Robinhood is a US-based zero-fee discount broker established in 2013. Currently, the platform boasts more than 10 million users and hosts billions in transactions. Robinhood targets the millennial investor, connecting with younger consumers who want to get started in investing. The company is regulated by top-tier financial authorities, such as the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Besides the brokerage service, Robinhood introduced a Cash Management service, which can earn interest on your uninvested amounts.
Commissions & fees - (4/5)
Robinhood has some of the most competitive fees in the industry. It is a commission-free broker with whom it is possible to trade stocks, ETFs, options or cryptocurrency free of charge. In addition to US stocks and ETFs, it is possible to trade foreign stocks through ADRs, but this involves a high fee of 50 USD per trade. The company earns revenues by selling its users order flow to wholesale market makers. In contrast, Robinhood Gold service enables access to other features, such as margin trading for 1,000 USD. In order to obtain access to this service, the user has to pay a monthly fee of 5 USD. Other company's fees include a transfer fee equal to 75 USD; write transfer fee of 25 USD for domestic wires and 50 USD for international transfers; a broker fee equal to 10 USD as well as a check fee equal to 35 USD. There are no withdrawal or inactivity fees.
Markets & products - (1/5)
While the company excels in terms of commissions and fees, its product offering has considerable space for development. The company allows you to trade cryptocurrencies in the same account that is used for equities and options. That said, the platform lacks a number of asset classes, such as fixed income, mutual funds, futures or futures options. It does not have penny stocks and does not enable short selling. What is more, the securities are mainly situated in the US markets.
The company also offers Robinhood Cash Management. With this service, any uninvested cash sitting in your brokerage account earns interest. The total yield is comparable to what one might find in a high-yield savings account, and it fluctuates alongside interest rates. This makes it convenient for customers to keep cash in their brokerage account that otherwise would need to be transferred out for a higher yield.
Advanced trading platform - (2/5)
Robinhood offers its downloadable mobile app as well as a web platform (its website) for customers to use. Both platforms have similar feature sets. Overall, both the design of the platform and the set of offered features is very limited as the company focuses on younger traders interested in low trading fees. It does not have a downloadable desktop platform and customization is very limited. However, the interface is very user-friendly. Note that Robinhood crashed three times between March 3 and March 9, 2020 not letting its clients log in and/or trade in volatile market conditions.
With Robinhood, you can place different types of orders, such as Market, Limit, Stop Loss, Stop Limit and Trailing Stop.
It is also possible to set good-till-day (GTD) and good-till-canceled (GTC) order terms. Furthermore, you can find an estimated cost tab when you place an order. Robinhood's web trading platform has an easy-to-understand portfolio and fee report function. You can view the average cost of - and the returns on - your stock portfolio. You can also find a pie chart showing how diversified your portfolio is.
Innovative account opening - (3/5)
Robinhood account opening is seamless and fully digital and can be completed within a day. It takes around 10 minutes to submit your application and less than a day for your account to be verified.
Opening a Robinhood account in the US requires that you are 18 or older, have a valid social security number, have a legal US residential address and status (citizen, permanent resident, valid US visa holder). In order to complete the procedure you are required to fill a short survey and verify your identity. This implies that only US clients can open an account.
However, Robinhood is planning to expand its services into Europe and other continents as well. In a significant step toward this goal, Robinhood has already received a brokerage license in the UK from the Financial Conduct Authority (FCA). The launch is expected sometime in 2020.
There is no minimum deposit for the Robinhood Standard/Instant account. However, upon upgrading to Robinhood Gold, the client is required to make a deposit of 2,000 USD.
There are three account types. If you sign up, you automatically open a Robinhood Standard/Instant account. Later, you can convert your account to a Cash Account or upgrade to Robinhood Gold. One major difference involves limitations placed on day trading, i.e.when you buy and sell a stock on the same day.
With the Robinhood Standard and Robinhood Gold accounts, you can perform only three day trades per week. If you do more, your account will be blocked for 90 days unless you have at least $25,000 on your account. The Cash Account doesn't have such constraints, you can carry out as many day trades as you want without a minimum required account balance.
Customer service - (1/5)
Despite the company's profound focus on inexperienced investors, its customer support is not yet ready to serve this audience. It is possible to reach the support team only via e-mail and only during working hours. There is no phone or live chat option. If you work your way through an extensive menu designed to narrow down your support issue, you can enter your own phone number for a callback.
Education - (2/5)
Robinhood provides educational texts that are easy to understand, yet there are no other useful educational tools, such as a demo account or tutorial videos. It is possible to learn from educational articles listed under the "Learn" tab. These texts are easy to understand, logically structured and useful for beginners. The articles cover a range of basic topics, such as "What are bull and bear markets" and "What is CAGR". There is little guidance on how to use the platform, however, it can be argued that these inquiries are pre-integrated in the highly intuitive platform.
Mobile trading / Apps - (3/5)
Robinhood's mobile platform is one of the most convenient options available. It is available for both iOS and Android devices. The Robinhood mobile platform offers more or less the same design, user experience and functionality as the web trading platform. The research functions are slightly different from the web platform as the detailed stock screener is not available on mobile. Robinhood's mobile trading platform provides a safe login. It employs two-step authentication, including the option to log in using biometric authentication. All the asset classes available for your account can be traded on the mobile app as well as the website, and watchlists are identical across the platforms.
Robinhood's focus on simplicity also has several notable drawbacks. The watch list functionality is extremely basic and includes few optional columns beyond the last price and percentage change. Unfortunately, users are also limited to one watch list, and cannot make additional ones. When pulling a stock quote, charts cannot be modified beyond six default date ranges. Also, no technical analysis can be conducted, and even the landscape mode is not supported for horizontal viewing.
UI / UX - (3/5)
The platform has a very easy-to-use and visually appealing interface. It is possible to easily spot where your investments stand. Furthermore, it is possible to create a watchlist to keep an eye on stocks you’re considering for purchase. It is very easy to navigate and use, but this is related to its overall simplicity. Robinhood's initial offering was a mobile app followed by a website launch in Nov. 2017. As a result, Robinhood's app and the website are similar in look and feel, which makes it easy to invest through either interface.
The downside is that there is very little you can do to customize or personalize the experience. Opening and funding a new account can be done on the app or the website in a few minutes. An order ticket pops open whenever you are looking at a particular stock, option or crypto coin. Prices update while the app is open but they lag behind real-time data providers.
Placing options trades is clunky, complicated and counterintuitive. Although Robinhood allows options trading, the platform seems geared entirely towards making market orders for assets rather than actually attempting to strategically use options to profit. This perception is reinforced by the fact that pricing refreshes every few seconds, but the actual pricing data lagged behind two other platforms we opened simultaneously by 3–10 seconds. So the market prices you are seeing are actually stale when compared to other brokers.
Digital security - (4/5)
Robinhood is regulated by top-tier authorities, provides strong investor protection and discloses its financial information. It is regulated by top-tier financial authorities, such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Mobile app users can log in with biometric (face or fingerprint) recognition or a custom pin. What is more, Robinhood encourages users to enable two-factor authentication. New logins from unrecognized devices also need to be verified with a six-digit code that is sent via text message or e-mail in case two-factor authentication is not enabled.
Robinhood carries no excess Securities Investor Protection Corporation (SIPC) insurance. In conclusion, in 2019 there were no significant data breaches reported by the Identity Theft Research Center.
In late February 2020, Robinhood announced a new feature called "Profiles" which enables users to customize their public profiles and search other users to see where they have invested. This can be regarded as an attempt to move more into the direction of social trading, thus the company's efforts are yet to be monitored.