Robinhood is an investment platform offering commission-free trading of stocks, ETFs, cryptocurrency, and options—all through a mobile app or website. The company is known for its easy-to-use, streamlined platform and appeal to investors new to the investment game.
Doesn’t require a monthly fee or account minimum.
Easy to use.
Offers commission-free crypto trading with no markups and markdowns.
One of the few brokers offering access to Initial Public Offerings (IPOs).
High-interest cash option.
Allows fractional share trading.
Does not offer joint brokerage or custodial accounts.
A Gold tier subscription,
which provides research and data that is generally free at most brokerage firms, costs $5 per month.
Does not offer bonds or mutual funds.
The app encourages active trading and margin trading, which are high-risk activities for its target market of new investors.
Allows payment for order flow, reducing some of the benefits of commission-free trading.
Customer support is limited: Robinhood does not offer direct phone support or live chat unless requested through the app or its website.
Limited tools for trading, research, and education.
Robinhood is best suited for intermediate or advanced investors. This will include experienced investors who are less reliant on customer support, broker investor tools and educational resources.
The platform is designed primarily for active trading, including day trading. It’s one of the top brokers for options trading since there is no per-contract fee, as is common with most brokers.The app also appears to encourage margin trading. This is not a practice recommended for new and small investors, since it magnifies the potential for investment losses.
Robinhood is not an optimal platform for the kind of long-term, buy-and-hold index investing strategy recommended by the majority of financial advisors and followed by most investors.
Robinhood has grown steadily in popularity in recent years, but it’s not the right platform for everyone. Though it markets itself primarily toward new investors, the features offered—in combination with the limitations of the app—make Robinhood more suitable for seasoned, active traders who are more confident in their investing skills and less dependent on customer service and investor resources.