Robinhood Review – Commission-Free Stock Trading App

Robinhood is a free-trading app that's ideal for investors who want to trade stocks, options, exchange-traded funds and cryptocurrency without paying commissions or fees. The service is innovative, cutting out nearly all costs that are typically associated with investing.

Pros & Cons

Did you know more than 50% of millennials aren’t investing in the stock market? Some don’t invest because they think they need a lot of money. Others don’t invest because they think it’s too risky. 

But what if I told you both of these aren’t true? What if I told you there’s a simple way to dip your toes in the investing waters for free without having to risk a ton of cash? 

You may have thought there was no such thing as commission-free investing, but think again. Today we’ll talk about Robinhood—a 100% fee-free investing platform.

We’ll dive deep into how it works and the pros and cons, so you can decide if it’s the right investing platform for you.   

If you’ve held off on investing because you thought it was too risky or too expensive, stick around—Robinhood may change your mind.

What Is Robinhood?

Robinhood is an online brokerage. But unlike most online brokers that charge $6 to $10 for every trade, Robinhood is 100% commission-free. It doesn’t charge users anything to use its services. That’s right. Zero, zilch, nada. 

Vladimir Tenev and Baiju Bhatt—two roommates at Stanford University—founded Robinhood in 2013 out of a desire to make investing accessible to everyone. 

The stock market can be intimidating, it's true. But history has proven that, when done responsibly, it's a great way to create wealth. Over the past century, the stock market's had an average return of 10%. 

Robinhood’s mission is to “empower the new generation to take greater ownership in their financial future, which... shrinks the gap between the "haves" and the "have nots" and leads to a healthier, more robust global economy.”

A publicly-traded company, today Robinhood is worth $39 billion and has over 22.4 million customers. According to Robinhood, it has saved customers over $2 billion in commission fees since its launch.

Types Of Investments Offered

Robinhood offers a wide range of investments including: 

• Stocks
• Exchange-traded funds (ETFs)
• Options
• Cryptocurrencies (including Bitcoin, Ethereum, Dogecoin, Litecoin, and more)

Robinhood offers four different order types to use when trading through your brokerage account (the last three automate the buying/selling process): 

• Market (you buy the stock at market price).
• Limit (you lock in a particular buy or sell price. When the stock hits that price, it’ll automatically buy or sell).
• Stop Loss (you limit your loss by automatically selling a stock once it dips below a certain price. In this case, the stop loss turns into a market order and it could sell at or around the price you indicate depending on when your order is processed).
• Stop Limit (this is similar to a stop loss, but this order turns into a limit once it has reached your desired price. This locks in your trade at a certain rate).

How Does Robinhood Make Money?

Robinhood never takes a commission from investors. Instead, Robinhood makes money three ways:

1. Interest on cash. When you have cash sitting idle in your investing account, Robinhood keeps the interest earned on that cash.  
2. Robinhood Gold subscriptions. This is Robinhood’s premium account service. Subscribers pay $5 per month and get access to additional trading features (more on this below). Robinhood charges a variable rate that currently stands at 4.15% for Robinhood Gold members.
3. Rebates from market makers. For every $100 you buy in stock, Robinhood earns 2.6 cents from the market maker.

What Do Customers Say About Robinhood?

Robinhood has a mix of good and bad reviews depending on where you look online. 

If you look on Google Play, the Robinhood App has a 4 out of 5-star rating with over 443,000 votes. It currently has around 3,000 reviews on Trustpilot with an average 1 out of 5-star rating.

It's important to dig a little deeper on this 1-star TrustPilot rating though. The Robinhood platform has been subject to organised 'review bombing' recently - not least because users took exception to halting of trading GameStop stocks when the market was subject to manipulation. 

That said, most genuine reviews praise the mobile app claiming, “If I would’ve known it was this easy to build a portfolio and make investments... I would’ve started years ago.” Other reviews praise the app’s sleek interface and easy usability. 

Most legitimate complaints are about Robinhood’s long customer service wait times and problems encountered during the sign-up process. Robinhood does a good job of responding to these negative comments in an effort to help customers have a smooth experience with the platform.

What Makes Robinhood Unique? 

While investing platforms are a dime a dozen, here are three ways Robinhood stands out from the pack: 

What Are The Benefits Of Investing With Robinhood? 

So, now that you know what makes Robinhood unique, let’s talk about some benefits you get when you invest with Robinhood. 

Robinhood Instant

Robinhood Gold

Robinhood App

Robinhood Snacks

Robinhood Trading Information

Cash Management

What to Watch Out For

So, what should you watch out for with Robinhood? There aren’t many drawbacks, but here are a few things that might trip up new Robinhood customers: 

It’s not for day trading. Robinhood is for active traders, yes, but you can’t day trade unless you have a minimum equity balance of $25,000. A lot of people join the platform thinking they can make multiple trades per day, but this against Securities and Exchange Commission federal regulation. 

Robinhood Crypto isn’t available in all 50 states. Robinhood is slowly rolling this program out across the country. It’s currently available in 39 states. Also, not all cryptocurrencies are available through Robinhood—just the popular ones. 

Robinhood Cash Management isn’t available yet. Not a huge drawback, but don’t expect to sign up today and earn 3% interest on your cash. Robinhood hasn’t officially announced when this service will be available. 

How Do I Get Started With Robinhood? 

Setting up your Robinhood account is an easy 5-step process that takes less than 10 minutes. 

Robinhood FAQ's

Below are answers to some popular questions about Robinhood. 

Robinhood Alternatives

Should You Use Robinhood?

Robinhood makes it easy to jump in the investing game with little experience. They take the intimidation out of investing through commission-free trades, $0 minimum account balance, and a streamlined user interface.

Plus, you’re not limited to just stocks. Robinhood offers options, ETFs, and cryptocurrencies—all commission-free. 

You can set up an account today, deposit funds instantly, and start making smaller trades without worrying about fees eating up your investments.

If you follow the media and have certain “hunches” about the stock market, for example, you can easily try them out in Robinhood with a small number of stocks. 

Because of this, Robinhood is ideal for active investors. If you’re looking for long-term investing where your portfolio is automatically diversified for you, you may want to look into another service like Acorns.

Have questions about Robinhood we didn’t answer? Drop them in the comments below.