All research, writing and data collection at StockBrokers.com is done by humans, for humans. If a streamlined trading platform and mobile experience, an IRA with a contribution match or the ability to trade cryptocurrency are important to you, Robinhood is a solid choice. But now that plenty of online brokers have joined Robinhood in eliminating commissions, casual investors can afford to shop for the broker that suits them best. Interested in other brokers that work well for new investors? See NerdWallet’s rankings of the best brokers for beginners. Another content option from Robinhood is the Under The Hood podcast hosted by one of the co-founders.

A big downside is that you aren’t guaranteed to receive IPO shares when you request them. This is because Robinhood gets a limited amount of shares of each IPO. Robinhood is able to offer free trades to its users because it is making money from market makers and exchanges via a process called “payment for order flow”, or PFOF. Robinhood will match deposits into taxable brokerage accounts by 1%. If you contribute $10,000 to your account, you’ll earn $100 if you’re a Robinhood Gold customer.

1. M1 also offers a high-yield savings account, as opposed to just offering interest on cash balances in your investing account like Robinhood does.
2. Robinhood Gold members can now earn 5.00% on uninvested cash.
3. Robinhood is a solid product and, in my opinion, is perfectly suitable for investors who want to take a more hands-on approach to managing their portfolio.
4. The broker is frequently criticized for encouraging irresponsible investing, a concern I share.
5. Robinhood has not had any known major security incidents since 2021.

However, you can’t customize charts, and Robinhood doesn’t provide drawing tools. In terms of other trading technology, Robinhood gives you the ability to make recurring investments, which is a helpful feature. In keeping with its simplified approach to investing, Robinhood doesn’t allow you to perform backtests or offer a demo account. The company has also been a game changer for some of its clients.

For example, if you’re a new investor also looking to accumulate funds to invest, Acorns is an excellent choice. It allows you global markets weekly update to connect to a spending account that will round up your purchases and transfer the change into your investment account. It’s not unusual for brokers to experience customer service issues and regulatory challenges. However, Robinhood seems to have encountered more than the typical amount, especially given the platform’s relative youth. If at any time within five years you withdraw a portion of the amount that received the IRA match, the match will be reduced proportionately. For example, if you transferred $10,000 into the account, and earned a $300 match, but withdrew $2,000 six months later, $60 of the match ($2,000 X 3%) will be withdrawn to cover the fee.

Is Robinhood Gold worth it?

However, if you want to sell your fractional share, you must wait until the company has enough pieces to make a whole stock; these smaller pieces cannot be traded on their own. There’s no opening minimum for brokerage accounts, but there is a $2,000 minimum for margin accounts. This is a regulatory requirement, so it’s not unique to Robinhood. They offer a Robinhood Cash Card as well, a debit card helps users buy nike shoes and deadstock sneakers grow their investment account.

The platform also offers IRAs with up to a 3% match for every dollar you contribute to a Robinhood IRA. Only Robinhood Gold members get access to the highest match bonus. Payment for Order Flow involves Robinhood directing its customers’ trades to third-party market makers in exchange for a fee. These market makers, in turn, execute the trades and often provide a small payment to Robinhood for each transaction (something like a fraction of a penny per share).

Other Notable Robinhood Features

Founded in 2013 and based in Menlo Park, California, Robinhood is an online broker that has raised $2.2 billion in venture capital funding and has more than 14 million monthly active users. The millennial- and Gen Z-focused broker is best known for offering $0 stock, ETF, options and cryptocurrency trades via an easy-to-use website and mobile trading app. Robinhood is a good fit for beginner investors, and the company made our list of the best brokers for beginners. The app offers a streamlined, approachable and easy-to-navigate trading platform, plus extremely low costs, which beginner investors tend to prioritize.

Alternatively, if your primary plan is to trade cryptocurrencies, crypto exchanges like Coinbase or Gemini may be a better choice. Finally, Robinhood is a member of the SIPC (Securities Investor Protection Corporation). This means you’re protected against broker failure for up to $500,000 in cash and securities, including $250,000 of cash. However, the coverage does not extend to investment market losses or cryptocurrency positions. Robinhood is best suited for intermediate or advanced investors. This will include experienced investors who are less reliant on customer support, broker investor tools and educational resources.

Cash Management

Despite the limited range of tradable assets, Robinhood does stand out for its cryptocurrency offerings, although its range of available coins is more limited than the best crypto exchanges. In addition, Robinhood launched an advanced charts feature in 2023. This feature allows Robinhood customers to analyze and research company trends and stock prices better. Robinhood users can access news stories and videos about specific stocks and the market from sources like The Wall Street Journal, Reuters, Barron’s, CNN Business, Cheddar and Reuters.

Taylor Hamilton, 23, an IT worker who graduated from the University of Pennsylvania in 2018, opened a Robinhood account and began trading in March. In October 2019, Robinhood gleefully announced to its customers, “Options Stop Limit Orders Are Here,” a nifty feature which essentially puts an overview of foreign exchange derivatives trading on autopilot. Robinhood didn’t invent this selling of orders—E-Trade, for example, earned about $200 million in 2019 through the practice. Unlike most of its competitors, though, Robinhood charges the quants a percentage of the spread on each trade it sells, versus a fixed amount.

Support for more sophisticated order types, like order-triggers-other (OTO) is important because they help traders navigate risk, quickly enter and exit positions, and take gains off the table. As a result, traders using conditional orders can spend more time analyzing the market and planning their next move without having to watch current trades as closely. This is another sign that Robinhood isn’t meant for active traders.

How do you transfer assets from Robinhood to Fidelity?

I was able to get quotes for a few of the larger over-the-counter U.S. stocks, but not many. The securities available to trade at Robinhood are limited. Mutual funds and bonds aren’t supported, which can help build a diversified, long-term portfolio. Robinhood does, however, offer access to more than 650 foreign companies via American Depository Receipts. It also offers exchange-traded funds, including index and bond ETFs. Unlike traditional brokerage firms, cryptocurrency exchanges are not members of the Securities Investor Protection Corporation (SIPC).

Moreover, Robinhood’s web platform and mobile offerings are straightforward to navigate. And you’ll get one share of free stock when you open an account. You’ll also get a free stock whenever you make successful referrals and 1.5% APY on uninvested cash (Robinhood Gold members receive 5% APY). Robinhood also gives users the option to make trades in after-hours or pre-market trading, which is appealing to some investors (but comes with extra risk since there is usually less liquidity). Robinhood is not a traditional bank with branch offices, credit cards, mortgages, wire transfers, and the like.

It’s worth pointing out that options investing carries more risk than stocks and ETFs. And while Robinhood formerly required its users to have a margin account for options trading, you can now trade options with a regular cash account. Robinhood offers stocks, ETFs, fractional shares, options, and cryptocurrencies. Commission-free trading on Robinhood is available for stocks and ETFs.

So when there is a large gap between the bid and asked price, everyone wins—except the customer. Moreover, since Robinhood’s customers tend to trade small quantities of stocks, they are less likely to move markets and are thus lower-risk for the big quants running their models. In the first quarter of 2020, 70% of the firm’s $130 million in revenue was derived from selling its order flow.