Robinhood Application: Comprehensive Review 2022

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Investment has been one of the most noted and followed topics in today’s age, especially after the world was hit by the Covid-19 lockdown days when people started looking for easy and effective ways to earn money. Although the hype among the people increased tremendously, in 2019, investment is still best suited for people who understand the market and are ready to risk their potential funds on it.

However, it is not always about the funds or the market; it is also about the type of application you will use, how secure the application is, and whether or not to use it. Today, there are more than 100s investing platforms, of which Robinhood is an established name! 

But what is the platform all about? Is it the right broker to start your journey with? Let’s find out in this comprehensive review.

Pros & Cons Of Robinhood Application

Pros

  • The platform allows its users to buy fractional shares, making it easy for investors with low funds to invest.
  • Zero commissions-based platform, with high interest saving program & is suitable or designed keeping the first time investors in mind.
  • They provide a desktop and mobile platform & give away one free stock worth up to $200 on successfully linking your bank account.
  • The trading fee equals $0 per trade & does not require a minimum account balance.

Cons

  • The platform lacks research tools & much important information.
  • The charting software is non-existent and offers minimal functionality.

Robinhood Application: At A Glance

Official  www.robinhood.com 
Headquarter Menlo Park, California, U.S.
Founded In  April 1, 2013
Specialties StockbrokerElectronic Trading platform
Robinhood Application Employees Size 3,900 employees (March 31, 2022) 
Nature of Course Trading for Profit
Platform Fee $5 - $10 per trade
Customer Support Online / Telephonic / Live Chat (24x7 availability ) Credentials:[email protected] to be requested from the app itself from the Live Agent.
Industry Future Trading
Legal Entity  Nasdaq: HOOD (Class A)
Supported Countries Global 

Robinhood Application: Company Overview

Unlike most online stock brokers, Robinhood only supports trading in stocks, ETFs, and cryptocurrencies. Mutual fund trading is not available. While Robinhood does provide commission-free trading, it also has a variety of other opportunities to make money from your company.

Due to the ease of its trading app and a website platform that focuses on the fundamentals of investing for novice investors, Robinhood is a fantastic option for beginners. The straightforward user interface of Robinhood makes it simple to navigate and perform fundamental trading and investment operations. However, if you have some skill, you could realize that Robinhood only offers a small selection of trading tools.

Although it’s important to note that the broker continues to polish and expand its service, Robinhood lacks advanced features like trading tools and trails other brokers in categories like platforms and tools, mobile, education, research, and investments.

Robinhood customers like to follow the crowd; thus, there may be times when the platform is unavailable due to a high volume of users wanting to do the same thing at once, such as purchasing a specific security.

The Robinhood stock trading app is effective for investors searching for a straightforward, user-friendly tool. Beyond that, Robinhood will leave you wanting more, particularly now that $0 transactions are widely available. For trading in stocks, options, and cryptocurrencies, Robinhood does not charge a fee. However, some services of Robinhood Gold cost $5 per month, and Robinhood does accept PFOF or payment for order flow. Read the full Robinhood vs eToro review.

Robinhood Application Under Review

Key Features Of The Robinhood Application

For years, Robinhood Application has stood up as one of the most renowned brokers in the industry. Backing its expertise are several core features, most of which are explained in the section below: 

Transparency In Operations

In the past, Robinhood was a disruptive fintech player in the brokerage sector, assisting novice investors. However, the company’s motivations are now under scrutiny, and issues with data, transparency, and trust are at the forefront. For “misleading clients regarding revenue sources and failing to satisfy the duty of best performance,” the SEC penalized Robinhood $65 million in December 2020. 

Later, the SEC ruled that between 2015 and 2018, Robinhood neglected to inform users that its main source of income came from the market makers to whom it routed customer orders. As a result, this strategy ultimately led to trades that gave customers less money than they would have received from other brokers.

High Standards Of Security

Users of mobile apps for security can sign in using personalized pins, face or fingerprint recognition, or both. The users must enable Two-factor authentication. If two-factor authentication is not allowed, new logins from unrecognized devices need to be validated with a six-digit code received through text message or email.

Since Robinhood is a member of SIPC, its customers who purchase stocks are covered up to $500,000 (including $250,000 for claims involving cash). In contrast to other brokers, Robinhood does not have additional Securities Investor Protection Corporation (SIPC) insurance. Within the last four years, Robinhood has disclosed data breaches. The most recent occurred in 2021 and affected more than 5 million client accounts without causing these accounts any financial damages.

Visit Robinhood

Access To Investment Analysis

When compared to its larger competitors, Robinhood provides virtually little portfolio analysis. Balances, margin, and purchasing power are all visible in real-time, but that’s about it.  There is no internal rate of return, asset allocation study, or means to calculate the tax implications of a planned trade. 

Furthermore, there is no trade journal. Instead, you must import your transactions into another software or website to conduct any portfolio analysis. This way, users can make the most of their investments without having to risk their entire savings on a single trade. 

Access To Educational Resources

Given that Robinhood is a broker and its ideal customer is new to investing, its educational offerings aren’t as extensive as they should be. The top financial news stories of the day are currently delivered to Robinhood customers via Snacks, a podcast, newsletter, and video series. This service is available Monday through Friday. 

As of August 2020, the broker reported that there were 2 million active monthly podcast listeners and more than 20 million monthly subscribers to the weekly email. In addition, with a recent shift to video as a new format for their Snacks material, Robinhood hopes to give engaging and practical graphics that will make understanding financial news less frightening.

Additional Features Of The Platform

Those mentioned above were the core features of the Robinhood application. But, interestingly, that’s not all that goes into making the platform what it is. So continue reading as we explore some other additional features of the platform. 

  • Consumer Service: The website or the app is used for all customer service interactions. Robinhood is equipped with a chatbot. Since Robinhood has no phone number, you cannot contact him for support. For a callback, you can add your phone number. The users can also come in contact with the team of customer service via social media.
  • Exchange of Technology: It is challenging to compare Robinhood’s payment for order flow data to that of its rivals because, unlike many other brokers, it doesn’t publish its trading information. Your likelihood of receiving the best price when your trade is placed depends on how a broker routes your order. The term “price improvement” refers to this lowest price. Robinhood similarly withholds its price advancement statistics.
  • Option to start your journey at only $1: As a broker, the Robinhood application is known for the flexibility that it provides to its users. If you’re a beginner, you could start diversifying your profile by investing in multiple asset types from different markets. Thanks to the latest updates, users can also consider investing in cryptocurrencies without attracting additional commissions. 
  • Multiple options to diversify your portfolio: As a broker, the Robinhood application is known for the flexibility that it provides to its users. If you’re a beginner, you could start diversifying your profile by investing in multiple asset types from different markets. Plus, thanks to the latest updates, users can also consider investing in cryptocurrencies without attracting additional commissions. 
  • Robinhood cash card: The Robinhood cash card is preferably one of the unique concepts unveiled by the broker. Unlike other applications that offer you a debit card for your spending, Robinhood has a unique debit card linked to their invested funds. In addition, it also comes with weekly rewards to help users develop their custom investment habits. 

How Secure Is Robinhood Application?

To survive in the competition, one most important component for the investors is to know about the platform’s security. It is safe to say Robinhood is one of the most secure, reliable & budget-friendly applications for any investors, be it a professional or a newbie.

Robinhood has over 18 million users worldwide, with more users adding on every single day. They even provide free stock when you successfully open an account and link it with your bank server. 

Robinhood being a member of the SIPC gives another extra assurance, meaning your funds are safe at the platform itself. However, it should also be kept in mind that it is regulated by SEC (Securities and Exchange Commission).

Other than that, the company has several other safety measures covered below:

  1. Two-factor Authentication (2FA): It acts as an extra layer of protection and keeps your crypto safe if you don’t lose access to your device. 
  2. Strong passwords: Passwords are the most common form of security, but in Robinhood, your passwords are stored in hashed form, and no one can access it other than you.
  3. Withdrawal Confirmation & Encrypted Serves: Robinhood has taken extra care of your security with a process where you cannot withdraw funds without any confirmation via your phone number or email. It also has encrypted services, which automatically protect your funds against DDOS attacks. 

In addition, the platform is also open to adopting new and better security features as they’re introduced in the market. 

Visit Robinhood

Fee Structure

The Fee structure of Robinhood App, in general, is on the low side compared to any other platform. They don’t charge brokerage fees as the other site does but charge a minimal amount making it possible for its trader to invest actively without any issues. Besides, there are no extra hidden charges linked with the platform. 

Trading Fees

The platform revolves around providing free stock options, EFT, and cryptocurrency trades, with a minimum balance of $0, where only taxable investment accounts are available. Although the platform does not provide robust functions as other platforms, Robinhood still has one of the lowest cost charges when compared in the industry & is among those few trading platforms where you can trade cryptocurrency for free.

Here’s a tabular presentation of the trading fees on the platform:

Assets Fee Structure Fee Terms
US Stock Fee Low EFT & Stock Trading is free
Inactivity Fee None No Activity Fee Required
US Tech Fund Fee Nil Nil
EUR/USD Fee Nil Nil

Non-Trading Fees

When all non-trading expenses are considered, Robinhood is a reasonable broker. This indicates that they won’t charge you much for withdrawal fees or others non-trading-related activity on your trading account. Non-trading expenses at Robinhood include various brokerage fees and charges you pay that have nothing to do with purchasing and selling assets.

 

Extra Fee Amount
Activity Fee $0.000130
Deposit fee $0
Withdrawal fee $0

 

Overall, Robinhood’s competitive fee structure allows users to make the most of their everyday trading experience. 

Account Opening Over The Platform

Robinhood has a very smooth UI/UX, making it easy to use and start with. To open an account with Robinhood, all you need to do is follow the steps listed below: 

Step 1: Search for Robinhood’s website or download the application on your device. 

Step 2: Once you download it or come to their main landing site, you’ll see a dropbox with several options. Select the invest option, where you’ll be redirected to a Get Started page.

robinhood.com/signup

Step 3: Complete the application, where you need to add your email address or phone number & set a very secure password as well and submit it.

Step 4: Once approved, you’ll receive an email or verify your documents.

Note: An average of 5-7 days is required for your documents to be verified; once verified, you can actively trade using your new account.

Customer Satisfaction

The consumer rating for Robinhood is 1.33 stars out of 216 reviews, which shows that most customers are typically unhappy with their purchases. Customer service, phone number, and bank account issues are the most often mentioned Robinhood complaints by customers. Among Brokerage websites, Robinhood is ranked 76th.

In June 2020, Alex Kearns, a 20-year-old investor, committed suicide after receiving a notification from the brokerage that he believed he had lost $730,000 on an options trade and was unable to get in touch with anyone at the company to get more information. This led to strong criticism of Robinhood at the time.

Young investors loved the fast-growing broker’s user-friendly interface, which helped it become well-known during the “meme” stock trading craze earlier this year. 

Before rolling out 24/7 phone assistance, a first for a significant cryptocurrency trading platform, Robinhood’s 21.3 million active users were mainly required to communicate with the business via email. However, with the average wait time at Robinhood Crypto in recent weeks being approximately 30 minutes, consumers can now request a call through the app and hear from a trained agent.

Robinhood Application Vs. Competition 

Considering the wide range of features and functionality the Robinhood platform provides, it’s evident that it is one of the most reliable brokers to start your journey. However, if you find the charting tools incompetent in your research, you might want to test them against its competitor. 

Therefore, to help you with insight, we’ve run a detailed comparison of Robinhood against its competition Fidelity. Let’s check it out in the following section. 

Visit Robinhood

Robinhood Application Vs. Fidelity 

The critical distinction between Fidelity and Robinhood is that the former is a more established, full-service brokerage company. At the same time, the latter is a more recent entrant that has garnered much positive and negative attention. However, that’s not all! Let’s check out the core differences in the following sections: 

  • Usability: Regarding the appearance and feel of their platforms, Fidelity and Robinhood are very different. Fidelity is user-friendly and seamless. Once you uncover the multiple sub-menus, opening a brokerage account is straightforward, and navigating the website is simple. If you are having trouble finding what you’re looking for, you may also use the search box at the top of each page.
  • Experience with trade: Robinhood offers multiple levels of trading experience. They are:  
  • Desktop trade: Both Fidelity and Robinhood offer appropriate trading experiences for novice investors. However, since Fidelity can accommodate clients of all experience levels, we believe it has distinct advantage in this area.
  • Mobile trade: A beta version of Fidelity was just released, supporting many of the additional features that its customers have been requesting. Overall, we concluded that Fidelity’s mobile platform is superior to Robinhood’s in terms of being complete and robust.
  • Order types: Both brokers let their clients choose sure tax lots when selling through them. Overall, Fidelity outperforms Robinhood in this space because it provides an excellent selection of orders, even if not all of those orders are mobile-friendly.

Final Verdict

Should You Consider Using Robinhood?

Robinhood might be the spot to help you get used to investing if you’re new to it and have a small starting amount. The mobile-first broker has a straightforward website and an app that offers an easy on-ramp to stock and ETF investing. Besides, some other features might make you consider the application. 

  1. No Commission charged: Robinhood was the first stock brokerage app to offer its services without charging commissions. As a result, customers can open an account for as little as a few dollars and begin purchasing shares without paying a commission on each trade. Users of the Robinhood app can trade equities for free, thanks to its commission-free business strategy. Robinhood initially just had an iPhone app, but they soon added Android versions as well. Users of the program can invest in ETFs, American stocks, virtual currencies, and options.
  2. No trading fees: Robinhood is for the people, so there are no account minimums or trading fees while using Robinhood. A number of U.S.-listed stocks and ETFs are available for trading. Additionally, you may now trade options as well as cryptocurrencies.
  3. Access to margin trading: Robinhood now has a premium gold account called the Robinhood Gold account, which enables margin trading. But novice investors don’t have to worry about it or shell out money.

Shortcomings Of Robinhood

Despite the pros, there are several shortcomings to the Robinhood platform. To give you a better idea, here are some cons to the broking platform: 

  • Robinhood does not offer complex charting or screeners: Robinhood doesn’t provide comprehensive charting, screenings, etc. While most brokers charge for options contracts, and some still charge a ticket price for stock trades, you will have access to trading tools, educational offerings, data, customer support, and research in exchange.
  • Brokers are not worth taking seriously:  There are alternative zero-fee brokers with additional resources that are worth considering, even if you are a novice investor who is merely interested in purchasing and keeping stocks.

This brings us to the end of our comprehensive review of the Robinhood application! With this, we hope you now have a better idea of the platform’s different features, pros, and cons. While Robinhood is a reliable overall broker, certain aspects make it challenging. 

Therefore, if you’re a trader needing real-time charting and screens, Robinhood won’t be the suitable option for you. Here, we suggest you look for a different option. All the best! 

FAQs

Do you need a bank account to trade in Robinhood?

The solution is that you can trade with Robinhood without needing a traditional bank account. Simply add a Cash Management account, and then use Direct Deposit to fund your brokerage account. Once the money has been added, you can use it to conduct transactions.

What Robinhood requires private information?

To abide by FINRA regulations and U.S. government legislation, Robinhood requests personal information, including financial and tax identity information. Both new and returning customers will be asked for personal information.

Why are there more security checks while logging in?

When trying to sign in to your account from a new device, they have increased security precautions to help protect the security of your account. Due to the change, you can no longer use email alone to validate a new trusted device. Instead, you must use the phone number connected to your account to verify any new trusted devices.

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