Gold but the value seems to be well above the $5 a month price tag. This has retail trading appeal written all over it.
OPTIONS:
$.002 per contract (on sells, no greater than $5.95)
ACCOUNT TYPES/MINIMUMS: (C)
All individual accounts, with some slight differences within.
1. Robinhood Instant
2. Robinhood Gold
3. Robinhood Cash
ACCOUNT MINIMUMS:
There is NO account minimum. Robinhood is designed for low account size traders.
MARGIN:
If you want margin, you must have at least $2,000 or 100% of the security’s purchase price deposited into your account. This is regulatory not Robinhood.
You only get 2:1 margin at best on 2.5% flat interest.
Something we need to remember is that Robinhood is not entering the trading platform market to steal IRA accounts and corporate accounts from its’ competitors. It is here for retail traders and people who want something “easy” to use. Thus, you can only open your individual trader account. Within there you can determine if you want margin, Robinhood gold, or just cash. There are no account minimums. Also, something to note, you get up to $500 in reward stocks each year for inviting friends.
They do NOT provide you the same type of 4:1 intraday margin as many other platforms, but I believe it is because they know most of their clientele is inexperienced and this protects them. Their margin fees are also at an industry low.
Because of their limits they currently do NOT allow trading/investing in certain OTCs, preferred stocks, mutual funds, bonds/fixed income, closed-end funds, units, etc. They DO, however (depending on the state laws) allow commission-free trading in 7 cryptos.
So, their account types are obviously very limited and not for everyone. But for the average trader, this simplicity also becomes appealing to them. Despite their low margin, I would argue that this actually protects their largely inexperienced users.
ROBINHOOD MOBILE/WEB TRADING: (A-)
Now obviously this is where Robinhood would be striving here considering that THIS IS ALL THEY HAVE. They do not have an actual “trading platform”. This is a purely web browser-based system. So, it is naturally designed to be used on the go and with ease from any device. It is still missing key features that many platforms have however because Robinhood as a company does not offer them (which you will see). It is BASIC. They are essentially trying to make it so anyone can use it, making the UI and interface simple and pretty.
LOCATING SHARES: (F)
So here is one of the kickers…..you cannot short shares on Robinhood. So there is no share locates because all you can do is buy (minus selling a position). Now you can still buy inverse ETFs, buy Put Options, and, funny enough, sell naked options Calls. But you cannot short a stock in Robinhood. One might argue that, like with margin, this protects their inexperienced retail users, but it is still a glaring thing to be missing. Robinhood better hope we don’t enter a bear market ever again……
And this all isn’t event touching upon the old Robinhood Gamestop (GME) debacle. If you want to know more on this, there are tons of videos out there (including ours on our youtube). But Robinhood has since had some serious egg on its’ face after forcing user to sell their shares and stopping people from buying.
ROBINHOOD PLATFORM: (C-)
If you haven’t come to this conclusion, Robinhood is NOT my favorite trading “platform” out there by any means. I would personally never use them. HOWEVER, that does not mean that they do not have things that appeal to them and that they do not have their place in the market. The only way I see this being worth the limited capabilities is if you want a cheap “platform”, low fees/costs, and that none of the things I mentioned that they are missing bother you. Do not plan on day trading quickly on them and don’t plan on day trading multiple stocks at once effectively. Do not expect to be able to do anything “fancy”. No hot keys, no API, no shorting etc.
What if you are a new trader who has a small account and don’t want to commit to one of the more fancier/costly platforms? Well, you might have some bigger reasons to cut your teeth in the markets with robinhood. But I would advise against going too exposed in the markets with them. Also I cannot speak to how easy it will be to get your money out.
What if you are the everday Wallstreetbet trader/investor? This might suffice. And that is not intended to be an insult. If you want coding, hot keys, speed, routing options, etc then this is not for you. But if you are a more cost focused trader who wants to take a few YOLOs, then by all means who am I to stop you.
It is also STAGGERING to me that they do not allow shorting, but you can burn your money in the options market, including selling options, to your hearts content. Their order types are also limited to market, limit, stop loss, stop limit, trailing stop, and recurring (buy only). You have no complex options order capabilities and thus are further limited in your trading strategies. So don’t expect much from their execution-side.
This platform is about as bare bones as it gets (it is hard to call it a platform since it is so web browser focused). The Gamestop debacle also soured their reputation with their largest userbase. Now that Robinhood has IPO’d into the market, will they continue to use those funds to improve? Who knows. Their mission is supposed to be for the people, so will we continue to see improvements? To be fair they have improved their customer service over the last year. So MAYBE our opinion on them will grow as they continue to grow in the marketplace.
API SOFTWARE: (F)
They don’t have it, which shouldn’t come as a surprise to you if you’ve noticed their trend of simplification and basic.
TRADING SIMULATOR: (F)
Yet another thing they don’t have. It’s free and easy to open an account so I suppose they just want you to pop your money right in. No paper trading account or practice account to try the platform.
HOT KEYS: (D)
No hot keys but that is also because there is no trading platform to use them on. There is NOT much order customization you can use anyway. But don’t expect to be the fastest trader out there. Not much more you can say here. Again, so simple a caveman can use it.
CUSTOMER SERVICE: (C-)
They have a moderate FAQ/walkthrough section. They try to answer as many questions as they envisioned their users would have. It is ok, but not the most robust FAQ section I’ve ever seen. If you have further questions, you do have the ability to send them an email. Now I have seen reports from random people on the internet saying that they never got a response, or if they did it took way too long. Now they have lately added a callback system to their support. You request a phone call, and they will reach out to you. While their initial customer service was absolutely appalling, to their marginal credit they are trying to improve it to a baseline function. We will see how this service continues to grow and if it can improve. It could hardly have gotten worse.
CHARTING: (D)
Much like the rest of the “platform” this is about as basic as it gets. Just a simple web browser chart. You can put 4 indicators on your chart at the time of writing this (Moving Average (MA), Exponential Moving Average (EMA), Relative Strength Index (RSI), and MACD). That is it. That is the extent of the technical analysis they offer you. You also cannot greatly alter or move the charts. You can hardly switch timeframes and cannot really manipulate their charts in any way. And in terms of chart-types, you can have candlestick or line.
As you can tell, I am NOT a huge fan of their charts. They are as basic as it comes, almost to the point of being completely detrimental. If you end up using Robinhood, I would at least find another way to use charts. There are plenty of free options to use charts (Tradingview being a great web browser charting system). Just abysmal.
