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Summary and Review of the Robinhood App

Updated on August 29, 2018
Angelo Grant profile image

A first-time individual investor using the Robinhood app to trade stocks has grown his small account 12.5% in under 6 months.

What is Robinhood?

Robinhood is an aptly named securities broker platform that allows users to trade commission-free with no minimum account requirements. Because of these two key features, regular folks now have access and no excuse not to participate in the financial markets. Investing in stocks, options, ETFs and cryptocurrencies is now truly open to the public thanks to Robinhood.

$0 Is Required to Open/Maintain an Account!

Robinhood has brought a new class of investors to the table. None of the big banks or established brokers would have given up wild amounts of profits in fees to extend this kind of access to the little people.

It is Not a Scam! It's Really Free.

In this materialistic world, It is understandable that you should treat anything that is so-called 'free' with a reasonable amount of suspicion. For example, Facebook is free but you become the product. So the question looms, what's the catch with Robinhood? The answer is that there is no catch. I've been using Robinhood since March 2018 and embrace the app with my full support because it has revolutionalized investing and allowed me to become an individual investor overnight. Robinhood is the first company I know of that has offered free stock trading, its proprietary technology allows it to streamline processes that were always free but unavailable to the individual investor. Their platform is simplistic and allows just about anyone to become an individual investor. Before Robinhood, this access was limited to certain circles, now literally anyone with a smartphone can become an investor in stocks, options, and cryptocurrency.

The App is Secure and Your Money and Data is Too

The Robinhood app is protected by password and pin. Signing in to the app requires a pin before you can access your portfolio.Plus an optional layer of security that requires the company to send a unique code to your device each time you sign in.
The Robinhood app is protected by password and pin. Signing in to the app requires a pin before you can access your portfolio.Plus an optional layer of security that requires the company to send a unique code to your device each time you sign in. | Source

The Portfolio shows the total account balance, followed by a performance dollar amount and percentage which includes a chart and can be adjusted to reflect anywhere between 1 Day, 1 Year and all time. Cryptocurrencies are a default followed by any options you hold then stocks immediately followed by watch list. You can rearrange and organize your stock portfolio in the order that you prefer.

Robinhood is Regulated By FINRA and Covered by SIPC

Robinhood is a registered broker with FINRA (Financial Industry Regulatory Authority) and customers are protected with SIPC (Securities Investor Protection Corporation). This simply means that if Robinhood were to go belly-up the SIPC would step in and to certain dollar amount threshold return your cash, stocks, and other securities held with Robinhood.

Robinhood Attracts Millennial Investors

The simple, sleek and fool-proof platform enable novice investors to ease into the markets. The lightweight design of the platform is very attractive to younger investors not wishing to be bombarded or frustrated with complexities. It's a superb product and it's also free hence the company has grown exponentially. The company has crossed 4 million active traders and has a swelling valuation well over $5 billion. Just to give you some perspective on this growth, E*Trade, which is an established Brokerage has under 4 million users and has been around for over three decades.

Portfolio View

You can  simply drag and drop to rearrange and organize your stocks in the order that you prefer. The same can be done with your watch list.
You can simply drag and drop to rearrange and organize your stocks in the order that you prefer. The same can be done with your watch list. | Source

Building a Portfolio With an App Built For Novice Investors

Robinhood connects its users with news feed relevant to stocks on their watch list which is important when considering what stocks to buy/sell and when to do so. Robinhood also groups related stocks in what are called collections. Therefore, customers can easily invest in industries that interest them, for example, real estate.

Not all stocks are available on Robinhood, for example, theMaven Inc (MVEN) which is the parent company of Hubpages is not yet available but most stocks are and more are constantly being added as they work to improve the product and expand globally.

Collections is a Cool Feature That Helps Investors Find New Stocks

Discover new stocks grouped by classes such as “Oil and Gas,” “Upcoming Earnings,” and “Conglomorates,” as well as curated categories such as “Female CEOs.”

Users can chose to view last price / Percentage Change / Equity / Total Gain/Loss / Total Percent Change
Users can chose to view last price / Percentage Change / Equity / Total Gain/Loss / Total Percent Change | Source

Robinhood's Push Notifications Keeps Users Updated on Whats Happening in The Markets

Push notifications direct to the mobile device connect traders with the latest relevant news feed related to their portfolios: investors can expect information such as price alerts, earnings calls, and dividend payments.

Placing an Order on Robinhood

The app walks users through the steps of placing an order as well as the different options
The app walks users through the steps of placing an order as well as the different options | Source

You Don't Have to Sit Around Watching The Stock Market

Place a limit order to catch a stock on the dip and it will execute once the price target is reached. The drawback to this strategy is that your funds will be reserved for the purchase therefore the reserved funds is tied up and no investment activity can occur until the price target is reached.

Bonus Features: The Product Keeps Getting Better And It's Still Free

Web, Options, Extended-Hours Trading

Access your account with most of the same functionalities of the app on the big screen through Robinhood Web. Track your portfolio and invest in stocks, and *cryptocurrency on the website. You can also monitor and close your options positions.

We recently released Discover, a feature that guides investors through placing options trades. To help facilitate the decision-making process we removed unnecessary jargon, and added educational resources to help you learn how to buy a call or a put, the associated risks, and more.

Pre-market and after-hours trading comes standard with Robinhood Instant (Free Version)

Robinhood is a Catalysis for Giant Brokers to Offer Free Trades

Chase, E*Trade, Ameritrade and other big brokerages are lowering fees and offering *commission-free trading as the competition stiffens.

FYI Robinhood offers to pay any fees charged by your old broker to move stocks to the app.

Sugested Resources to Use in Conjuction with Robinhood

Yahoo Finance - you can connect your account and trade directly from their desk. TipRanking, Benzinga, Zacks, Motley Fool, Options Alpha. Tap into your local Library for books on stock trading and options trading.

Robinhood Gold

Robinhood default accounts are marginal trading accounts that allow instant settlement however the free version of the app has small instant margins but can be extended with a subscription to Robinhood Gold.
Robinhood default accounts are marginal trading accounts that allow instant settlement however the free version of the app has small instant margins but can be extended with a subscription to Robinhood Gold. | Source

Robinhood's Limitations

The app is great for investing and swing trading over several days however Robinhood gives a single chart for each stock which does not allow traders to react to the nuances of the market the way Technical traders would like approach stock trading. Both Fundamental and Technical Traders would also appreciate if the app allowed traders to short a stock as well as included more information about a stock such as the float, 200 days moving average, Ex-dividend date, price targets, and the company revenues.

PDR Restrictions

Getting around the Pattern Day Trading Rule(PDR) which prevents margin accounts under $25,000 from making 4-day trades within a 5-day period may be accomplished by turning off instant settlement which converts your account into a cash account. This comes with its own limitations.

What The Future Holds For Robinhood

More great products...

Robinhood aims to be a transformational leader in the field of Financial Technology, therefore, expect them to do phenomenal things.

Trading cryptocurrency is restricted to 13 states (AZ, CA, CO, FL, MA, MI, MS, MO, MT, NM, PA, UT, WI) however Robinhood is working to expand to more states as well as add more types of coins. Also, Robinhood has promised that more options functionality is coming soon.

Expect an IPO once the company has fleshed out all its core products and subscribership to Robinhood Gold pops.

Ready to Get Started With Robinhood?

Here is an opportunity to pay it forward and benefit us both by using my referral code or link. Once you've signed up and received your free stock you'll also be able to make referrals. Because the value of the free stock can vary leave a comment to let us know what stock you received and just how lucky you were with Robinhood.

Rewards limited to $500 total per user.

Understanding the Vision of Robinhood

From Financial Tech Startup to Powerhouse Broker Catalyzing the Evolution of Investing

© 2018 Angelo

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