Robinhood investing is a startup that allows you to earn income through positive trades in different markets. The company was founded by Beihu Bhatt and Vlad Tenev. It launched officially in 2013, and has only shown rapid growth in 8 years.
Interestingly, other giant companies have not been able to replicate the success of this app from different angles: neither in terms of investments raised, nor in the number of clients. According to one of the latest data, 6 million people are regular partners of the company, including through the application. Its main direction is trading.
What is this RobinHood app?
"RobinHood" is a branded investment app, which after downloading and installing, top-up allows you to trade cryptocurrencies, indexes, options and earn income on it. Initially it was launched for iOS-based gadgets, and now it is already available for Android. The brokerage company is a voluntary member of the Financial Industry Regulatory Authority (FINRA). In fact, you can work with it through the app, because it doesn't have a personal bank and isn't represented on the stock markets.
The broker's regulator
The company is regulated by FINRA. This is the American Financial Services Industry Regulatory Service. Robingood is also regulated by the SEC, the U.S. Securities and Exchange Commission. Stock transactions are conducted through the legal entity ROBINHOOD FINANCIAL, LLC, incorporated in the state of Delaware. Its CRD registry number is 165998 and its SEC registry number is 8-69188.The robinhood.com website says that customer securities in the platform accounts are protected by SIPC for up to $500,000. This information is confirmed by the SIPC registry.
Robinhood app overview and description
The app is formed by 2 legal entities, Robinhood Financial LLC and Robinhood Crypto LLC. It is worth noting that the Robinhood broker application falls under the regulation of the Securities and Exchange Commission (SEC). It is indicative that investments up to half a million dollars and securities up to 250 thousand dollars are protected by the state. Cryptocurrency activity, on the other hand, is not insured in any way.
The Robinhood app was originally conceived as an alternative to Coinbase's proprietary app. At the moment, Robinhood does not work in Russia and a number of other countries. You can use it in the U.S. and Australia. Robinhood will take 10 to 15 minutes to process your request and will be verified within one day. How to open an account? It's enough to register by following the typical procedure, and a standard or instant account will open.
Then the transition to the highest level of Gold or downgrade to Cash Account is available. The working currency is American or Australian dollar. You can get a personal account if you meet the following conditions: you are over 18 years old; you have a social security number; you have a U.S. address; you have a visa, residency permit, or U.S. citizenship. After registration you answer a number of questions, confirm your identity by sending a scan of your driver's license, passport or ID-card.
This is a premium account that allows you to trade with a margin of up to $1,000. The use of the account is paid and will cost $6 per month. The minimum balance on the account must be $2,000. Withdrawal of up to $50,000 per week. There are extended trading hours, which is very convenient for professional traders. Leverage 2:1. No restrictions for Daytrading - day trading, but no more than 3 trades per week. If you trade more than 3, you'll get your account banned for 90 days, but you can get rid of it if the balance on your account is no less than 25 thousand dollars.
This is an account that "speeds up" from the moment of opening with a deposit of $1000 at a time. There are no commissions to be paid. You can reinvest without waiting for the 3-day period. Restrictions on the number of deals, as in Robinhood Gold - 3 daily deals per week (or, to be exact, in the period of 5 working days). It is a limited margin account in its own form. Commissions and Fees of the Platform Reading the reviews of the Robin Hood branded app, at first one might get the feeling that there are no commissions. But that's not true, as how would a startup develop? In fact, the customer pays nothing for bidding, but some money is charged during the exchange. Buying or selling bitcoin generates a small spread. There are no withdrawal fees, passivity in the cabinet, account maintenance and storage of funds.
Commissions and fees of the platform
Reading reviews of Robin Hood's branded app, at first you may get the feeling that there are no commissions. But that's not true, as how would a startup develop? In fact, the customer pays nothing for bidding, but some money is charged during the exchange. Buying or selling bitcoin generates a small spread. There is no withdrawal fee, no passivity in the cabinet, no account maintenance and no storage of funds.
The main commissions in operation (see table)
|Incoming free of charge International wire transfers||50$|
|Outgoing domestic wire transfers||25$|
|Transactions placed by phone brokerage||10$|
|Domestic check delivery at night||35$|
Tools to work with
Initially, the app allowed you to work with margin trading, acting as an intermediary, and in early 2018, the company said it added cryptocurrency to the list of instruments as well. Currently, within the Robin Hood app, you can work with the following instruments:
- Stocks & Funds
Monitoring and fundamental data
Your transaction history is available in your personal cabinet. By clicking on the tag, you will see all stocks with the same label, charts, quotes, it is convenient when making a decision to open an order. Please note: there is no protection against a negative balance. The analysts' opinions are connected to work, and you can also see how many people have bought this or that stock and compare it with the popularity from the experts. Minus - the chart is very simple, only price changes, so to work with certain instruments, you need to look for additional sources of information.
Placement and Execution of Orders
This function is available in the personal cabinet, and it is worth noting a rather stylish and at the same time clear interface of the platform. To purchase securities, an order is placed, in which the desired amount of securities and its type are entered. The system then calculates the approximate cost of the transaction and indicates the current price of the stock. You can open such types of orders: by market; stop loss; by limit; stop limit. Asset classes in the Robinhood application You can work simultaneously with 3 represented assets: stocks and ETFs; options; cryptocurrencies. It's easy to use Robinhood to place orders to buy shares as part of an ipo. Leverage trading is also available. The principle is simple: the higher the amount borrowed from the broker, the lower the rate.
Financing rate depending on the amount borrowed (leverage)
|Leverage amount||$ 1000||$ 25000||$ 50000|
|Financing rate||% per year 7.2||% per year 3.6||% per year 4.8|
When choosing the right instruments, examine the strengths and weaknesses of each in detail, such as why a mutual fund is better than options work and why it's more reliable.
Stocks and ETFs
Securities are recommended by the service for investors, represented by more than 5000. Mostly American companies are represented, but there are Canadian and some European companies. Some securities can be transferred from another broker, as long as the app itself also works with them. Stock withdrawals to another broker are $75. Cheap securities up to $5 apiece are also available, but they are characterized by high volatility.
Options on stock indices and stocks are available, but only for large companies. There are no commissions for work. The tool is aimed at those who aim at the long-term perspective and want to create a diversified portfolio with different investments, minimizing the risks.
Bitcoin and Ethereum are used for work. But it is impossible to withdraw crypto, you must first convert it to fiat. It is interesting that analytics is also available for other coins, but so far they have not been added to the list of trading. And another important nuance: cryptocurrencies are allowed to work in 16 states of America. Interestingly, the Robin Hood cryptocurrency app, despite the high risks, is still actively in demand.
Robin Hood app limitations and commissions
The plus is that the depositor himself determines the appropriate amount to invest: there are no restrictions. Replenishment and withdrawal only through bank transfer. Commission is charged for trading stocks of non-American companies. A significant disadvantage is that there is no demo account and no training program, which is especially important for beginners. There are also no rankings that could help decide on the most appropriate tools to invest in, for example, the top ETF helped choose an investment fund that was convenient in terms of the amount of entry, profit and frequency of payouts.
Is it possible to work for free, and what Robinhood earns on Despite the fact that the app does not actually take money for transactions, it gets its profit from such channels: crediting; work of premium accounts; processing transactions from companies (Virtu, Two Sigma).
Of the latest news related to the app, is that it may soon enter the UK market, as it has received permission from the regulator to operate as a broker. Over the course of its development, the app has received both high and not-so-positive reviews. The service has recently turned its efforts to developing advertising campaigns by launching Robinhood free stock. In its form, it is an affiliate service. Inviting a friend, you give him the opportunity to get a promotion from 3 to 150 dollars from certain companies, but on the condition of depositing an account for a certain amount and in a strictly designated time. Apline can count on the same profit. The brand itself has become quite successful in the market, and you can meet the name Robinhood Global or other similar, but they are from the world of investment projects online. Speaking of the weaknesses of the Robinhood.com application, it is worth noting that when an account is registered a newcomer is offered quite risky strategies, such as buying pre-growth shares, in particular giants like Berkshire Hathaway. Experts say such investors should recommend low-risk options, such as ETFs.
Robinhood's strengths over competitors include:
- Trading of stock market instruments without commissions
- The ability to trade from mobile devices
- Easy registration procedure
Weaknesses of Robinhood:
- There is no demo account
- Broker does not offer Forex tools for trading
- No offers for passive income
- The information on the site is only in English
- F small amount of training materials
- The company cooperates only with clients from the United States
- Absence of online support
Robinhood is the easiest way to start investing if you are a beginner. Experienced traders will not find this platform suitable. There are no tools for technical analysis, the available stocks are limited to the American market, there are no bonds, mutual funds, and the usual futures. The platform works only through a mobile app, which also constrains analysts.