Hey ladies! Ready for another broker review?

Now it’s time to make a Robinhood review. We’ll get to know better the following topics:

  • What is Robinhood?

  • How does Robinhood make money?

  • Is Robinhood safe and legit?

  • How to make money on Robinhood?

  • Robinhood Penny Stocks

  • Robinhood day trading.

  • Comparison of Robinhood fees vs. Etrade, Fidelity, and Stash

  • Is Robinhood Gold worth it?

  • Robinhood IPO

What is Robinhood?

This broker is the sweetheart of options traders. Robinhood is a discount broker that operates in the US since 2013. It charges no fees for US stock trading, no inactivity fees, and no withdrawal fees.

If you’re based in the UK, don’t worry! Robinhood will introduce their investing platform to the UK in 2020. Check more about it here.

This broker features a straightforward account opening process and deposit, and access to several markets.

How does Robinhood make money?

Just like YouTube, Robinhood is free.

You can go to YouTube.com anytime and watch any video you want without paying a dime, right?

However, they make money somehow – in the case of YouTube, they collect your user data and sell ads. They also offer the YouTube Premium subscription for those who want extra content. So it’s your choice to become a member or not.

Robinhood is the same. How does Robinhood make money then?

Although Robinhood charges no trading fees and no non-trading fees for US stocks, options, and crypto trading, it charges high financing rates overall and trading fees on all non-US stocks. If you don’t understand this lingo, let’s do a quick review:

Trading feesFees charged when you trade – examples are commissions and spreads.
Non-trading feesFees charged for other services from the broker, such as account opening, inactivity fees, and withdrawal fees.
Financing ratesAlso called overnight rates, financing rates are charged when the trader holds her leveraged position for more than a day. The financing rates will vary according to the amount borrowed and the period until payment.
Leveraged positionYour position when you borrow money from the broker to trade – commonly used when you buy on the margin.

This means that the broker makes money from the trading fees for non-US stocks and the financing rates.

Also, just like YouTube offers YouTube Premium, Robinhood offers Robinhood Gold. It is a signature membership for those interested in extra features. We’ll discuss Robinhood Gold and if it is worth having later.

Is Robinhood safe and legit?

To put in short words, Robinhood is safe. But we should delve a little further:

Robinhood is divided into two primary entities: Robinhood Financial LLC and Robinhood Crypto LLC.

The first is responsible for stock and options trading, and the second for crypto trading.

Robinhood Financial LLC is 100% legit, mainly because it’s supervised by the top tier financial authority in the US – the Financial Industry Regulation Authority -, with a maximum of $500,000 investor protection, including a $250,000 limit.

However, Robinhood Crypto LLC isn’t a member of FINRA – which means it isn’t covered by any investor protection scheme.

Robinhood has reported no security breaches since its launch in 2013.

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How to make money on Robinhood

It is expected that traders looking for a Robinhood review would want to know how to make money on Robinhood. I’ll tell you how!

First, you’ll need to open an account. To be eligible to open an account in the US, you’ll need:

  • To be at least 18 years of age;

  • To have a legal US residential address;

  • To have a valid social security number;

  • To be a US citizen, US permanent resident, or have a valid US visa.

The account opening is fully digital and extremely easy – after you start, it will be ready for trading in a day. However, the Robinhood account opening is currently only available for US and Australian clients.

To trade, you won’t have any problems with the user-friendly mobile and web trading platforms. You’ll be able to choose between stocks, ETFs, options, and cryptos, but they are mainly limited to the US markets.

If you’re looking to trade outside the US market, I don’t recommend it. Remember that the fees for trading non-US stocks are high? If you want to go down this road, choose another broker.

You can make money on Robinhood trading around 5,000 stocks and ETFs, most of which are listed on the major US stock exchanges.

Within Robinhood options trading, you can choose to trade with stock and stock indexes, and within crypto, you can go wild!

Crypto trading with Robinhood is diversified, with 16 cryptocurrencies to choose from:

  • Bitcoin (BTC)

  • Ethereum (ETH)

  • Bitcoin Cash (BCH)

  • Bitcoin Gold (BTG)

  • Ethereum Classic (ETC)

  • Litecoin (LTC)

  • Dogecoin (DOGE)

  • OmiseGO (OMG)

  • Monero (XMR)

  • Qtum (QTUM)

  • Dash (DASH)

  • Ripple (XRP)

  • Stellar (XLM)

  • Zcash (ZEC)

  • NEO (NEO)

  • Lisk (LSK)]

Check more about crypto trading in the following articles:

Best Trading Platform For Cryptocurrency, Crypto and Digital Currencies

How Women Are Growing In The Crypto Industry

5 Ways to Make Money from Crypto

Robinhood Penny Stocks

Although it doesn’t feature any investor education materials or even a demo trading account, Robinhood is considered one of the best brokers for beginners, mainly due to its penny stock trading options!

The penny stocks on Robinhood are low-priced stocks with a price of less than $5. The Robinhood penny stocks are usually issued by smaller companies, which means they are risky, but also an excellent way to learn risk management as a beginner.

Robinhood Day Trading

Now what you ladies were looking for the most (I bet) – can you day trade with Robinhood?

And the answer is yes! However, it will only generate profit if you’re day trading on the US-based instruments offered by Robinhood. The trading fees for the non-US stocks are very high.

But how to day trade with Robinhood?

You’ll need at least $25,000 in your account to day trade with Robinhood. This amount is average, it’s required by law to day trade.

But if you want to start pratising, you’ll still have the opportunity to make three day trades every rolling five business days.

The commission-free structure of zero trading fees for buying or selling stocks and ETFs is perfect for day traders with low capital. Day trading with Robinhood is terrific for those who want to trade with little (the minimum trade is $10), and pay no withdrawal fees later!

Robinhood vs. (Fidelity, Stash, Etrade)

Compared to other similar brokers, Robinhood stands out in a few aspects, especially on the fees – or, better, in the lack of them.

We will give you a full comparison of the fees of Robinhood vs. Etrade, Robinhood vs. Fidelity, and Robinhood vs. Stash.

Broker feesStock/ETF

Commission

Mutual Fund

Commission

Options

Commission

Management

Fee

Robinhood$0n/a$0$0
Etrade$0$19.95$0 + $0.65 per contract$0
Fidelity$0$49.95$0 + $0.65 per contract$0
Stash$0n/an/a$1/month (standard)

$2/month (Stash Retire)

0.25% for amounts of $5,000 or higher.

Is Robinhood Gold worth it?

As a signature membership service, Robinhood Gold charges $5 per month ($60 per year).

It is a fantastic addition and a good deal, especially for those who are very active traders placing trades consistently each month.

When you sign up for Robinhood Gold, a few features are unlocked:

Pre & after trading hoursWith Robinhood Gold, regular traders can trade any time of the day, even after the closing bell and before the opening bell. This means that you’ll have an extra two and a half hours of access to their trading platform and services every day.
Additional buying powerMargin trading is unlocked with Robinhood Gold. You’ll be able to borrow money from the broker to buy stocks. This means you can even double your buying power with Robinhood Gold, keeping your profits and paying them back later.
Bigger instant depositsThis feature allows you to reinvest your money instantly and eliminates the three day wait period needed for the transference of the funds from your bank into Robinhood.

The benefit is primarily for traders who are interested in trading in the margin. We’ve talked about how high are the Robinhood financing rates.

If you have a Robinhood Gold signature, the first $1,000 of margin is included with your $5 monthly fee.

If you decide to borrow more money to trade on the margin in the future, you’ll pay a 5% yearly interest on any money used above the $1,000.

Robinhood Gold is worth it, but I can only recommend it to seasoned traders. This is because it will give you a full margin account, which offers excellent potential for more significant gains, but it will also magnify losses.

You should only trade in the margin if you know what you’re doing, OK? Otherwise, stick to the regular Robinhood account.

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Robinhood IPO

For those who don’t know what an IPO is – it means Initial Public Offering.

The IPO is a way a private company can become public, which means it starts offering its stocks for the first time in the market for investors to buy.

It is a way to raise funds for the company and distribute its shares so that the general public can invest. Usually, companies are born privately owned by a select group of investors, and then they turn their shares into tradable shares through the IPO.

Facebook and Uber, for example, are IPO’d companies that launched their shares to the market for anyone to buy them and become an investor.

Robinhood IPO was announced in 2018, but the company has not yet been offered publicly. The calculated share price for Robinhood IPO is set approximately 10$ per share.

Conclusion

That was my Robinhood review! If you ladies are interested in trading with Robinhood or if you already use this broker, please let us know in the comment section below!

And if you’re based on the UK, keep searching for the news, because Robinhood is soon to be launched here.

Hugs and kisses!

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