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Day trading on Robinhood
It’s possible but risky — especially given the platform’s limited charting tools.
Robinhood’s simplicity makes it a popular tool for new investors, but it wasn’t designed with day traders in mind. Even if you meet the platform’s day trading criteria, its inadequate research and analysis tools could put your investments at significant risk.
Can I day trade on Robinhood?
Yes, you can day trade on Robinhood. But Robinhood Instant and Gold account holders with less than $25,000 in equity are limited to three day trades in a five trading-day period.
A day trade is any security that is bought and sold on the same trading day. Day trading can be lucrative — but it’s high risk. Even professional traders that dedicate their careers to navigating the nuances of day trading face substantial losses when things go wrong.
To execute successful day trades, you need a well-developed trading strategy, a robust understanding of the market and sufficient charting tools.
And this is where Robinhood falls short. The platform lacks the advanced charting and analysis tools of competitors, including Webull, Tastyworks and TD Ameritrade. Without advanced tools and indicators, day trading on the Robinhood platform could lead to sizable losses.
The pattern day trader rule
The pattern day trader rule limits day trades to three day trades over five business days for anyone with less than $25,000 in their account. The rule — set by the Financial Industry Regulatory Authority (FINRA) and governed by the Securities and Exchange Commission (SEC) — applies to all US brokerages.
Robinhood Instant and Gold account holders with less than $25,000 of equity in their account at the end of the previous trading day are not permitted to day trade. Robinhood explains that this restriction is designed to protect new investors with limited funds from taking on too much risk.
Place more than three day trades within a five day trading period and Robinhood marks you as a pattern day trader (PDT). Once you’re marked you can’t place day trades for 90 days unless you bring your account equity above $25,000. Traders can track the number of trades they’ve made in five days by scrolling down to the day trades section from the Investing page of their account.
There are two ways to day trade on Robinhood and avoid being marked as a PDT:
- Hold a Robinhood Cash account
- Have at least $25,000 in equity in your Instant or Gold account at the end of the previous trading day
Can I day trade if I downgrade to a Cash account?
Yes, you can day trade by downgrading your Robinhood Instant or Gold account to a Cash account — the same Pattern Day Trading restrictions don’t apply to Cash accounts. Investors new to Robinhood automatically start with a Robinhood Instant account: a margin account equipped with Robinhood’s instant deposit feature and extended-hours trading.
A Robinhood Gold account can’t be directly downgraded to a Cash account — it must first be downgraded to a Robinhood Instant account:
- From the Robinhood mobile app, tap Account in the bottom right corner of the screen.
- Tap the three bars in the top right corner of the screen.
- Tap Settings.
- Tap Robinhood Gold.
- Tap Downgrade from Gold.
To downgrade from an Instant account to a Cash account, email Robinhood support and request the change.
What tools does Robinhood offer for day traders?
Investors can use Robinhood’s collection of top stock movers to identify trending securities and perform a close analysis of performance with charting tools. Gold members have access to premium Morningstar research reports and Level II Market Data.
WATCH: How to day trade on Robinhood
Watch our short video on how to execute a trade on Robinhood, and how its charts and tools compare to other trading platforms.
What tools is Robinhood missing?
Robinhood’s sparsely populated stock data and inadequate research tools can be problematic for any investor. But advanced traders especially must be wary of using this platform for day trading.
Robinhood’s stock data is far from comprehensive and its charting technology is too primitive to provide a close reading of stock performance. Here are some of the tools the Robinhood platform is missing:
- Stock screeners. Stock screeners scan the entire market to provide averages on trading volume, price, charting patterns and more. They’re an essential analysis tool, allowing investors to apply numerous filters to narrow and compare stock options.
- Heatmaps. Some platforms, like TD Ameritrade’s Thinkorswim, offer interactive heatmaps to help investors visualize the market.
- Charting indicators. Robinhood’s candlestick charts are rudimentary at best. With only five technical indicators to choose from, the platform’s charts are missing many essential indicators, including volume-weighted average price. Compare this to Webull’s 50 indicators, TradingView’s 100 indicators or Zacks Trade’s 120 indicators.
- Customizable data. Platforms like Webull and TD Ameritrade feature flexible trading technology that allows investors to create their own customized alerts and indicators to better find the securities they seek.
- Time and sales. Time and sales, also called the tape, is a detailed rundown of every trade within the market, and helps day traders gauge shifting trends and market momentum.
Pros and cons of day trading on Robinhood
Benefits and drawbacks to consider before attempting to day trade on Robinhood:
- Commission-free. Robinhood made a name for itself as one of the first trading platforms to implement commission-free stocks.
- Easy-to-navigate. Many investors report that Robinhood’s platform is intuitive, user-friendly and easy to use.
- Instant deposits. Robinhood Instant account holders gain instant access to deposits of up to $1,000.
- Unreliable. Robinhood experienced multiple service outages in 2020.
- Limited research. Day traders will find it next to impossible to execute in-depth research or stock analysis using the platform’s limited tools.
- Limited support. Customer support is only available by email.
- Margin restrictions. You need to have at least $25,000 in your Instant or Gold account to trade with leverage — a strategy many day traders rely on. Robinhood’s equity requirement makes it challenging for day traders to get started.
Can I short stocks on Robinhood?
No, you can’t short stocks on Robinhood. Short selling is a complex trading strategy that involves borrowing shares, selling them, buying them back, repaying the shares at a lower price and profiting from the price difference. Platforms like Interactive Brokers, TD Ameritrade and Firstrade let traders short stocks but Robinhood doesn’t.
Compare Robinhood with alternative day trading platforms
Compare the details for Robinhood and other platforms suited for day trading.
Day trading is risky under the best of circumstances. And while some platforms are equipped to cater to advanced traders, Robinhood’s insufficient research and analysis tools make it an inappropriate choice for day traders.
The ideal investment method for your funds depends on your trading experience and long-term financial goals. Compare trading platform options with multiple providers to find the brokerage best suited to your needs.
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