The Bad: Dead Battery
If you follow the electric vehicle market, youve probably noticed that Chinese Tesla killer Nio Inc. has gone on a tear this week. At one point, NIO was up more than 56% since the start of November.
The reason: Nio signed a deal with an Intel Corp. subsidiary for driverless-car technology. According to Nio: This self-driving system will be the first of its kind, targeting consumer autonomy, engineered for automotive qualification standards, quality, cost and scale.
Cost and quality? Interesting. Nio could certainly use a great deal of help on both of those fronts. Back in September, Nio reported that its losses surged 80% year over year. A large part of those losses was vehicle recalls, which prompted EV margins to plummet to -24%.
In short, it doesnt matter right now how many EVs Nio churns out or what kind of driverless technology its vehicles sport. The company is losing $0.24 on every dollar it spends on making these vehicles. Even Tesla at its worst was never anywhere near this bad. But then, Tesla didnt have direct government backing.
Investors are apparently connecting the dots this morning, as NIO shares are down more than 12% after their recent run higher.
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What Are The Risks Of Margin
There are a few risks associated with trading on margin. They include:
Increased Losses.
Since youre borrowing money from your broker, youll have to pay them back, even if you experience a loss. Some investors lose much more than they invested in the first place.
Add to the fact that youre also paying interest. The amount to pay back will compound quickly if you cant afford it.
Margin Call.
A margin call is when your broker calls you to add more money into the margin account. This happens when the amount is below the margin minimum. Underperforming securities can cause the amount to dip this way.
To resolve this, youll have to sell some of your assets to meet the margin requirement. Sometimes it gets so bad youll have to sell everything. This still isnt the worst possible outcome from margin trading!
Liquidation.
If you as an investor fail to keep your promise as per your margin loan agreement, the broker can take action. Robinhood can liquidate all the remaining assets in your account. This includes securities from other firms and companies.
Liquidation can happen without your prior approval. Robinhood can simply do so within their rights.
To prevent these outcomes, you shouldnt bite off more than you can chew. Dont borrow too much either. And if you do borrow, try to return in as soon as possible.
If you trade on margin, you should never neglect to regularly look at your portfolio.
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Robinhood Gold And Level 2 Quotes
Level 2 quotes are one of Robinhood Golds biggest value propositions. If youre unfamiliar with level 2 quotes, they show a depth of bids and offers for stocks. A level 1 quote tells you the last price traded, and the current best bid and ask.
Level 2 quotes display not only the current bid and ask, but the open orders at all prices.
In a desktop trading platform like ThinkOrSwim, a level 2 screen looks like this:
Heres a breakdown of what youre seeing:
- The Ex column stands for exchange. There are several different exchanges where traders route their orders, as you can see by the dozen or so different exchanges involved in bidding/offering Apple stock.
- The bid column is the bid price. Its a price that a buyer is bidding for the stock.
- The Ask column is the ask price. Its the price that a buyer is offering the stock at.
- The BS column stands for bid size. The numbers are in the hundreds. 4 means 400 shares are bid or offered.
Heres how level 2 quotes in Robinhood look:
Source: Robinhood Blog
The only piece of information omitted by Robinhood is the exchange quoting the stock, which is pretty irrelevant to Robinhood traders because they dont have direct market access anyways.
With direct market access, you might see that ARCA is offering a stock at $10.50, so you directly route your order to the ARCA exchange to trade with that order.
Can I Set Margin Limits
Yes, you can. Robinhood allows you to set up borrowing limits to help you control how much margin you use.
By setting a limit, you can restrict the amount of margin you access to the amount that you feel comfortable using. You can set this limit to any amount, though there are a number of regulatory rules on margin that will limit the amount of margin Robinhood is able to give you.
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How To Check Your Margin
You can track how much margin is available to you by checking your Gold settings.
- Total Margin – The total margin that your account is allowed to have based on your account equity and the volatility of your holdings.
- The margin available in your account is based on the minimum of your total margin and your borrowing limit.
- The portion of your margin available that you are currently using.
- Borrowing Limit – Your set maximum limit on the amount of money you can borrow.
What Are Bigger Instant Deposits
Our Instant Deposit feature gives you immediate access to $1,000 after you initiate a deposit. With Robinhood Gold, you can get even bigger Instant Depositsup to $50,000 depending on your account balance and status. That means if you see an opportunity in the market, you can use your money right away instead of waiting up to five business days for your funds to settle.
With Robinhood Gold, your Instant Deposit limit is based on your account balance:
- $50K if your portfolio value is over $50K
- $25K if your portfolio value is over $25K
- $10K if your portfolio value is over $10K
- $5K if your portfolio value is under $10K
Without Robinhood Gold, you get $1,000 in Instant Deposits, regardless of your account balance. You can always find your Instant Deposit limit in the Instant Deposit Health section of your account overview.
If you deposit more funds than your Instant Deposit limit, youll only get instant availability up to your limit. This means that youll have to wait up to five business days for the additional funds over your limit to settle.
For example, if youre a Robinhood Gold subscriber and have $3,000 in your account, your Instant Deposit limit will be $5,000. If you make a $6,000 deposit from your bank, $5,000 of the new funds will be available instantly. The remaining $1,000 will become available when the deposit is complete.
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How To Read Level 2 Market Data On Robinhood
The level 2 market data basically acts as an “order book” of sorts. Seeing the open orders lets you make a more informed estimate about which direction the price of a stock is headed and by how much. By analyzing trends in numbers, you are learning a lot more about the current state of a stock than you would if you just view the best bids and asks available.
The data is presented as a chart, with the left-hand side representing open buys and the right-hand side representing open sells. Smack dab in the middle of the chart is the stock’s current market value. Comparing open orders on either side of the spectrum is extremely helpful in this context.
You will find these important details on the data:
- The price at which the order was placed
- Number of shares in the order
Buying And Selling Stocks After Hours
Once you have enabled Robinhood Gold, you can now start buying and selling stocks after hours:
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Will I Be Able To Use My Debit Card To Make Purchases If I Have Robinhood Gold
Yes! Using your debit card to make purchases works similarly to withdrawing money from your brokerage account. If you turn on , you can use margin for day-to-day spending too. For this reason, you might notice your debit balance or Margin Used increases when your transactions are processed, similar to the way it would increase if you were borrowing cash to purchase stocks. Youll be charged 2.5% interest monthly on any amount you borrow over $1,000.
An Informative Guide On How To Cancel Robinhood Gold Account
Robinhood is a financial services provider company that claims to be the first-ever commission-free trading company of stocks and exchanges. It introduced a mobile app in March 2015 and since then the graph of popularity has only surged. The application is quite streamlined for both newcomers and experienced users that make your purchases more convenient.
To target its core customer base, Robinhood launched different platforms within the app to use and navigate trading of stock and funds in the market with the name of Robinhood gold, Robinhood brokerage, and Recurring investments, etc.
In case you are not satisfied with the services and want to know about how to cancel Robinhood gold account, then you are surely at the right place as in this guide we will be discussing the procedures on canceling Robinhood gold account.
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Is Signing Up For Robinhood Worth Your Time
Given that it takes all of 3 minutes to signup-of course, it is worth your time.
We all have Robinhood accounts and really like the app.
We like this promotion because it gives people a free introduction to stock trading.
What is the best way to learn the stock market?
By getting your hands dirty, of course. The best way to learn is by doing not simply watching!
If you learn by doing, wouldnt you like to test out the market with free money?
Think about it
you have nothing to lose.
Starting to invest in the stock market is the best thing you can do to start building wealth. Robinhood is the best way for you to get your feet wet!
If you don’t like the free stock you getno problem! Just sell it and buy the stock you want!
Even if you are clueless when it comes to stocks, that is the PERFECT reason to take this opportunity.
Do not miss out on this promotion because Robinhood is one of the only companies giving away free shares .
And dont forget you can receive up to $500 in free shares by referring friends.
How To Cancel A Robinhood Gold Account
Robinhood does not consider closing an account until it has a $0.00 balance in it. To cancel a Robinhood account, you need to send a written application to the authorities. Also, you need to sell all the securities you have in your account and then transfer all the available cash to any of the external bank accounts of yours. This can easily be done by using the mobile app of Robinhood.
As Robinhood works on zero commission charges, simultaneously you would not have to pay any liquidation cost for the process.
Once your account hits the desired zero balance, you can easily send an email to where you can request closure of your Robinhood gold account. Usually, it takes about a week for the company to complete the closure of the account request.
Another way to cancel your Robinhood gold account is to use the mobile app and file an account closure form. Go to the help tab in the menu and select Contact Support. Now you have to select My Account. Finally, opt for Close my account. In the provided box you can type a message to close your Robinhood gold account.
There are certain brokers like TD Ameritrade which will connect you online in a chat to submit the account closure request. Robinhood does not offer this kind of service.
You cannot reopen your account or under any circumstances can reactivate it. Once you have closed your Robinhood gold account and want to join the trading platform again, you will have to apply for an entirely new account.
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Benefits Of Robinhood Gold
Robinhood Gold comes with numerous benefits. Robinhood also shines when it comes to account minimums. Many people arent able to trade with other brokerages because they dont have the minimum to open an account. Robinhood doesnt have account minimums however, users need to have at least $2,000 of Portfolio Value to be eligible for margin trading.
Robinhood Gold is also a breeze to use. Users can sign up and fund their accounts in minutes, and they can start trading quickly and easily. The streamlined interface means that everything people need is just a click away. They can click on a stock and buy it just like that. Then they can go back to the app to monitor the stock. They can also view graphs and can see how it is performing in real-time. Robinhood has now also given Gold users the ability to see live bids and asks through Nasdaq Level II Market Data. Level II is likely helpful for users placing large orders and in situations where order volume is low. In short, Level II allows Gold users to analyze the depth of the order book as a way to identify situations where supply and demand may impact the future price of a stock.
How Is My Margin Interest Calculated
Another draw of Robinhood Gold is its low.
With Robinhood Gold, you get $1,000 in interest-free margin. Everything above that is calculated at 2.5% interest. This is low compared to other brokers, but its also not the full story.
If you short sell, youll have to pay borrow fees. These vary with the stock. Some stocks wont have shares to borrow. Others will be available at high rates.
There are also FINRA-mandated fees. On smaller trades, these will be just a few cents. But this all adds up and impacts your trading plan.
My #1 rule is to cut losses quickly.Thats even more important when you trade on .
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What Is The Pricing Of Robinhood Gold
Robinhood users can sign up for Robinhood Gold at any time, and can try the premium account free for 30 days. After that, the service costs only $5 a month, with your first $1,000 of margin included.
If you use more than $1,000 of margin, you will be charged 2.5% yearly margin interest above the $1,000 benchmark. Robinhood Gold calculates your margin interest daily, and its charged to your account at the end of each monthly billing cycle.
How Does Robinhood Margin Work For Beginners
Trading on margin can be risky business because you are investing with borrowed money.
If the stock takes a downturn, you will lose not only your own cash but also the money you borrowed from Robinhood.
On the other hand, if the stock sees an increase in value, you can see higher returns than if you had just used the cash you had on hand.
It could go either way.
Before trading on margin, it is imperative that you do your own research and understand how it works. Here are the basics of Robinhood margin for beginners.
Before even considering investing on margin, you should give some thought to your:
- Specific investment goals
- Tolerance for risk
- Current financial status
Most people borrow on margin to invest because they think they need extra buying power. Before doing so, check out this article on earning compound interest. You might not need that extra buying power and risk.
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How To Buy Crypto On Robinhood
Follow these easy steps to open a Robinhood account and get started trading crypto.
If you dont already have the Robinhood app, youll need to download it on the app store. You can get Robinhood on iOS and Android, or you could make an account on your computer. Robinhoods platform offers a streamlined user experience. Its goal as a company is to make investing accessible and simple for the average person. It features an intuitive user interface and if youre just beginning to invest, start with Robinhood. Its mobile app lets you track your portfolio on the go. The best part about Robinhood is that you wont find any hidden fees, and there are no fees to deposit or withdraw from your bank account. You can opt into Robinhoods premium service, which gives you access to financial derivatives, but this is completely optional.
