Compared to other brokers, Robinhood is relatively easy to use, especially when it comes to the mobile application. However, its lack of experience with advanced investing strategies means that it trails behind some of its competitors. In addition, the interface is somewhat limited. For example, the watch list functionality is limited, with fewer than 100 columns available. On the other hand, TD Ameritrade and TradeStation offer more than three hundred columns.
The main advantage of Robinhood is its no commission fees for trades. This has given it an edge over competitors, who have lowered their commission fees in the past few years. However, Robinhood still has its rivals beat when it comes to per-contract fees for option trades. TD Ameritrade, Interactive Brokers, and Ally Invest each charge $0.65 per option trade. While that may sound like a lot, the fact remains that no other trading platform can match Robinhood’s no-commission option trade fees.
Another notable example of this kind of fraud was when Robinhood was fined $65 million after misleading customers. The firm did not adequately explain its order flow payment strategy to customers, which made investors wary of it. Moreover, despite being marketed as a commission-free trading platform, the firm did not disclose this information before its customers. The resulting scandal could lead to greater misunderstandings about how financial services work. Moreover, there is no clear answer as to whether Robinhood will face more scrutiny for the lapse in its disclosure policy.
Compared to E*TRADE, Robinhood is a good option for beginners, but seasoned traders will probably find it difficult to use. E*TRADE supports multiple markets, provides extensive screeners, and allows users to customize their platforms. Compared to Robinhood, the free version offers limited features. Also, it lacks some essential features, such as price improvement information and transparency regarding fills. However, it is worth checking out for its free trial.
Lastly, despite the zero commissions on US stock, cryptocurrency, and options trading, it has a high level of fees. It charges a minimal fee for US stocks and ETFs, but charges extra for trading foreign stock and ADRs. The latter incur small custody fees that the broker passes on to you, but these fees are not very high. So, before you invest with Robinhood, make sure you understand what’s included in the service.
Another notable feature of Robinhood is its fractional share offering. You can purchase fractional shares of stocks and cryptocurrencies. In addition, you can also invest in 17 different cryptocurrencies. These recurring investments allow you to take advantage of low entry and exit prices. However, one drawback to Robinhood is its low account minimums and service outages. Despite its low fees and high level of customer service, it’s still an excellent choice for traders who don’t want to deal with large brokerages.
Another benefit of Robinhood is that it is completely free of commissions. While this means that you won’t be charged any commissions for trading stocks, ETFs, options, or cryptocurrency, it is also important to note that it earns its money by selling your orders to wholesale market makers. Because of this, it’s important to note that it does not support OTC stocks. You can only trade stocks listed on the NASDAQ and NYSE.