The company was co-founded by Vlad Tenev and Baiju Bhatt in 2013. They sought to create a zero-commission trading platform and the idea took off instantly especially with people looking to buy penny stocks. Pre-launch they received $3 million and have grown the initial investment to a company that is valued at almost $6 billion.
The company’s product has expanded along with its finances. The platform that started as a mobile application has grown to be accessible on the web in 2018. As of now, Robinhood has only American customers but is looking to expand into the UK, Europe, and Australia.
The platform expanded to include cryptocurrencies:
- Bitcoin (BTC)
- Litecoin (LTC)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Ethereum Classic (ETC)
and real-time market data for:
|• Bitcoin Gold (BTG)|
• Dash (DASH)
• Lisk (LSK)
• Monero (XMR)
• NEO (NEO)
• OmiseGO (OMG)
• Qtum (QTUM)
• Ripple (XRP)
• Stellar (XLM)
• Zcash (ZEC)
You can open up 1 of 3 types of accounts with Robinhood:
This is the standard account type that every Robinhood user starts with. With it comes instant deposits, no minimum initial deposit, no waiting for money processing when trading & making deposits up to $1000.
As this is an upgrade from Robinhood Instant, you are given more buying power, extended trading hours (30 minutes before opening and 2 hours after closing) but do have to maintain a minimum balance of $2000.
Users have the ability to reduce their Robinhood Gold or Robinhood Instant accounts to the Robinhood Cash account. This type allows for commission-free equity trades and no access to instant deposits or settlements.
In order to trade on Robinhood, you have to deposit money into your account. It’s recommended linking a checking account due to potential transfer reversals.
Here’s the sweetest thing about Robinhood, no commission fees for trades done on their app! No inactivity fees. No withdrawal fees. The only two potential fees include a monthly fee for equity accounts that is based on the amount borrowed and an ACAT fee ($75).
Web Platform Features
The Robinhood website is pretty standard including your accounts financials, stock filters to look at specific stocks, your watch list, market news. I think a unique feature would be their “Top Movers” section which allows traders to instantly see the crazy moves going on in the market. Many times you can find the top 10 penny stocks on Robinhood each day.
The Mobile Robinhood App
The app is pretty similar with a very colorful and friendly look. It is accessible on both iOS and Android. However, unlike the website platform, not all of the features listed above are available on the same screen. You have to move around and find the features by using the bottom tabs on the app.
Technical research is a no-go on the app, which isn’t that big of a deal you just have to go back and forth when placing your trades. Free demo accounts are also not available on Robinhood, so for those who like to paper trade to practice must use a different program.
In terms of platform security, Robinhood utilizes two-factor authentication and TPS encryption to protect users accounts and personal data.
Robinhood is a part of FINRA (Financial Industry Regulatory Authority) and SIPC (Securities Investor Protection Corporation) which gives $500,000 worth of insurance per customer, with a $250,000 sib-limit for cash claims. To give further insurance coverage to its consumers, Robinhood has additional insurance providers from London Underwriters.
Benefits & Costs
Robinhood prides itself of the concept of ease. This is clearly reflected in Robinhood’s platform benefits. Traders get charged 0 trading fees, no minimum initial account balance, the app is easy to learn for new traders, and bank transfers are free which is attractive to small upcoming traders. This is especially true for those putting a list of penny stocks together. The low cost compared to other top online penny stock brokers is very beneficial especially for those just getting started with little money.
With ease comes some costs for Robinhood. The platform underperforms with providing more advanced traders with the tools they need to be successful. This ranges from the extremely basic charts, limited availability with cryptocurrency, and potential 20-minute delays with market data. Those with Robinhood Gold accounts can potentially have negative balances/buying power.
A separate issue that can become a serious problem is regarding Robinhood’s customer service as their services aren’t available 24/7 so any issues would need to be resolved on the next business day.
If you’re looking to save money on those tedious commission fees that other platforms apply on traders than honestly look no further. While complaints about the platforms “simplicity” are understandable from seasoned traders, just use another platform to gather your research and place trades on Robinhood.