Robinhood Review: What Does The US Broker Offer In 2021?

Last Updated:
Disclosure: Your support helps keep Commodity.com running! We earn a referral fee for some brokers & services we list on this page. Learn more...

Risk Warning: Your Capital is at Risk.

Robinhood is an online brokerage firm that offers services to U.S traders exclusively. The broker lists thousands of international stocks, over 1,900 ETFs, and cryptocurrencies.

While Robinhood is primarily known as a stock, ETF, and options broker, the platform offers a cryptocurrency exchange and wallet functionality where traders can own and store cryptocurrencies.

This review focuses on how Robinhood fares as an SEC, FINCA, and SIPC regulated broker.

We explore the list of products, how you can register an account, and what sort of yield Robinhood’s Cash Management service promises traders with unused funds.

Overview

RobinhoodOverview
✒️ OverviewUS-based stock, ETF, and cryptocurrency broker
⭐ Our Overall Rating
🏆 Broker Trust Rating75/100
🏁 Founded2013
🛍️ ProductShares, ETFs, Cryptocurrencies, Commodities (See the product list).
📉 Markets Shares, ETFs, Options, Gold
🗺️ Countries ServedUS
💳 Minimum DepositCash Account: None
Margin Account: $2,000
💰 FeesRobinhood is a no-commission broker. It is compensated through regulatory and service fees (See below).
🛡️ Regulator(s)Securities Investor Protection Corporation (SIPCS), Financial Industry Regulatory Authority (FINRA), Security and Exchange Commission (SEC)
📞 Customer SupportE-mail, Social Media
🎮 Demo AccountNo demo

Pros and Cons Of Robinhood

Pros
Cons
Tick IconTrustworthy broker (we scored Robinhood 75/100 in our broker trust rating)No demo account
Tick IconCustomized popular asset categories presented on the dashboardOnly US traders accepted
Tick IconThousands of stocks and ETFs available to tradeOnly one deposit method available
Tick IconCash Management service that yields unused funds

Start Trading Now at Robinhood.com

Where Is Robinhood Regulated?

Robinhood only accepts registrations from the US. Thus, Robinhood is regulated by:

RegulatorProtections
Securities Investor Protection Corporation (SIPCS)Protects Robinhood clients in the event of sudden bankruptcy where members’ funds go missing. Each Robinhood trader is covered up to $500,000 in compensation for securities and cash, and $250,000 for cash only, respectively.
Financial Industry Regulatory Authority (FINRA)US broker watchdog. The FINRA is non-profit and regulates brokers like Robinhood, exclusively in the US. The organization sets ethical laws for brokers and ensures the compliance of its members. FINRA also takes part in educating traders.
Security and Exchange Commission (SEC)The SEC oversees the regulation of securities markets with investor protection at the forefront.



Should the SEC take action against a company that’s rightfully accused of misconduct, traders stand a good chance of having their funds returned.
Note: Robinhood Crypto is not protected by SIPC and is not a member of FINRA or SIPC.

Start Trading Now at Robinhood.com

How To Open A Robinhood Account

To open a Robinhood account, you need to be a U.S resident and be in the country. If that’s the case, you can open an account by following these steps:

  1. Head over to Robinhood.com or open the Robinhood app on mobile
  2. Select the ‘Sign Up’ option
  3. Fill in the required details, like your:
    • Full name
    • E-mail
    • New Password
  4. Then, provide your:
    • Phone number
    • U.S residential address
robinhood sign up process

At this point, you can access the dashboard, but you can’t trade or deposit. To trade, you need to continue with the registration process.

How To Verify Your Robinhood Account

To access the trading platform and make a deposit, you need to verify your Robinhood account.

To complete the verification process, Robinhood needs traders to provide:

  • Proof-of-identity: This can be your passport or driver’s license
  • Proof-of-address: This can be a utility bill or bank statement that contains your name and residential address

The Robinhood mobile app allows you to upload documents from your folder, or you can take a photo and upload it directly.

Start Trading Now at Robinhood.com

Free Stock For New Registrations

New Robinhood traders are eligible to claim one free share of a random stock when opening an account. The share can be held or sold after two days of claiming it.

Since the stock is chosen at random, Robinhood states that the share may be worth anywhere between $2.50 and $200. To receive your free stock, navigate to the ‘Free Stock‘ tab in the menu.

If you’ve signed up for a Robinhood account and haven’t been able to claim your share, contact Robinhood’s customer support.

ESMA regulations prohibit CFD brokers from offering bonuses to retail investors in Europe to encourage CFD trading (or a greater volume of trading), including signup bonuses or fee rebates.

What Products Can I Trade With Robinhood?

The main products traders have access to at Robinhood are company stocks. Robinhood clients can either buy and sell shares outright, or trade options contracts on selected products.

robinhood popular products

Traders can also choose from over 1,900 exchange-traded funds and seven cryptocurrencies.

Stocks On Robinhood

Robinhood provides popular categories of company stocks.

Here are some examples of what international stocks Robinhood traders can buy and sell by category:

  • Energy (450+ stocks): Exxon Mobil, Chevron, NextEra Energy, Shell, Total, Petrobras, Quanta, Apache, Southwestern Energy, CleanSpark
  • Automotive (140+ stocks): Tesla, Toyota, Volkswagen, Nidec, Daimler, Ferrari, Honda, GM, Continental AG, Li Auto Inc, Textron, Gentex
  • Technology (800+ stocks): Apple, Microsoft, Amazon, Cisco, Salesforce, Netflix, BYD Company, CME Group, Twitter, Garmin
  • Real Estate (300+ stocks): Prologis, Crown Castle, East Japan Railway, Mitsubishi Estate, Welltower
  • Banking (650+ stocks): JPMorgan Chase, Mastercard, PayPal, Bank of America, China Construction Bank, Accenture, Citigroup
  • Food & Drink (140+ stocks): Nestle, Coca Cola, Abbott, Mondelez, Colgate, General Mills, Tesco, Hershey, Carlsberg

The brokerage offers international company stocks to trade directly, or through options contracts.

Fractional Shares

Alongside traditional stocks, Robinhood offers fractional shares. Traders can enter a market with a fraction of a share as small as 1/1000000.

This means that traders with a smaller capital who wish to speculate on a stock’s price that is out of their budget range can do so.

For example, a trader has a capital of $500 and wants to use half of that amount to enter a market with XYZ. That’s $250 available to trade, but the XYZ stock priced at $820.

With fractional shares, the trader could purchase 3/10 of the XYZ stock, which would amount to $246.

Robinhood traders can buy fractional shares based on the amount they’re willing to spend, or the fraction of the chosen share. However, not all stocks are eligible for fractional purchase.

Options On Stocks

Robinhood traders can also purchase and sell options contracts on stocks, commission-free.

For “advanced” traders (deemed so by Robinhood), the platform allows options strategies like iron condors, straddles, and strangles.

Options contracts allow you to speculate on a stock’s price at a future date. See our guide on Options Trading to learn more.

Exchange-Traded Funds (ETFs)

Traders interested in exchange-traded funds (ETFs) have more than 1,900 baskets of stocks to choose from, including:

See some of Robinhood’s most popular ETFs.

Robinhood does not offer exposure to mutual funds.

Cryptocurrencies On Robinhood

Robinhood offers a crypto exchange where traders can buy and sell cryptocurrencies commission-free. There are a total of seventeen supported coins:

See all of Robinhood’s cryptos.

Cryptocurrencies are exchanged via Robinhood Crypto, a company subsidiary that is not a member of FINRA.

Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.

Start Trading Now at Robinhood.com

Account Types At Robinhood

Robinhood offers three different account types for traders. As with most brokers, they offer both cash and margin accounts.

Robinhood Instant Account

When traders create a new Robinhood account, the broker opens a Robinhood Instant account for the trader by default. The Instant account is a margin account.

Margin accounts allow you to trade in greater volume than what your cash deposit amount would entitle you to. Margin trades carry more risk because you can lose borrowed money.

Robinhood’s Instant account offer traders:

  • Extended-hours trading
  • Instant deposits: trading up to $1,000 before while a deposit is being processed

Robinhood Gold Account

Robinhood Gold is a margin account like Robinhood Instant, except it offers traders more perks.

Gold account holders can:

  • Gain access to Level 2 market data powered by NASDAQ Totalview
  • Instant deposits between $5,000 and $50,000 (depending on portfolio value)
  • Margin trading on Gold

Traders should note that margin accounts do not require the account holder to use the margin allowance. These accounts can still be used as cash accounts.

Margin Requirements for Robinhood Gold – Federal regulations (FINRA) require you to have a minimum of $2,000 of Portfolio Value (minus any cryptocurrency positions) in your Robinhood brokerage account.

Robinhood Gold is free for a 30-day trial period and costs $5 every 30-days thereafter.

Robinhood Cash Account

Robinhood Cash account holders can trade based on the account balance that’s already reached the account.

Unlike Instant or Gold, Cash account holders are unable to make instant deposits. That said, extended-hours trading is still available to Cash account holders.

Users can downgrade from Robinhood Gold to a Robinhood Cash account in just a few clicks.

Cash Management Services By Robinhood

Robinhood’s cash management service is part of traders’ online broker accounts. This functionality allows traders’ untraded account funds to earn interest based on an annual yield percentage.

robinhood cash management

Robinhood traders may earn 0.30% on uninvested funds. The APY percentage is variable.

Traders who opt-in for cash management are eligible for:

  • A customizable debit card
  • ACH account number
  • Lost or stolen card replacement
  • Apple Pay, Google Pay, or Samsung Pay access

You can read more about which banks are part of the Robinhood Cash Management Program.

Start Trading Now at Robinhood.com

Deposits and Withdrawals

Unlike other online brokerage firms, Robinhood only offers one method of funding trading accounts.

When making a deposit, traders must link a checking account to their Robinhood account. Savings accounts can also be linked, although Robinhood does not recommend this option.

How To Deposit Via Mobile

iOS and Android users can make a deposit on the Robinhood mobile app by:

  1. Tapping the account icon on the right side of the screen’s bottom menu
  2. Select ‘Transfers‘, then select ‘Transfers to Robinhood
  3. Select the transfer account (the bank account you’ve linked)
  4. Enter a deposit amount and complete the transaction

How To Deposit Via Desktop

A Robinhood deposit on the web platform can be done by:

  1. Clicking the ‘Account‘ menu on the right side of the upper menu of your dashboard
  2. Select ‘Banking
  3. Navigate to the ‘Transfer Funds‘ section
  4. Select your bank account and the deposit amount
  5. Select ‘Review‘, then click ‘Submit‘ to complete your deposit

How To Withdraw Funds Via Mobile

iOS and Android users can withdraw funds through the Robinhood mobile app by:

  1. Tapping the account icon on the right side of the screen’s bottom menu
  2. Select ‘Transfers‘, then select ‘Transfers to your bank
  3. Select the transfer account and bank
  4. Enter a withdrawal amount and complete the transaction

How To Withdraw Funds Via Desktop

Withdrawing funds on Robinhood’s web app takes three steps:

  1. Clicking the ‘Account‘ menu on the right side of the upper menu of your dashboard
  2. Select ‘Banking
  3. Navigate to the ‘Transfer Funds‘ section
  4. Select your bank account and withdrawal amount
  5. Select ‘Review‘, then click ‘Submit‘ to complete your withdrawal

Start Trading Now at Robinhood.com

Robinhood Trading Fees

Robinhood declares itself as a commission-free broker. Traders are not charged for opening an account, fund transfers, or account management.

That said, Robinhood is charged regulatory fees by the SEC and FINRA. These charges are passed onto traders to compensate the broker:

  • Regulatory Transaction Fee: $22.10 per $1,000,000 of principal (sells only). Traders with a total sale value under $500 are exempt. Depending on SEC rate adjustments (annual and mid-year), Robinhood may amend this fee.
  • Trading Activity Fee: $0.000119 per share (equity sells) and $0.002 per share (options sells). Traders with 50 share sales or less are exempt.
  • American Depositary Receipt (ADR): Bank-issued fees on foreign stocks traded on American exchanges. Robinhood estimates this fee to be around $0.01-$0.03 per share.

Robinhood Fee Schedule

Here’s a summary of Robinhood’s official fee schedule:

Summary Of Fees
Transfer FeesOutgoing ACATs
$75
Domestic Overnight Check Delivery$20
Service FeesPaper Confirms$2
Domestic Overnight Mail$20
'Gold' Account FeesCost for 30 days$5
Margin interest over $10002.5%

See the live Robinhood Fee Schedule on the website for further details.

Start Trading Now at Robinhood.com

Customer Support

Compared to other brokerages, Robinhood has a very limited choice of customer support avenues.

Traders can reach out to Robinhood through the broker’s help center. You can either browse through the knowledge base or submit a support ticket with one of the following categories:

  • Getting Started
  • My Account & Login
  • Investing
  • Bank Transfers & Linking
  • Cash Management
  • Documents & Taxes
  • Restrictions
  • General Questions
robinhood support ticket

Robinhood also offers a help center where traders can access FAQs and support threads in the aforementioned categories.

Start Trading Now at Robinhood.com

Can I Trust Robinhood?

As a member of the U.S Security and Exchange Commission (SEC), Robinhood made its mark as a regulated broker in the US.

The company also offers client protection through the Securities Investor Protection Corporation (SIPCS) and is a member of the Financial Industry Regulatory Authority (FINRA).

Robinhood has over 13 million trading accounts according to their most recent SEC filing.

That said, Robinhood had its share of controversies over the past three years.

In December 2020, the U.S Security and Exchange Commission (SEC) published an official press release on its charges against Robinhood. The allegations are for ‘misleading customers about revenue sources‘ and ‘failing to satisfy duty of best execution’.

The SEC’s order calculated that Robinhood’s practices might’ve resulted in over $34 million pulled from traders’ funds.

Brief Company History

2013Robinhood was founded in 2013 by Vladimir Tenev and Baiju Bhatt, with its current headquarters in California, US. The company name aims to portray the broker’s aspiration to provide accessible financial trading for lower capital traders, too.
2015The Robinhood mobile app was officially launched.
2020As of May 2020, Robinhood was valued at over $8 billion (US) by American VC firm, Sequoia.

Start Trading Now at Robinhood.com

FAQs

Here we answer some common questions about trading with Robinhood.

Is Robinhood legitimate?

Robinhood is a member of the U.S Security and Exchange Commission (SEC) and is regulated by the Securities Investor Protection Corporation (SIPCS). The broker is also monitored by the Financial Industry Regulatory Authority (FINRA), assuring traders of the involvement of leading regulatory bodies in the US.

See how these organizations protect Robinhood clients.

How do I get my money from Robinhood?

You can withdraw funds from Robinhood through the broker’s mobile app on iOS or Android devices, as well as via its web app. Navigate to the Account section on your chosen device and find the Transfers menu. Then, select your withdrawal method and amount. See this step-by-step Robinhood Fund Withdrawal Guide.

What happens if I close my Robinhood account?

After your Robinhood account is closed, the broker keeps a record of your account statements, tax documentation, and trade data. This is due to the record-keeping requirements of the U.S Security and Exchange Commission (SEC). You can close your Robinhood account provided that your account balance is $0.00 and all your trading positions are closed.

Is it safe to buy Bitcoin on Robinhood?

While traders can store and exchange Bitcoin via Robinhood Crypto, Robinhood is not a cryptocurrency specialist platform. Whether buying Bitcoin is considered “safe” on Robinhood is for individual judgment and the comparison of Robinhood to other Bitcoin exchanges. Robinhood provides cryptocurrency trading and storage services to clients through a subsidiary named Robinhood Crypto LLC.

Is the Robinhood app free?

Traders can download the Robinhood app for free from the iOS app store and Google Play store. While the application is free, users who register and participate in trading are subject to Robinhood’s compensatory fees. See this list of Robinhood’s fees to review what fees you may be subject to as a Robinhood client on mobile.

Plus500 is not available in the US

Legitimate CFD brokers, like Plus500, cannot accept US clients by law

US traders welcome at these brokers:

Cryoptocurrencies:

  • Trade 14+ major crypto coins
  • Includes Bitcoin, Ethereum & Ripple
  • Super simple setup

Accepts traders in the USA

Start Trading at eToro

Forex, Gold & Silver:

  • Trade gold and silver
  • Trade over 90+ currencies
  • Major US broker

Accepts traders in the USA

Start Trading at Forex

No thanks