What is Robinhood
Robinhood is a mobile app that is focused on trading without paying a commission fee to trade. This app was designed to give people an opportunity to invest in an easy way.
Robinhood is great for:
- Users who are mobile-centric.
- People who want to be traders of stock, ETF and options.
- Users who want to be involved in margin trading.
- Taxable brokerage accounts.
Advantages of the service
- Easy in usage.
- Free trades.
- Can set up automatic transfers.
- Quick access to deposits.
Disadvantages of the service
- No mutual funds.
- No IRAs.
- No automatic reinvestment of dividends.
Robinhood accounts
Each user should choose one of the options: Robinhood, Robinhood Gold, Cash.
- Robinhood – the standard account which is also called instant one. This account is usually offered when you sign up. This account gives users an access to instant deposits. It means that you can start purchasing immediately after performing a bank transfer. You can use your funds just after selling.
- Robinhood Gold – it is a more premium account that gives you an ability of a high-level of margin trading, larger instant deposits and extended hours for trading.
- Cash – this account is similar to standard one without the instant deposits and instant settlement. This account is exempt from strict rules on trading day.
Robinhood Gold offers 3 major advantages in comparison with a standard account. Even though a Gold account isn’t free, there’s a fixed, monthly cost. Let’s get down to higher margins. You get more buying power when you have access to higher margins – uo to 100% of your account size. Talking about instant deposits. The same tiers that determine buying power are used for determining the number of instant deposits that are accessible immediately. You also get extended trading hours. Typical market hours are 9:30 AM EST to 4:00 PM EST on normal business days. This is the time period in which you are normally allowed to make trades. With Robinhood Gold, you can make trades outside of this time window:
- Pre-market: 30 minutes before the market open (9:00AM EST)
- After-market: 2 hours after the market closes (6:00 PM EST)
Investment options
Robinhood allows users to invest in 4 types of securities:
- Stocks.
- Options.
- Exchange-traded funds (ETFs).
- Cryptocurrencies (available in some US states only).
Mutual funds are missing. Simply saying, a mutual fund is a basket of stocks that let people diversify their money by holding a single investment in multiple stocks.
Other investments excluded are: futures, forex, IPOs, annuities, and bonds.
Currently, the service offers the trade of bitcoin and ethereum.
Is it a good idea to open a Robinhood Account
Robinhood may be a strong fundament for any investor that wants to make investments in stocks at a very low cost. As first-time investors usually start with a small amount of money, this service may help you to dive into the world of investing.
Undoubtedly, budding investors are provided with a good platform that fosters them.
More confident traders who are experienced in this sphere may give a try to Robinhood Gold.
Splaitor doesn’t provide any investment, money management, or trading advice. Read our Disclaimer to know more.
