Overview

Robinhood Markets is a financial services company which has its headquarters in Palo Alto, California. It is a U.S. based company which allows you to do trade through its smartphone app. Through Robinhood smartphone app traders are given opportunity to invest in publically traded companies and exchange traded funds listed in U.S exchanges without paying any commission or trade fees.

This commission free stock brokerage firm was founded by Baiju Bhatt and Vladimir Tenev on April 18, 2013. Earlier the firm was known with the name Robinhood Financial, LLC. It is popular for taking from rich and giving to the poor as it allows making stock trades for free, which other big companies fail to offer. According to latest reports Robinhood has gained nearly one million customers as on March 2016.

However the firm is still new in brokerage market and does not offer trading related to Options, Mutual Funds, Warrants and OTC securities.


Robinhood Features

Like other online trading firms Robinhood offers some features for stock traders and investors which are as follows:

  • Accounts Availability – As the company is new in the market, you can only open Individual accounts with Robinhood.
  • Trading Fees – You can buy or sell stock with Robinhood at zero cost.
  • Minimum Deposit Required – At Robinhood you can start trading even with few dollars.
  • Mobile App – You can make trades with the help of mobile app which is available for Iphone, Ipad and Android users.
  • Scheduled Deposit – Another benefit which Robinhood offers is of schedule payment methods. With schedule deposits you can easily schedule transfers on weekly, biweekly, monthly and quarterly basis.
  • Robinhood Instant – With Robinhood Instant you get benefit of instant access to deposits and immediate access to your funds after selling stocks. There is no need to wait for 3 -4 days to watch your transfer.
  • Advanced Order Support – With this feature you get support for market orders, stop orders, limit orders, stop limit orders from Robinhood.

Robinhood Commission and Fees

With the lower fees charged from the customers, Robinhood is among that online brokerage company which is catering to the millennial crowd. As the smartphone technology is their primary computing device, the firm has managed to get more and more customers in quick time. The rates and commission charged by Robinhood is cleared with the help of table which is given below:

Stock Trades Option Base Options Contract Minimum Deposit Mutual Funds
$0.00 N/A N/A $0 N/A

How to create account at Robinhood?

The signup process at Robinhood is different as compared to other online brokerage companies such as E*Trade, TradeKing, Charles Schwab etc. You can create account at Robinhood only via Android or Iphone app meaning that you are not allowed to Sign-up at Robinhood on their website. Also trading is limited on their mobile app only.

Once you start the sign –up process you need to submit your basic information such as Social Security number, name, address etc so as to state that you are real person. Robinhood is currently available for U.S market but it will be soon available for Australian market as well.

After completing the sign –up process you will now be allowed to view your profile and make changes as per your requirements. The interface of the app is very simple and pretty easy to use. In case you have newer version of Iphone than you can login into the Robinhood app with your fingerprint.

Also if you want to link your bank account for transfer than it will also be done with the help of the app only.


How exactly Robinhood make money?

It is quite strange as other big companies are charging some fees on stock trades and require minimum amount balance to start trading, while Robinhood which is an emerging brokerage company charge zero fees from new users.

The major reason behind that is Robinhood CEO states that their company will make profits with the help of margin lending interest and with the interest on uninvested customer cash deposits. According to the sources the margin interest rate which is offered is 3.5% which is the lowest interest rate among other stock brokerage firms. This might be the source of revenue for firms like Robinhood which offers zero fees on stock trades.


Other companies which offer same fees and commission to traders and investors include LOYAL3 and WiseBanyan. However Zecco was another trading company which offers the same services but its decisions of offering such pricing structure proved unsuccessful and as a result of that it merged with TradeKing.

Pros and Cons of Robinhood

Pros:

  1. Robinhood is easy to use and make trades.
  2. With free trade fees one can start trading at Robinhood quickly.

Cons:

  1. Robinhood does not allow ACAT transfers meaning that there is no way to transfer existing brokerage assets.
  2. One of the disadvantages of Robinhood is that they do not offer retirement accounts which other leading firms are offering.
  3. You are also not allowed to perform trade options, warrants, mutual funds and OTC securities.

Additional Information

Name = Robinhood Markets Inc
Headquarters = Palo Alto, California
Key People = Baiju Bhatt (Co – Founder), Vladimir Tenev (Co – Founder), Nate Rodland (COO)
Industry = Technology
Founded in = April 18, 2013 in Palo Alto, California
Website = www.robinhood.com