Robinhood Spreads, leverage, minimum deposit Revealed

Overview of Robinhood

　　Founded in 2013, Robinhood is an online Forex broker based in the United States, which offers products and services in cryptos, retirement, options, and futures. Additionally, Robinhood provides access to American Depositary Receipts for over 650 global companies and the ability to trade fractional shares.

　　The broker supports both web and mobile trading, allowing users to access their accounts and trade on-the-go with no minimum deposit requirement, making it accessible to investors with various budget levels. The platform offers individual accounts as well as retirement accounts without any commission fees.

　　However, it is important to note that Robinhood operates without regulation, which may be a consideration for some investors seeking a regulated brokerage.

Pros and Cons

　　Robinhood offers both advantages and disadvantages to its users. On the positive side, Robinhood provides a very simple and intuitive trading experience. Its streamlined interface makes it easy for users to navigate and execute trades efficiently.

　　Additionally, one of the standout features of Robinhood is its no commissions policy. This allows users to trade without incurring additional costs.

　　Furthermore, Robinhood offers fractional share trading and direct access to cryptocurrencies, giving users the opportunity to invest in smaller portions of shares and participate in the cryptocurrency market.

　　However, there are also some drawbacks to consider when using Robinhood. Firstly, Robinhood is not specifically regulated. While Robinhood provides a user-friendly interface, it lacks comprehensive educational content. This could be a drawback for users who are new to trading and would benefit from educational resources to enhance their understanding of the markets and trading strategies.

　　Furthermore, Robinhood does not support popular trading platforms like MT4 or MT5, limiting options for traders who prefer those platforms. The broker also does not specify different types of accounts available, which may limit customization options for individual users.

Is Robinhood Legit?

　　To assess the credibility of a broker, it is crucial to verify their regulatory status through reputable regulatory agencies such as the FCA or CySEC. In the case of Robinhood, it is important to note that they lack authorization or regulation from any regulatory authorities. As a result, it is strongly advised to avoid trading with this broker due to their anonymity and the risk of sudden disappearance without any notice.

Market Instruments

　　Robinhood offers products and services in cryptos, retirement, options, and futures.

　　Please be aware that due to the lack of regulation, it is essential to carefully consider the associated risks before engaging in any trading activities on Robinhood.

Account Types

　　Robinhood only offers brokerage account options as either margin or cash accounts.

　　Robinhood also offers 2 different types of retirement accounts: traditional IRA and Roth IRA. You can open 1 of each type of IRA account at Robinhood, even if you already have an IRA at another financial institution or a workplace retirement plan, like a 401(k).

How to Open an Account?

　　To open an account with Robinhood, please follow these steps:

　　Step 1: Visit the Robinhood website: Go to https://robinhood.com/

　　Step 2: Click on the“Sign up” button located in the top-right corner of the website.

　　Step 3: Provide personal information: Once your email is verified, Robinhood will ask you to provide personal information, including your name, address, date of birth, and social security number (for U.S. residents). This information is necessary to comply with regulatory requirements.

　　Step 4: Complete the application: Fill in the required information accurately and review the terms and conditions. You may need to answer additional questions about your investment experience, financial goals, and risk tolerance.

　　Step 5: Set up funding: Once your account application is approved, you will need to link a bank account to fund your Robinhood account. Follow the instructions provided in the app to securely link your bank account.

　　Step 6: Review and agree to disclosures: Robinhood will present you with various disclosures and agreements, including the customer agreement and privacy policy. Read these documents carefully and agree to the terms.

　　Step 7: Fund your account: Transfer funds from your linked bank account to your Robinhood account to start investing. Once your account is funded, you can start trading stocks, ETFs, options, and cryptocurrencies directly.

Commissions

　　RobinHood eliminated transaction fees. Such a move is now a general trend, with many other brokers either lowering fees or eliminating them altogether to stay competitive.

Non-trading Fees

　　Robinhood offers commission-free trading for stocks and ETFs, similar to its competitors.

　　Options trades also have no fees. The standard margin interest rate is 11.75% as of April 21st, 2023. Robinhood Gold members receive $1,000 in free margin trading and a discounted rate of 7.75% for borrowing above that, with a subscription fee of $5 per month. A $100 account transfer out fee is applicable.

　　There are no fees for domestic or international wire transfers, account opening, account maintenance, or account inactivity. However, there is a $20 fee for sending a domestic check overnight.

Trading Platform

　　Robinhood does not offer popular trading platforms such as MT4 and MT5. Instead, it offers two proprietary platforms, web and mobile, which may have limitations.

　　Trade Experience

　　Robinhood‘s trading experience is fast and easy to use, appealing to new investors in particular as it allows them to get up and running quickly. Robinhood users get access to basic watch lists and stock quotes paired with charts, analyst ratings, and news. The improved chart overlays give investors a more comprehensive look into stocks and their positions. Beyond this, there’s not much in the way of in-depth insights and customization ability.

　　Mobile Trade Experience

　　Robinhood is a mobile-first brokerage that aims to make trading simple without complicating the experience with more in-depth features. It makes sense then that more complex trading tools and research options are largely absent from the mobile trade experience. For instance, no chart drawing tools are available on mobile and trades cant be executed directly from charts. Order staging and simultaneous order entry options are also not available.

Educational Resources

　　In terms of educational resources, Robinhood provides the “Learn” section including Investing 101, Options trading essentials, and Library. Educational content, while improving, still isn‘t up to par with many of Robinhood’s competitors offerings. An intentional focus on enhancing this area is apparent, though. Robinhood continues to expand its Learn section with more material and has enhanced the onboarding questionnaire to help users understand investing basics.