Use my referral link share.robinhood.com for a free stock when you signup! See below for more details
Robinhood is the commission free trading app; its mission is to “democratize access to the financial markets” for individual investors by not charging any fees for trading. What does that mean? It means you are able to buy and sell shares of publicly traded companies and ETFs without having to pay a broker’s fee. This is a big deal as these fees can be up to $6.95 per trade at brokers like eTrade. When you start out investing you may not have a lot you’re willing to invest, and when that’s the case those brokerage fees can really cut into your profits. It’s actually the reason why I felt confident enough to start investing a few years ago, I could invest small amounts incrementally without having to worry about those hefty fees.
For the most part, the interface of Robinhood is very simple. When looking at the stock you see the graph looking at the specified time-frame, 1 day, week, month, 3 months, 1 year, or 5 years. Below that will be any recent news related to the stock, followed by the basic statistics, the past four or five quarterly earnings, and a brief description about the company.
I’m a big fan of Robinhood and have a majority of my equity within this app. The only downside to me is that it’s not the best for researching and comparing stocks. I normally do my research on other platforms, especially when searching for ETFs, and then use Robinhood to execute the trade. Besides that, I completely recommend Robinhood to all of my friends.
Robinhood Gold – How Robinhood Makes Money
So how does Robinhood make money if you’re not charged a fee when trading stocks? They offer different tiers of Gold membership.
Normal trading hours are from 9:30 am – 4pm EST; you can place trades outside of these hours, but they will not be executed until the markets are open. All tiers give you extended trading hours, which means you can execute trades from 9 am to 6 pm, giving you an extra two and a half hours. This can come in handy when there’s news or earnings announcements before/after normal trading hours, so that you can take advantage of executing trades based off the most recent information right away. The downside to the extended trading hours is the lack of liquidity; there aren’t as many people trading during these hours compared to normal. So if you execute a trade the price that currently is displaying might not be the actually price you’re buying or selling at. I haven’t done many trades during the extended hours, but in my experience you could end up paying or losing as much as 15 cents more per share when buying or selling. However, you do easily have the ability to set the max/min price you’re willing to buy/sell at. You can also set how long you would like that trade to be active for. Let’s say you want to buy a share of Amazon and the max you’re willing to pay is $1,400 per share, you can set that trade to never expire, or expire at the end of the next trading day.
Gold also gives you the access to instantly deposit $2,000 into your account, instead of the standard $1,000. Any amounts more than that will be subject to a 4-5 business day ACH hold before the funds are available for trading.
The other benefit of Robinhood Gold is the ability to execute trades on margin (essentially taking out a loan to buy stock and paying interest on that amount). The first tier, for $10 a month, gives you access to $2,000. That’s an annual interest rate of 6%. However, you’re paying $10 no matter how much of the $2,000 margin you have available. So if you only borrow $100, you’re still paying $10 a month.
The second tier gives you access to an extra $25,000 for trading, at a price of $120 per month; an interest rate of 5.76%. The final tier is for $50,000 & up, for $200/month, giving an annual interest rate of 4.8%. In order to be eligible for these tiers you need to have a specific amount of cash/equity in your account; if you open an account and only put $2,000 in you will not be able to utilize the 2nd and 3rd tiers of 25k and 50k.
I personally have only ever utilized the first tier of $2k. The first time I signed up I only really wanted to use the extended trading hours to take advantage of pre and post market hour changes. Since I wasn’t trading much at the time I discontinued it after a month or two as I didn’t want it to cut into my gains. Once I had invested more money into Robinhood and felt more comfortable investing I started taking advantage of the margin amounts. Since then I frequently turn the gold tier on and off. For example, I will upgrade to tier 1 when the market is having a down day and I either want to take advantage of the $2k instant deposit, the $2k margin for trading, or both.
Referral Reward
When you refer a friend you both get a free stock. The stocks you can win have a value between $2.50 and $200. There’s a 98% chance the stock is valued below $10, 1% chance it’s below $50, and 1% it’s between $50 and $200. I’ve referred 2 friends and received one share of Southwestern Energy with a value of $7.51 and one share of Xerox with a value of $7.10. My two friends got stocks worth about $5-8 as well. It’s certainly not a lot, but if you put in an initial deposit of $100 and got one free share worth $7, you’ve made a return of 7% just for opening the account; not too bad. And if you’re lucky you may even get a share of Apple worth $160. If you’re interested in signing up and want a free stock you can use my referral link: share.robinhood.com
Coming Soon!
Robinhood has also launched a website, and trading for cryptocurrencies and options. These are all brand new features and still in BETA testing. Some users currently have access but there’s a current wait of over 1 million people. All features will be available for everyone in early 2018, according to Robinhood. The website, from what have I seen, will have all of the same features of the app, as well as the ability to view the most popular traded stocks on Robinhood.
The ability to exchange cryptos is especially exciting because it’s one of the largest, if not the largest, brokerage firm to offer crypto trading to its clients. And with no commission fee how can you say no? I also think there’s less exposure to exchange risk with Robinhood; less chance of it going bankrupt, having bitcoins stolen or hacked, etc. For example, in 2013 70% of bitcoin transactions were done through the Japanese company Mt Gox. In February of 2014 it was bankrupt and shutdown, losing hundreds of millions of their client’s money.
Is Robinhood a Scam?
No, Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).
Pup of Wall Street 