Is Robinhood Margin Worth It
Robinhood Financial is an online broker platform designed to open doors to the financial markets by offering commission-free trades on an easy-to-use mobile app. It does not require any account minimums. They dont charge any fees when you open an account, transfer funds to it, or for maintaining your account.
Robinhood Gold is a premium feature that lets you buy on margin. However, this is extremely risky, particularly for new investors. You will also have to pay for a gold account. Think carefully about whether or not you need or can manage margin trading to reach your money goals.
In order to trade on margin with Robinhood, you need a minimum of $2,000 in your brokerage account. You also need a Gold subscription for $5 per month. This will cover your first $1,000 of margin. Beyond that, you will have to pay 5% interest on any additional funds borrowed. Before borrowing money, consider whether or not you really need margin.
How To Use Level 2 Quotes
Traders primarily use level 2 quotes to identify very short-term supply and demand. Practitioners claim that shifts in supply and demand show up on level 2 and time & sales before you see it on a chart.
Before electronic trading technology became ubiquitous, skillful analysis paid steep dividends.
You were able to spot out large orders with relative ease and ride the momentum they created. If the order didnt move the stock, you could always lean on the order to get out unscathed.
Things have changed, and everyday retail traders can cloak their orders on the level 2 effectively using tools offered by retail brokers like Interactive Brokers. As such, the effectiveness of these order flow strategies is debated among the trading community.
Thats not to say that there arent tons of traders who still see significant success trading order flow using level 2 quotes.
How Do I Export/save My History Of Completed Orders Using The Robinhood Api
robin_stocks lets you save a history of completed stock and option orders in CSV format.
The functions to do this are in the export module and are named:
They both have the parameters:
- dir_path: Absolute or relative path to the directory the file will be written.
- file_name: Optional argument for the name of the file. If None then the filename will be option_orders_.
So for instance we could do:
Which would create a CSV file of our stock orders history at the location /order_history/stocks_monday.csv relative to our initial directory.
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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.
Robinhood Pros And Cons
Robinhood offers commission-free US stock trading without withdrawal and inactivity fees. Its mobile and web trading platforms are user-friendly and well designed. Account opening is seamless, fully digital and fast.
On the downside, Robinhood provides only a limited selection of assets, focusing mostly on the US market. Customer support is available via e-mail only, which is sometimes slow. The educational material lineup is slim.
|Free US stock and ETF trading||Limited product range|
|Great mobile and web trading platforms||Weak customer support|
|Fast and fully digital account opening||Few educational materials|
|Country of regulation|
|Time to open an account||1 day|
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How This Broker Makes Money From You And For You
With no fees for equity and options trades, Robinhood has to generate revenue to be a sustainable company. The fees and commissions listed above are visible to customers, but there are other methods that are not as apparent. The online broker has a dedicated web page to inform you on the various ways it makes money.
- Interest paid on cash: Robinhood generates income on uninvested cash that isnt swept into the cash management network of program banks, primarily by depositing this cash in interest-bearing accounts.
- Payment for order flow: There are many brokers that generate income by accepting payment from market makers for directing their customers equity and options to those trading venues. This is called payment for order flow . We discussed Robinhoods lack of transparency around PFOF above, and it appears to be a major revenue stream for the broker.
- Stock loan programs: Robinhoods stock loan program generates revenue for the broker by lending margin securities to counterparties. Robinhood retains all income it generates from loaning your stock and does not share it with you.
- Robinhoods margin interest rates are much lower than average. It’s also worth noting that using margin requires membership to their Gold program which is $5 per month.
- Portfolio margining: Portfolio margining, which can lower the amount of margin you may need, is not available at Robinhood.
How To Open Your Account
The account opening process is user-friendly, fast and fully digital. It takes around 10 minutes to submit your application and less than a day for your account to be verified.
Opening a Robinhood account in the US requires that you
To complete the Robinhood account opening:
If you use the instant deposit option, your money arrives immediately otherwise, the process may take 4 to 5 business days. The instant deposit function has some limitations: if you have a Robinhood Instant account, you can deposit up to $1,000 instantly, while the Robinhood Gold account limit is $50,000. All transfers above the set limit will be credited after 4 to 5 business days. For example, if you transfer $1,500 to your Instant account, $1,000 will be credited immediately, while the remainder after 4 to 5 business days.
You can only deposit money from accounts in your name.
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Is Robinhood Instant Free
Robinhood Instant is free. We believe Robinhood Instant will be powerful for all kinds of investors, so we made it free, Robinhood explained upon the feature launch in February 2016. Thats right: no monthly or recurring fees, no trading commissions, no interest charges, and no account minimums.
In fact, all of the investing with Robinhood is commission-free. The company said that it doesnt charge users to open, maintain, or fund accounts. However, Robinhood does pass fees charged by self-regulatory organizations like the Financial Industry Regulatory Authority to its users.
A post shared by Robinhood on Jun 11, 2018 at 10:45am PDT
Robinhood users looking for instant deposits could benefit from a Robinhood Instant account. However, Robinhood users should also know that Instant accounts and Gold accounts are subject to pattern day trading rules.
The company explained that, in general, each user is limited to a maximum of three day trades defined as the purchase and sale of the same stock or options contract on the same trading day within a span of five business days, unless the user has $25,000 or more of equity in their Instant or Gold account.
Pattern day trading rules were put in place to protect individual investors from taking on too much risk, according to Robinhood.
Why Shouldnt I Use The Robinhood Api
- Limited resolution historical data
- No websocket for live data
- No short selling/limited order types
- Un-official API
Firstly, the historical data available through the API is a bit limited. The API provides only 5 minute|10 minute|30 minute|day|week intervals for data, and only returns data in the day|week|year|5year|all ranges.
Notably, this is missing high resolution 1 minute data, and the popular 1 hour and 4 hour time-frames for trading on.
Low value accounts are blocked from frequent day trading. This is a pretty big one but not particularly limited to Robinhood since its intended as a industry-wide form of protection for unsophisticated investors by the SEC.
This applies to both instant and gold accounts with balances under $25,000, which are not allowed to make more than 3 day trades in any 5 consecutive business day period.
A day trade is any trade in which you reverse direction in the same day.
For instance buying stock A at 10am and buying stock A again at 11am is not a day trade, since you are maintaining the same direction .
However, buying stock A at 10am and selling stock A at 11am is a direction reversal since you have gone from buying to selling so counts as 1 day trade.
Similarly buying stock A at 10am, selling stock A at 11am, buying stock A again at 11:30am and selling at 11:40am counts as 3 day trades as you changed direction 3 times.
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Why Isnt My Deposit Available Right Away
For all account holders, there is a set instant deposit limit. Thus, each customers Robinhood instant deposit restricted amount will only allow instant access to a certain amount of funds. If traders deposit an amount that exceeds their instant deposit limit, the funds over and above the limit are subject to the standard waiting time. For example, a trader with an instant deposit limit of $10,000 deposits $15,000. $10,000 will be immediately available. However, the remaining $5,000 is subject to the 5 business day waiting period. Once the remainder has cleared, it will become available too.
Keep in mind that traders who have not upgraded to Robinhood Gold, will have an instant deposit limit of $1,000. Any funds that exceed this limit will only be credited once cleared. The Robinhood instant deposit restricted policy is crucial in order to maintain oversight and credibility of customers. Is Robinhood safe when it comes to implementing their deposit limits? Yes, they certainly are.
Differences Between Webull And Robinhood:
While Robinhood and Webull both offer margin investing and margin accounts, they differ on the costs associated with their services. When investors utilize Robinhood Gold, they pay $5 a month on top of any interest accrued with margins over $1,000.
Robinhood previously had an interest rate of 5% but has since lowered it to a flat rate of 2.5%. On Webull, interest rates start at 6.99% and increase from there. Although this may turn some traders away, Webull does have more to offer some traders especially short-stock sellers.
Weebull vs Robinhood
Where Robinhood lacks in investment resources, Webull makes up the difference. The online brokerage offers information about different investments and markets, initial public offerings , and ETFs.
At this point in time, Robinhood does offer a wider variety of cryptocurrency investment options, but we should note that Webulls selection is growing every day.
Webull also supports the short sale of stocks at the time of writing, whereas Robinhood does not.
While there is a way to make pseudo-short stock trades on Robinhood, it is not the same as Webulls direct access to real short selling.
Webull is also known as a more sophisticated investment platform than Robinhood Gold. Robinhood boasts a simple interface designed to make it easy forbeginner investors, but they have come under fire for one of their mobile app features.
This is a feature that both the free version of Robinhood and Robinhood Gold lacks.
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Where Robinhood Shines
Commissions and fees: Whats better than free? Robinhoods commitment to providing 100% commission-free stock, options, ETF and cryptocurrency trades is admirable, and the savings for investors who trade frequently is significant. This is especially true for options traders Robinhood is among the handful of brokers that dont charge a per-contract fee. Still, these days many big-name brokers also offer free trades, so it makes sense to compare other features when picking a broker.
» New to investing? Learn more about how to buy stocks.
Robinhood also seems committed to keeping other investor costs low. The Clearing by Robinhood service allows the company to operate on its own clearing system, which reduces some of the service’s account fees.
One of the biggest fees Robinhood charges is the $75 outgoing account transfer fee, but that’s not an unusual fee among brokers.
Account minimum: Robinhood doesnt have one, which means investors can get started right away. Of course, in order to invest, youll need enough to purchase the investment you have your eye on.
Fractional shares has also given the company the opportunity to offer a dividend reinvestment program , which it didnt previously. This is a very valuable strategy for building wealth over time, much like recurring investments. By offering the fractional shares/recurring investments/DRIP package, it seems Robinhood is working to stay competitive with the major brokers now that free trades are commonplace.
How You Are Protected
There are two major entities within Robinhood: Robinhood Financial LLC and Robinhood Crypto LLC. The former deals with stock and options trading, while the latter is responsible for crypto trading.
Robinhood Financial LLC is a member of FINRA and falls under the US investor protection scheme, the SIPC. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.
Not all investments are protected by SIPC. In general, SIPC covers notes, stocks, bonds, mutual funds and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.
Robinhood Crypto LLC is not a member of FINRA or the SIPC. This means trading cryptocurrencies is not protected by any investor protection scheme.
Robinhood does not provide negative balance protection.
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Robinhood Instant Deposit Restriction & Withdrawal
Trading enthusiast and skilled broker reviewer
Jenna Arnold has always been fascinated by the stock market and the world of trading. Having dabbled as a part-time trader while at university studying English Language, she leveraged her insights into this world into a full-time career as a writer specialising in trading and broker reviews. Jenna joined TradersBest.com last year and now heads all of our trading content, working remotely from her home in Massachusetts.
Robinhood has incorporated a fair and transparent system for dealing with instant deposit issues surrounding account transfers.
Online brokers continue to come up with innovative ways in which to deal with waiting times that inevitably occur when dealing with banking institutions. Our Robinhood instant deposit coverage will highlight the process whereby traders can access funds instantly, providing a more conducive platform for traders to access funds and trade as they see fit.
For more information on the online broker, you can read our latest Robinhood review where we provide everything you need to know about this popular broker.
Similarities Between Webull And Robinhood:
Both Webull and Robinhood are committed to commission-free trades. They both also offer investors the ability to trade in U.S. stocks, ETFs, and ATRs.
At this point in time, neither Webull nor Robinhood allows users to trade in mutual funds or bonds. While this may turn some investors away, its important to remember that both platforms support phenomenal features that provide many research and trading options.
Both platforms also do not require account minimums to start investing and do not charge inactivity fees, or deposit/withdrawal fees for transfers from a bank account. Robinhood Gold and Webull also offer margin trading.
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How Do I Get Options Data Using The Robinhood Api
All the functions in this section reside in the options module of robin_stocks.
Firstly, it would be useful to know the expiry dates for options for a stock.
To do this simply pass a stock ticker to the get_chains and filter info by expiration_dates like this:
The most useful/general function to get options data is find_tradable_options taking the parameters:
- symbol, expirationDate, strikePrice, optionType
as seen many times already in this guide already.
So as an example if we were interested in browsing Apple call options with a strike price of $400, but we were open about the expiration date, we could do the following:
Note if you leave optionType as None, you get both calls and puts returned.
There are a bunch of other ways to filter for options data that might tickle your fancy, which you can find in the Getting Option Information of the robin_stocks functions list.
What Is Level Ii Market Data
On many trading apps like Robinhood, the objective of the firm is to keep things simple. This is evident by only providing Level I Market Data. With this level of detail, you are only able to see minimal information about the bid and ask on different securities.
As a long-term investor, this likely won’t make a huge difference. But as an active trader, you’ll want to have as much information as possible before you trade. That’s where Level II Market Data comes in.
Level II Market Data provides additional data about the bid and ask prices of the securities. Instead of just showing you the current bid and ask, you’ll be able to see the next 10-15 bid and ask prices as well as the lot size of each. This provides you with a wider picture of the market for each stock and gives you a leg up over other traders.
Without this information, active traders are putting themselves at a bit of a disadvantage. While you’ll need to pay $5 a month on Robinhood for this kind of data, there are other apps like Moomoo that provide Level II Market Data for free.
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