Robinhood — despite the headlines — remains one of the most accessible and beginner-friendly trading platforms on the market. And it boils down to this:
- It’s easy to sign up
- It’s easy to use
- It’s commission-free
Robinhood pioneered the commission-free trade movement and continues to boast one of the best-priced apps on the market. Its intuitive interface makes it a natural fit for new traders. And with no account minimums, beginners can kickstart their new portfolio with any amount.
Nick Battista, host of Options Trading Concepts Live with Tastytrade, believes Robinhood revolutionized access to the markets for retail investors. “What was once a passive activity is now accessible from the palm of your hand with millisecond execution speed,” he explains.
Now, a few caveats: Robinhood’s assets, accounts and research tools are limited. It’s also experienced a series of service outages over the years — and saw massive backlash when it limited access to trending stocks in early 2021.
Robinhood is a practical option for newbies, but that’s about it. Experienced traders won’t be satisfied with the platform’s lack of sophisticated tools or account options.
|It offers commission-free trades and account fees are on par with competitors.|
|It has four securities to offer, including cryptocurrency.|
|Support is only available by email, but agents typically respond within a day.|
|Robinhood scores high on the Apple App store, but slightly lower on Google Play.|
|Research and tools|
|You can pay a premium for more robust reporting, but free resources are limited.|
|Multiple service outages have been reported for this platform.|
To learn how our star ratings are calculated, read the methodology at the bottom of the page.
You’ll get unlimited, commission-free trades across the following investment products:
- Stocks and funds. Browse over 5,000 available stocks and ETFs, including fractional shares for as little as $1.
- Options. Explore options trading with no per-contract fees.
- Cryptocurrency. Buy and sell 17 different cryptocurrencies any time of day, including Bitcoin, Litecoin and Ethereum.
- IPOs: Robinhood has also recently implemented a feature that lets users make offers for shares of select initial public offerings (IPOs) at IPO, before shares open for trading.
Can you buy Robinhood shares on Robinhood?
Yes, eventually. According to Robinhood’s S-1 filing, it plans to reserve 20% to 30% of the shares in its upcoming IPO for individual investors. Robinhood plans to offer its stock through its IPO Access program, giving its traders first crack at its shares at the pre-IPO price ahead of its public launch.
Robinhood is designed with the beginner in mind, with commission-free trades, a simple signup process and an intuitive interface. No account minimums mean newbies can open an account with no upfront investment and purchase fractional shares for just $1 apiece.
For advanced investors, Robinhood Gold offers Morningstar research reports, Nasdaq Level 2 Market Data and instant access to deposits of $5,000 to $50,000 for $5 monthly. But Robinhood’s lack of access to mutual funds, individual bonds and analyst research could be a deal-breaker for more active investors.
With this in mind, Robinhood’s trading platform is best suited to the following types of investors:
- First-time investors. With no account minimums or commissions in sight, Robinhood’s platform is ideal for beginners looking to explore their trading options.
- Small-quantity investors. Fractional shares allow small-quantity investors to purchase shares for as little as $1.
- Cryptocurrency investors. Cryptocurrency investors can swap digital currency with no commission fees 24/7.
Now, while Robinhood is suitable for beginners, it’s far from risk-free.
John Stoj, financial planner, investment adviser and founder of Verbatim Financial tells Finder, “It can be argued that fintech platforms like Robinhood have been beneficial because they have introduced more people to the market, but for many users, the cost may be greater than the benefit. For the vast majority of people, the more they trade, the lower their returns, so to the extent that Robinhood encourages trading rather than investing, there will be a negative impact on their investments long term.”
The bottom line? An uninformed trade is a risky trade. And just because Robinhood doesn’t charge commissions doesn’t mean it’s a free-for-all. Read up, do your research and equip yourself with the knowledge you need to navigate the market with confidence.
Here’s how Robinhood sets itself apart from the competition:
- Intuitive app. The app makes it easy for beginners to get started with trading.
- Commission-free trading. Robinhood doesn’t charge any commissions or fees to trade — even on options contracts.
- Fast approval. Deposits of up to $1,000 are approved nearly instantly.
- Cryptocurrency support. One of Robinhood’s major selling points is its cryptocurrency support, as not many platforms offer this feature.
- No account minimums. Sign up for free and start trading with any amount.
- IPO access. Robinhood offers access to pre-market IPO shares before they’re released on a public exchange.
Consider the following pitfalls before signing up:
- Limited support. The only way to access Robinhood customer support is through its online ticketing system.
- Limited investment options. You can’t invest in mutual funds or bonds through Robinhood — something that competitors like Chase You Invest and Ally Invest offer.
- No IRAs. Robinhood’s account options are limited to individual brokerage accounts, so if you’re seeking an IRA, you’ll have to look elsewhere.
Robinhood trades have been commission-free since its launch in 2015. Back then, no commission fees were a pretty big deal, giving Robinhood an economic edge over its competitors. But today, many other trading platforms have dropped their commission fees, making it challenging for Robinhood to market itself as a low-cost alternative.
That said, Robinhood has many competitors beat when it comes to per-contract fees for option trades. Where many of its competitors, including Interactive Brokers, TD Ameritrade and Ally Invest, charge between $0.25 to $0.65 per contract, Robinhood offers these trades for free.
|Stock trade fee||$0|
|Options trade fee||$0|
|Robinhood Gold||$5 monthly|
You can sign up on Robinhood’s website or download its mobile app to get started:
- Select Sign up.
- Create an account using your first and last name and choosing a username.
- Enter your contact info, including your address and phone number.
- Verify your identity.
- Fund your account.
- Submit your application and wait for Robinhood’s email for the next steps.
To be eligible for a Robinhood account, you’ll need:
- A valid US residential address
- To be 18 or older
- A valid state-issued ID
- A valid Social Security number
You’ll be asked to provide the following information during sign up:
- First and last name
- Address, phone number and email
- Social Security number
- Valid government photo ID
- Employment information
- Financial institution account information
How does the free stock program work?
Robinhood offers a free stock when you sign up and link your bank account. Available stocks vary, but Robinhood states you have a 1 in 150 chance of receiving Visa, Johnson & Johnson or Apple stock.
Also, if you invite your friends to join, you could earn a reward stock. When your friend signs up through your referral link and connects their bank account, you’ll both receive a free stock. Stock rewards are limited to a maximum of $500 per user per year.
The free tier provides some basic research to help you stay on top of the market, but seasoned investors and day traders might find it lackluster. You’ll get a feed of news articles about the market and specific stocks and companies from sites like the Financial Post, MarketWatch, Reuters and the New York Times, along with daily information on which stocks are moving the most.
For an additional $5 a month, Robinhood investors can sign up for Robinhood Gold to receive Morningstar and Nasdaq Level 2 Market Datastock research reports. If you’re looking for in-depth research, you’ll likely want to shell out for the upgrade.
How does the Robinhood IPO Access feature work?
IPO Access is a feature that allows traders to buy shares of companies at their IPO price before they go live on public exchanges. Here’s a look at the process:
- Discover upcoming IPOs. From the Robinhood app, explore your IPO investment options by scrolling through the list of companies preparing to go public.
- Research the listing. Tap into a company’s preliminary prospectus to learn about its business model, performance history and any potential risk factors.
- Follow companies. If a certain IPO catches your eye, follow the company to stay up-to-date on the progress of its upcoming listing.
- Request shares. When you find a listing you’d like to invest in, request shares at the initial listing price.
- Review your order. While you wait for the listing to become available, feel free to edit, change or cancel your order — you’re not locked into your request.
- Order fulfillment. Once the listing is live, your order will be submitted. It’s possible you’ll receive fewer shares than you requested, and in some circumstances, you may not receive any shares at all.
What is Robinhood Cash Management?
The Robinhood Cash Management account offers brokerage account holders the opportunity to earn interest on cash sitting in their account. As of March 2021, Robinhood offers 0.3% annual percentage yield (APY) and a free debit card with access to more than 75,000 nationwide free ATMs. There are no associated maintenance fees, foreign transaction fees or account minimums.
Robinhood was founded in 2015 with headquarters in Menlo Park, California. It has its own Better Business Bureau (BBB) page but is not a BBB-accredited business. It’s registered with the US Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC).
Robinhood customers are protected up to $500,000, including up to $250,000 in cash balances. Cryptocurrencies are excluded from this protection, as they aren’t stocks.
Robinhood profits from payment for order flow
Robinhood may market itself as a commission-free platform, but it needs to earn money somehow, right? It is a business, after all.
Robinhood profits from payment for order flow (PFOF). This process allows brokerages to route customer orders to market makers for execution. These market makers then fill the order at a slightly better price than the investor was willing to pay and pockets the difference. As compensation, brokerages like Robinhood receive a payment from the market maker as thanks for the order: payment for order flow.
Robinhood isn’t the only brokerage that profits from payment for order flow — it’s a fairly common practice. But some brokerages, like Public, have turned from the PFOF model in favor of alternative — arguably more transparent — profit-earning practices, like optional tipping from investors.
Robinhood reviews are largely negative
Overall, Robinhood’s online reputation is fairly negative. It’s amassed nearly 1,300 official BBB complaints over the past three years and averages 1.22 out of 5 stars based on 130 customer reviews as of March 2021. And its Trustpilot rating isn’t much better — averaging 1 out of 5 stars based on 3,000 reviews.
Many recent reviews mention outages associated with the recent surge in trading activity — in particular, the restrictions on trending shorted stocks, like GameStop and AMC. These outages locked Robinhood investors into unfavorable positions and left them unable to execute trades, ultimately culminating in the loss of capital. The outages also resulted in multiple lawsuits and drew the criticism of Congress, prompting a House Financial Services Committee hearing where Democrats argued to end Robinhood’s “gamification” of trading and lack of transparency in how it profits from traders.
Has Robinhood put its outages behind it? It’s tough to say, but for what it’s worth, one of our staff members who uses Robinhood says they haven’t experienced an issues with the platform since.
Before the GameStop fiasco, negative reviews called out Robinhood’s limited customer support and delays in the cash withdrawal process. On the upside, customers love Robinhood’s commission-free trades, easy-to-learn platform and free stock referral program.
Overall, reviews of the Robinhood app are fairly positive. While the app has 1.7 out of 5 stars after 366,306 reviews on Google Play, it maintains an impressive 4 out of 5-star rating on the Apple App store after a whopping 3.2 million reviews. Many recent negative reviews on Google Play and the Apple App store cite Robinhood’s 2020 outages.
Robinhood service outages
In March 2020, the Robinhood trading platform experienced three major outages. The shortest outage lasted just under two hours, while the longest took 16 hours to resolve. In a blog post on its website, Robinhood founders Baiju Bhatt and Vlad Tenev explain that the outages were a combination of highly volatile market conditions and a record volume of trading action on the platform.
The founders state that it’s making improvements to shore up Robinhood’s internal infrastructure with reduced interdependencies and added redundancies. While the site has generally been stable since, it did have a short outage on June 18.
You can connect with Robinhood support in two ways:
- Phone. Request a call in the app by selecting the help topic Investing, then choosing Options. Phone support is only available weekdays 8 a.m to 8 p.m. EST, but it may be available 24/7 soon.
- Email. Fill out an online support ticket request on Robinhood’s website for an email response from the customer service team.
*Signup bonus information updated weekly.
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
Robinhood’s trading platform is a solid jumping-off point if you’re just getting into active investing or want to avoid commission fees. Its target audience includes first-time traders and cryptocurrency investors, offering accounts with no minimums, annual fees or inactivity fees.
But the platform isn’t for everyone. It’s limited by its simple design and lack of access to mutual funds and IRAs. More experienced day traders may want to opt for a platform with more sophisticated research tools.
How we rate trading platforms
★★★★★ 5/5 — Excellent
★★★★★ 4/5 — Good
★★★★★ 3/5 — Average
★★★★★ 2/5 — Subpar
★★★★★ 1/5 — Poor
We analyze top online trading platforms and rate them one to five stars based on factors that are most important to you. These factors include fees, securities available for trade, customer support, customer feedback, platform resources and overall reliability.
For a complete breakdown of how we score each category, read the full methodology of how we rate trading platforms.