Robinhood App: A Beginner's Guide To Investing

Robinhood is a commission-free investment app that allows users to trade stocks, ETFs, options, and cryptocurrencies. With its intuitive interface, Robinhood simplifies the investment process, making it accessible to beginners and experienced investors alike. The app offers a range of features, including technical indicators, 24/7 live support, and the ability to invest as much or as little as desired. Robinhood also provides educational resources and tools to help users make informed investment decisions. While Robinhood has faced some criticism and security concerns, it remains a popular choice for those seeking a user-friendly platform for their investment needs.

Getting started: how to sign up and fund your account

First, download the Robinhood app on your phone. Then, open the app and enter your personal information, contact details, Social Security number, and funding source. You should be approved within an hour, at which point you can initiate bank transfers.

Robinhood uses instant verification with many major banks, so you won't have to report micro-deposits to verify your account information. This means that bank transfers of up to $1,000 are available instantly for investing. Deposits larger than $1,000 will take four to five business days to process.

It's important to note that while it's quick and easy to start investing with Robinhood, users should be certain they understand the risks of investing before diving in.

Trading: how to place orders and navigate the platform

Robinhood offers commission-free trading on stocks, ETFs, their options, and crypto. You can invest as much or as little as you want, although other fees may apply.

To place an order, first, go to the stock's detail page to view the stock's historical performance, analyst ratings, company earnings, and other helpful information to consider when buying or selling a stock.

Next, select Trade → Buy or just Buy if you don't currently own the stock. By default, you will be asked to enter the amount you'd like to purchase in dollars, or you can choose to buy shares, or select another order type, by selecting Dollars.

Then, review your order and confirm that all the details are correct or select Edit. If everything looks good, swipe up to submit your order.

It's important to note that Robinhood defaults to share-based or dollar-based. Share-based and dollar-based orders can default to market or limit orders depending on the time of day and order side. During regular market hours (9:30 AM-4 PM ET), dollar-based buy orders are entered as market orders, and share-based buy orders are entered as limit orders with a preset limit price. During extended hours (7-9:30 AM and 4-8 PM ET), dollar-based and share-based buy orders are entered as limit orders with a preset limit price.

A limit order can only be executed at your specific limit price or better, and investors often use them to have more control over execution prices. With a buy limit order, a stock is purchased at your limit price or lower. Your limit price should be the maximum price per share you are willing to pay. For example, if YOWL is currently trading at $10 per share, but you only want to pay $8 per share at most, you would set your limit price to $8. If YOWL drops to $8 or lower, and there are shares available, your order will fill at $8 or lower. If YOWL doesn’t drop to $8, your order won’t execute.

With a sell limit order, a stock is sold at your limit price or higher. Your limit price should be the minimum price per share you want to receive. For example, if YOWL is currently trading at $10 per share, but you want to receive at least $12 per share, you would set your limit price to $12. If YOWL rises to $12 or higher, and there are buyers available, your order will be filled at your limit price or higher. If YOWL doesn’t rise to $12, your order won’t execute, and you’ll keep your shares.

Keep in mind that limit orders aren't guaranteed to execute. There has to be a buyer and seller on both sides of the trade. If there aren't enough shares in the market at your limit price, it may take multiple trades to fill the entire order, or the order may not be filled at all. Additionally, trading outside of market hours involves additional risks, such as increased price volatility and lower trading volume.

Investment options: stocks, ETFs, options, and crypto

Robinhood offers commission-free trading on stocks, ETFs, their options, and crypto. You can start investing with as little as $1 and trade 24/7.

Stocks

You can trade your favourite stocks commission-free, 24 hours a day, 5 days a week. Stocks and funds are offered through Robinhood Financial.

ETFs

ETFs (exchange-traded funds) can be traded commission-free and 24/7. They can help to remove some of the pressure from picking individual stocks, as they allow you to invest in a group of companies all at once. ETFs are offered by Robinhood Financial.

Options

Robinhood offers commission-free options trading. Options give you the right to buy or sell stocks or ETFs at a specific date for a specific price. Options are offered through Robinhood Financial and are risky, so they may not be suitable for all investors.

Crypto

Robinhood supports the buying and selling of crypto in your account. You can buy and sell crypto 24/7, with some exceptions like scheduled maintenance. Crypto is offered through Robinhood Crypto.

Robinhood Gold: the benefits of a premium account

Robinhood Gold is a premium subscription service that offers a suite of powerful tools, data, and features to take your investing to the next level. For a $5 monthly or $50 annual subscription charge, you get access to the following key benefits:

High-Interest Earnings on Uninvested Cash

Gold members can earn a competitive 4.25% APY on their uninvested brokerage cash with no cap on how much interest you can earn. This rate is significantly higher than the national average savings account interest rate, allowing you to watch your cash grow.

3% Retirement IRA Match

Robinhood Gold offers a 3% match on eligible IRA contributions to your Robinhood IRA. To keep the full 3% match, you must remain a Gold member for at least one year after your contribution.

Instant Deposits

Gold members can access up to $50,000 in Instant Deposits, enabling you to move at market speeds and make quick investment decisions.

Margin Investing

The first $1,000 of margin investing is interest-free for Gold members. This provides additional flexibility and potential for your investment strategies.

Level II Market Data and Professional Research

Gold subscribers gain access to Level II market data from Nasdaq and professional research from Morningstar. These tools provide real-time insights and in-depth analysis to support your investment decisions.

Robinhood Gold offers a one-time free trial for the first 30 days, allowing you to explore the benefits of the premium account before committing to a subscription.

Security and customer support: how to keep your account safe and get help

Security and customer support are key priorities for the Robinhood app. The app offers 24/7 live support, allowing users to chat with a Robinhood associate at any time. The app also provides security tools such as two-factor authentication to keep your account safe.

Robinhood uses industry-standard measures to protect your account and ensure your experience is safe and secure. When storing your account passwords, Robinhood uses the industry-standard BCrypt hashing algorithm and never stores them in plaintext. This means they are stored in a scrambled format that makes them difficult and time-intensive for attackers to crack. Sensitive information, such as your Social Security number, is encrypted before being stored. In addition, the app and website securely communicate with Robinhood's servers using the Transport Layer Security (TLS) protocol with up-to-date configurations and ciphers. TLS helps ensure that anything you send to the company's servers remains private, including your personal and account information such as your password, bank account, and more.

Robinhood also offers a range of resources to help you keep your account secure. This includes guidance on how to identify and report scams and security best practices. The app provides multi-factor authentication on all accounts and users are required to verify their identity each time they log in or make changes to their account.

If you need further assistance, Robinhood offers 24/7 live support via phone or chat. You can get answers to questions about stock trades, deposits, withdrawals, and more. You can also view your support chat history in the app or on the web.

Frequently asked questions