Robinhood is a unique brokerage platform that purports to be totally free and exists only on mobile devices. It’s an interesting concept, but in my opinion, it needs a lot more work before Robinhood is a viable brokerage.
For those who are looking for an inside look at Robinhood as its features shape up and its parent company molds its identity, I’ll be poking around Robinhood in this article. Robinhood’s basic package is totally free to sign up for and trade on, so if anything you read here sounds interesting, be sure to check it out on your iPhone or Android device.
Robinhood shines for its simplicity and its cheapness, although both of the above are also its greatest weaknesses. Robinhood suffers from the mobile platforms that it chooses to run on, so there’s very little screen room for complex data or multifactorial user inputs. Robinhood is a platform that your four-year-old could use to purchase stocks.
The initial splash screen of Robinhood pictured above and is quite underwhelming. The user gets the value summary of their account—which is to say, the single account that Robinhood can accommodate—and a gain/loss reading for their ETFs in the order of how many you own from the top down. The default screen isn’t customizable, and aside from the search feature, is difficult to navigate if you’ve got a lot of assets in your account.
Scoping out ETFs
The “research” functionality of Robinhood is accessible via the splash screen and is intensely limited. The most you can get out of peeping at a particular symbol is a perfunctory chart of value over time, which isn’t even very readable due to the absent Y-axis.
If you own shares in a particular stock, you automatically get the entire app’s research output for that stock included on your home page in a single summary image. Don’t even think about gathering deep historical data or extrapolating value.
Even if you could potentially have the brokerage gather more data for you, it’d still be displayed on the woefully insufficient smartphone screen. In short, you’ll need to do your research on another brokerage platform or via reading around the internet.
Trading without getting robbed
I’ve found that making trades with Robinhood is very simple, and is limited to the most basic of trades. Users dial in their trade details then get treated to a pretty animation which confirms that the trade executes.
Thankfully, Robinhood is a very fast trading platform by consumer brokerage standards. Trading speed and value turnaround live up to the hype that the founders advertise on the Robinhood corporate site. If you make a trade worth $100, you’ll nearly immediately have access to the value and can execute further trades which utilize it.
The fast turnaround and trade execution speeds don’t allow Robinhood to enter the realm of sub-minute trading, but when combined with no fee structure, it’s a viable day trading platform.
There’s a “card” system that Robinhood uses to display information to the user. In a nutshell, a card is an ETF you own on which you’ve recently executed a trade.
If the trade is completed, pending, or scheduled, it gets a card. Beneath your “active cards” are your watchlist cards, which are simply cards with basic ETF data. There’s no way to link your watchlist alerts of any kind, so expect to check up on it frequently if you’re planning a trade.
If you do end up seeing something of note on your watch list, you’ll need to plan the trade from scratch then execute it. On Robinhood’s platform, this isn’t hard at all because you have very little control over the trade itself.
I’ve pretty much covered the feature set of the default Robinhood brokerage account. Robinhood doesn’t offer overnight trading, saving trading templates, or having multiple sub-accounts linked to the same brokerage account.
If you’re interested in picking up some of these missing features, you have the option of paying $10 a month with Robinhood’s Gold package. I’m not terribly enthusiastic about standard features requiring an upgrade from the basic account, but it makes sense given Robinhood’s no-fee trading.
Advantages and Disadvantages of Robinhood
- Can trade on the go via mobile client
- Very basic interface
- Aesthetically pleasing mobile client
- Responsive mobile client
- A company is actively building out the platform
- Very fast trades for consumer brokerage
- Very fast value turnaround
- Can trade on margins by default
- No signup fee
- No monthly fees
- No minimum balance
- No trading fees
- Very basic interface precludes any complex trade
- Can’t plan future trades without upgrading to Gold
- Can’t save trades
- Can’t view historical trades within the platform
- Can’t perform any research
- Can’t perform any extrapolation
- Can’t customize any aspect of the platform
- Can’t handle multiple accounts or users
- Can’t schedule trades overnight without upgrading to Gold
- Poor documentation
- No desktop client
- Can’t share trades
- No trading assistance or tips
- No platform tutorial
- May fail executing trades over an unreliable connection
Will you be stealing from the rich?
Robinhood’s value is an open issue. In general, I think that Robinhood can be summarized as “you get what you pay for.” Robinhood is an extremely minimalistic trading platform for your mobile device whether or not you pay for the $10 monthly Gold upgrade package.
Your options will be extremely limited, and if your basic trading knowledge is poor, you will be entirely on your own. The corporation developing Robinhood may add more features to it or change the fee structure over time, but for now, what you see is what you get.
For casual traders and investors, there are many better choices out there which may serve their needs better, but at a greater cost.
Expert traders and investors using the Gold subscription could find utility in the Robinhood platform for making quickly executed trades while commuting if its integration with other accounts and brokerages is expanded. If you’re being eaten by fees and your brokerage needs are minimal, Robinhood may be the right choice for you.