For several years, my grandmother has encouraged me to get involved with the stock market. While she was successful at persuading my older brother into investing in penny stocks, I have never taken the initiative to learn how the stock market truly works. For that reason, I was excited when I heard about a brand new app called Robinhood, which provides zero-commission stock trading at your fingertips.
While online brokers are nothing new, with existing firms such as Interactive Brokers and E-Trade, Robinhood is a mobile-first service that doesn’t require a desktop. Whether you are a twenty-something college student that doesn’t fully understand how the stock market functions, an experienced Wall Street stock trader, or fall somewhere in between, the app makes stock trading easier for the masses.
Robinhood for iPhone has several features that makes the stock market more accessible from your pocket, including the ability to buy and sell U.S. listed stocks and exchange-traded funds with zero commission collected, place market orders and limit orders to get the best possible trade executions, support for margin trading, no account minimum and the ability to build a personalized stock watch list, track market data in real-time and access historical data and graphs for stocks.
The app has an intuitive color scheme for automatically knowing if the stock market is closed or open, or whether you have made a profit or loss on a particular stock. Margin trading has a gold color scheme. Robinhood also plans to introduce a Today view widget in the future, allowing for users to oversee stocks from Notification Center on iOS 8 or later, although it provided no specific timeframe for that feature.
Robinhood is rolling out today on the App Store for iPhone and is currently limited to users aged 18 years or older in the United States. The company has an international expansion on its roadmap, although co-founder Baiju Bhatt tells me that a global launch could be at least one year out due to the complexity of opening a brokerage. Android and web versions of the service are listed as coming soon.
The app supports most U.S. banks, including Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, Fidelity, Capital One 360, Charles Schwab and USAA. The sign-up process takes about four to five minutes, while getting account approval can take an additional one to three business days. Robinhood will begin inviting people from the early access wait list to create their accounts starting today.
You will need to provide Robinhood with your basic personal information, social security number and online banking login to create an account. Robinhood offers Touch ID support on iPhone 5s, iPhone 6 and iPhone 6 Plus, in addition to fully encrypting and securely storing sensitive information. Bank login information, passwords and any tokens are never stored or cached on Robinhood’s servers.
Robinhood is an attractive new solution for stock trading, especially for millennials that are just coming of financial age. With a mobile-first approach, simplistic yet intuitive user interface, zero commissions, no account balance minimum required and several other features, Robinhood has the potential to be a game changer in the online brokerage and stock trading landscape.
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So what’s in it for the company? How can this all be free?
From the site FAQ, they say they make money from interest they charge on margin trading (trading which involves you borrowing their money for leverage). They also collect interest on cash balances (similar to what banks do with your money). They are obviously estimating that they can make more from these methods while still offering zero commissions. My guess is they will charge interest rates which are slightly higher than their competitors, attracting people on the basis of zero commissions. I like that they are disrupting the brokerage landscape though
My post expressing thanks was deleted by the moderator.
What reason would they be charging interest? If I am trading with my own money I shouldn’t be borrowing anything from them? Or are they banking on me borrowing money to be able to trade more? I’m a little lost on this part.
Once trader becomes experienced one inevitable will need a margin account. Lending shares to short sellers to collect interest as well as other ways to make money is available to all brokers. Commissions are a thing of the 20th century…
I like Acorns better. It will round up your expenses to the nearest dollar and auto invest the spare change for you. Great app and easy to use. Although I guess this is nice if you want more choice in your investments.
I’m gun shy about Acorn’s commissions.
Not even remotely the same thing lol
Not available here at Brazil’s store… :(
Specifically says in the article that it’s available in the US only as of now…
Likley brought to you by High Frequency Traders. Enjoy “free” trades with guaranteed front running and partial order completion if your lucky. Nothing in life is free. The name is ironically funny.
It is unlikely anyone using this app would being trading volumes high enough to greatly effect stock prices making front running for such small volume almost pointlessly risky.
So what if I am not American and don’t have a social security number, will I still be able to use the app ?
i think you would have to wait for them to go international…