When it comes to investing, many investors use Robinhood due to its many advantages and endless options. As a dominating trading platform among online exchanges and brokerages, investors can trade stocks, ETFs, cryptocurrencies, and even more.
Many people want to know whether the platform delivers all the necessary pieces a trading platform should typically have. So, in this article, we will cover Robinhoods most essential features. Let’s begin by explaining what Robinhood is.
What is Robinhood?
The commission-free online investment and the stock-trading app was launched in 2013 and has since then reported roughly 6 million users. It allows users to invest in stocks, ETFs, options, cryptocurrency, and more. The most significant advantage of Robinhood is that it enables users to trade stocks, other securities, and cryptocurrency at no cost.
At first, Robinhood was available for Apple users only, but now there is an Android app version as well as a website. Both the app and the website are incredibly easy-to-use due to its overall simplicity. With Robinhood, investors have a clear picture of their portfolio’s performance over time. They can easily adjust their positions and, if necessary, change their strategy.
Robinhood requires no account minimum to trade. It also offers Robinhood Gold, which is a premium account where users can margin to trade. With Robinhood, investors can access extensive information about various positions as well as create watchlists. Let’s review all the advantages of the platform.
Advantages of Robinhood
- No fee when investing in stocks, ETFs, options, and cryptocurrency
- No commissions on stock trades
- Best for the frequent stock, options, or ETF traders as well as high-yield checking and savings.
- No account minimum
- Streamlined interface
- Android and Apple app versions
- An easy-to-use app
- Access to professional research reports, trade on margin
- Access to tools and features such as price movement notifications and customized investment news
- Regulated by the Securities and Exchange Commission (SEC)
- Protected up to $500,000 for securities and $250,000 for cash claims (by the Securities Investor Protection Corporation (SIPC))
- A voluntary member of the Financial Industry Regulatory Authority (FINRA)
- Best for individual taxable accounts and margin accounts.
When it comes to regulations and safety, Robinhood is one of the highest-rated platforms. Robinhood is a member of SEC, SIPC, and FINRA. And while these regulations have several measures in place to ensure user’s money and data are kept safe, there are other risks associated with the platform. Moreover, inexperienced investors should be aware of them.
You can find out more information about Robinhood’s regulations by reading “Smart Investing: Is Robinhood Safe for Investors?”.
Robinhood some disadvantages that traders need to consider before opening an account.
Disadvantages of Robinhood
- No retirement accounts
- Might be risky for new or inexperienced investors
- Limited customer support
- No trading for bonds or mutual funds
Also, many people wonder how Robinhood makes money when they don’t charge a fee nor commissions. Well, the platform makes money through its $6 per month margin and after-hours trading service.
We believe that new and inexperienced investors should gain the necessary knowledge first. Understanding the basics of things such as technical analysis and fundamental analysis can significantly help you make better-investing choices.
Also, it is essential to do your own research. Researching the tools, as well as what the stocks, ETFs, securities, and cryptocurrencies, are a great way to understand the market.
Once you have gained the needed knowledge, it’s time to determine what your goal is. If you want to be a day trader or options trader, then Robinhood is the perfect platform that will help keep the costs down. Lower costs mean higher returns.
Overall, Robinhood is an excellent commission-free online investing platform suitable for both experienced day traders and options traders, as well as inexperienced new investors. It is never too early or too late to start investing.
All of those benefits have made Robinhood increasingly popular among younger investors. Robinhood users can even use the platform to help them complete their annual tax returns. So, given the information above, should investors go ahead with the investment app?
There are essential questions to ask yourself before investing or associating yourself with any platform:
1. What is my risk tolerance?
2. Am I going to follow a long-term or short-term strategy?
3. What is my goal?
4. How much money can I afford to invest?
5. How can I avoid making mistakes?
If you decide investing is your thing, then you should educate yourself, and Robinhood is the perfect place to gain some experience. With the tools from Robinhood and the knowledge needed, you can achieve your financial goals.