Robinhood Review: Is Robinhood the Best Trading App in 2021?

Robinhood is designed:

It offers “investments for all” through a simple online platform and mobile application that trades stocks, options, ETFs, gold, and crypto for free. However, the broker has been in the news before due to a seemingly controversial practice:

• In December 2020, the SEC accused Robinhood of deceiving customers. According to the promoter, Robinhood offers commission-free trading but orders are executed at lower prices than other brokers. According to the SEC, Robinhood makes money from its customers through payments with larger order streams.

• The state of Massachusetts wants to revoke its brokerage license and accuses Robinhood of “encouraging inexperienced investors to engage in unlimited risk businesses.”

• In February, approximately 90 lawsuits were filed against the company after Robinhood took unprecedented steps to stop or restrict trading in certain securities.

Investing involves risks. As trading is becoming accessible to everyone these days, it is important to do your research on the stocks and platform you choose to invest on. It is too early to know the ramifications of these allegations and lawsuits. Meanwhile, this Robinhood analysis looks at how the platform works.

Start reviewing Robinhood by evaluating the strengths and weaknesses of the platform:

BENEFITS

• Trading in stocks, gold, ETFs, options, ADRs, and cryptography

• No assignment

• No minimum deposit

• Partial thesis allowed

• The cash management account receives 0.30% of the APY

• The mobile app is easy to use and offers tutorials for beginners

Needles

• A current range of legal issues from users and governments for allegedly dubious practices

• Research tools and technical analysis can be improved. The few available require a paid subscription.

• There are not mutual funds or retirement accounts available

• Limited customer support options

• Robinhood Gold offers margin trading and research tools for $ 5 per month, but many brokers offer them for free.

What is Robinhood?

Robinhood is a trading application designed to make investing and trading accessible to all through one simple platform. Robinhood’s commission-free approach was part of the reason it became the fastest-growing broker shortly after launching in 2014. However, other brokers soon found out and didn’t even offer commission trading.

Overview of functions and accounts

Robinhood’s interface is as simple as possible. While ideal for beginners who may be overwhelmed by more advanced platforms, the application is still very functional for intermediate marketers. Some of the main features of Robinhood are:

Research tools

The “meaty” tools are hidden behind a wall. Only Robinhood Gold members can access Nasdaq TotalView Level 2 and Morningstar Market for $ 5 per month.

High Yield Cash Account

Save your money between transactions in a cash management account that earns 0.30% APY. Based on current rates, Robinhood’s cash account can be considered a high yield. You will also receive a debit card with which you can pay bills or withdraw money from more than 75,000 ATMs.

Fractional shares

Robinhood allows partial shares, so you can buy shares for less than the value of an entire share. For example, you can buy Amazon or Bitcoin for $ 5 even if a stock is currently worth thousands of dollars. You end up getting a share of a share, let’s say 0.02.

Recurring investments

Automate your investment plan by making a dollar purchase of your choice. For example, you can plan to send $ 10 from your checking account every month on the 15th to buy XXX stock. Robinhood buys the stock for you at the current price.

Robinhood Gold

More advanced traders may be willing to pay $ 5 a month to upgrade to Robinhood Gold. Its main strengths are research tools (Morningstar and Level II Market Data) and margin trading, which mainly consists of trading borrowed money. However, margin trading and the most advanced search tools are usually offered for free by competing brokers.

Exercises

Robinhood does not charge any fees or negotiation fees, but there are other possible fees that can be avoided if you are aware of them:

• Outgoing transfer fee: $ 75

• Cost for paper statements: $ 5

• Margin above $ 1,000: 2.5%

Who is Robinhood best suited for?

Robinhood is the best solution for the new investor who wants to learn more about trading without major financial obligations. New accounts also receive free shares when they register for the first time. You can stay ahead of the platform by making it easier to negotiate or finding solutions to make it work for you, as separate sources for research and technical analysis.

Low initial investment

You can start with $ 1 if you like. Robinhood does not need a starting balance. Partial shares are allowed, which makes a $ 1 investment quite possible, even if you buy a share that sells for $ 500 each.

Transaction types

You can trade stocks, ETFs, options, gold, cryptocurrencies, and ADRs on one platform. Robinhood’s mission to make trade accessible to all is promising.

Simple interface

Simple and practical mobile and online platform designed to remove waste from the market. It’s easy to find what you need. Touch “stock details” to see the statistics, charts, their position, and the type of “collection” in which the shares fall, as the best and most popular.

When it’s time to trade, you can place limit orders and stop orders, market orders and stop orders. Not sure what that means? You have access to investment terms and principles and Robinhood Snacks, which places a “daily dose” of investment news in your application or email box.

Where Robinhood Fails

There are some points that can improve Robinhood.

Customer service

Given the number of Robinhood users just starting out, it’s surprising that there is no access to a customer service representative to ask for help. Support is only available by email after registration, but what if you are unable to log in to your account or have urgent problems?

One of these lawsuits against Robinhood is the result of this problem. A user with a false negative balance of $ 730,000 committed suicide when he mistakenly believed that he could get so much debt and get no explanation.

Transparency and reliability

In light of recent lawsuits and allegations by account holders, Robinhood has a lot of work to do with its policies. It is not yet clear whether this would be a one-off situation and whether we would trade certain stocks, leave investors with stocks, or miss opportunities.

Furthermore, the SEC says that Robinhood can make money by executing its orders at a less favorable rate, so the young broker has to follow his practices.

Translate »