Robinhood Review – 5 Things that You Should Know Before Joining

Investing in the stock market can be a very scary thing to a beginner. How would you go about getting started in the first place? Fortunately, there is a relatively new mobile phone app that can help you get started. The app is called Robinhood and it is free to get started. Better yet, there are no fees involved for making an individual trade.

The purpose of this article is to help provide you with some information on how the Robinhood app and account work. Also, through our research online, we have discovered some things that you should know about it before you get in over your head.

5 Things to be Aware of Before Joining Robinhood Investing

  1. It is not a get-rich-quick system – If you are looking for one of the many get-rich-quick schemes that are all over the Internet, this is not for you. This is a legitimate way to get involved in stock investing and should not be entered into lightly.
  • Volatility in the market is not always normal – The market can be extremely volatile at times, but it is more of an exception than the rule. For the most part, it is fairly stable and you go about trading on short-term gains or long-term gains, depending on your patience level.
  • Free trades can be dangerous – The fact that Robinhood is free on commissions on trades doesn’t mean that you should be going overboard on the number of trades that you make. Much like everything in life, too much of anything, even if it is good, can be bad in the long run.
  • Cash vs Margin trading – There are two different types of accounts on Robinhood, cash account and margin account. A cash account means that you can only use the money that you have in your account to make a trade. A Margin Account is very different in that you can borrow against the value of your account to make a higher value trade than what you have the money to pay for. This comes with risks and they can be substantial if the stock price takes a tumble.
  • Be sure you can afford it – Since there is a risk of loss of any part of your investment, you want to be sure that you are only using money that you can afford to lose. It is a very bad idea to over-extend yourself to fund your Robinhood account in the beginning. Then you want to be sure that any additional money you put in to cover losses that you again can afford it.

Pros and Cons of the Robinhood App

When it comes to using the Robinhood App as an investment tool, there are good things and bad things about it. We have included some of the good and bad things about it and you can use them to gauge how it comes to other types of stock brokerage options.

Pros of using the Robinhood App

  • No commissions on trades
  • Very easy to understand app
  • Allows commission-free on cryptocurrency trades

Cons of using the Robinhood App

  • Does not include bonds or mutual fund trading
  • Limited account support available

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