What you need to do to begin trading on Robinhood

To start investing on Robinhood, you create an account, verify your identity, link a bank account, and deposit money. The platform then lets you buy stocks, exchange-traded funds (ETFs), options, and cryptocurrencies directly from your phone or computer. You do not need a minimum balance to open an account, though some trades have their own requirements — for example, options trading requires approval after you answer questions about your experience.

Robinhood makes money by routing your trades to market makers and earning a small payment for each order, not by charging you per trade. This is why there are no per-trade commissions. The platform also earns interest on uninvested cash in your account and offers a paid subscription tier called Robinhood Gold that charges a monthly fee for margin trading and other features.

Key Takeaways

  • You must be at least 18 years old, a U.S. citizen or permanent resident, and have a valid Social Security number to open a Robinhood account.
  • The account setup takes about 10 minutes, but your bank link may take one to three business days to verify before you can deposit money.
  • You can start with any amount — there is no minimum deposit — but some investment types like options require you to request and receive approval first.
  • Robinhood holds your securities in a brokerage account, not an IRA or 401(k), so investment gains are taxable in the year you sell.
  • The platform charges no per-trade fees, but you pay the bid-ask spread (the difference between what buyers offer and sellers ask) like on any broker.

Account setup and identity verification

Start by downloading the Robinhood app or visiting robinhood.com and tapping "Sign Up." You will enter your email address, create a password, and provide your full name, date of birth, and Social Security number. Robinhood uses this information to verify your identity through third-party services and to comply with federal anti-money-laundering rules.

The verification process usually completes within minutes, though it can take up to 24 hours if the system flags your application for manual review. If verification fails, Robinhood will tell you why — common reasons include a mismatch between the name you provided and the name on file with the Social Security Administration, or a previous account closure on your record. You can contact Robinhood support to resolve these issues, but you cannot proceed until verification passes.

Linking your bank account and making your first deposit

After verification, you link a bank account by providing your routing number and account number. Robinhood uses Plaid, a third-party service, to securely connect to your bank. You can also provide these numbers manually if your bank is not in Plaid's network.

Robinhood then sends two small deposits (usually under $1 each) to your bank account. You must log back into Robinhood within 10 days and confirm the exact amounts of these deposits to prove you own the account. This is a standard anti-fraud step. Once confirmed, your bank link is active and you can transfer money to Robinhood.

Transfers from your bank to Robinhood typically take one to three business days. Transfers back to your bank (called withdrawals) also take one to three business days. Money in your Robinhood account earns a small amount of interest, though the rate varies and is usually less than 1 percent per year.

Choosing what to buy: stocks, ETFs, options, and crypto

Once money is in your account, you can search for and buy stocks (individual company shares), ETFs (funds that hold many stocks or bonds), options (contracts that let you bet on price movement), or cryptocurrencies. Stocks and ETFs can be bought immediately after your account is verified. Options and crypto require additional steps.

For options, you must request approval by answering questions about your investment experience, income, and net worth. Robinhood assigns you an approval level (usually Level 1, 2, or 3) based on your answers. Level 1 lets you buy call and put options; higher levels unlock more complex strategies. Approval is usually instant, though it can take up to 48 hours.

Cryptocurrency on Robinhood includes Bitcoin, Ethereum, and about 15 other coins. You do not need special approval to buy crypto, but Robinhood holds the coins in your account rather than giving you a private key. This means you own the crypto through Robinhood, not directly on the blockchain.

How trades work and what costs you money

When you buy a stock or ETF on Robinhood, you place an order during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays) or during extended hours (4 p.m. to 8 p.m. and 7 a.m. to 9:30 a.m.). Your order goes to a market maker, which is a firm that buys and sells securities constantly. The market maker fills your order at the best available price.

Robinhood does not charge a commission, but you pay the bid-ask spread — the difference between what buyers offer and what sellers ask. For a liquid stock like Apple, this spread might be a penny. For a less-traded stock, it could be several cents or more. The spread is built into the price you see on screen; you do not pay it separately.

If you use Robinhood Gold (the paid subscription), you can trade on margin, which means borrowing money from Robinhood to buy more securities than your cash allows. Margin costs interest, usually between 5 and 10 percent per year depending on how much you borrow. Most new investors should not use margin.

Tax reporting and account types

Robinhood accounts are standard brokerage accounts, not retirement accounts. This means any gains you make are taxable in the year you sell. If you buy a stock for $100 and sell it for $150, you owe tax on the $50 gain. Robinhood sends you a Form 1099 each January showing all your trades and gains for the previous year.

If you want to invest for retirement with tax advantages, you need a different account type — an IRA (Individual Retirement Account) or a 401(k) through your employer. Robinhood does offer IRAs, but you must open one separately from a regular brokerage account. The rules for IRAs are different: you can contribute only a set amount per year (currently $7,000 for people under 50), and you cannot withdraw money before age 59½ without a penalty.

Common mistakes and what to watch for

New investors on Robinhood often buy stocks based on social media hype or tips from friends without understanding what they are buying. Before you buy anything, spend time reading about the company or fund — look at its financial statements, understand what it does, and think about whether you believe in it long-term. Robinhood's app is designed to make trading feel easy and fun, which can lead to overtrading and losses.

Another common mistake is using options without understanding them. Options are contracts, not shares, and they expire on a set date. If you buy a call option and the stock does not move the way you expected, you can lose your entire investment. Do not trade options until you have read about how they work and practiced with small amounts of money.

Finally, be aware that Robinhood has experienced outages during times of high trading volume, which means you might not be able to buy or sell when you want to. This is rare but has happened. If you are investing money you cannot afford to lose, keep that in mind.

Frequently Asked Questions

Do I need money to open a Robinhood account?

No. You can create an account and verify your identity without depositing anything. However, you cannot buy stocks, ETFs, or other securities until money is in your account. There is no minimum deposit amount.

Can I trade stocks before the market opens?

Yes. Robinhood offers extended-hours trading from 7 a.m. to 9:30 a.m. and 4 p.m. to 8 p.m. Eastern time. Prices during these hours are often less stable and spreads are wider, so trades can be riskier.

What happens if Robinhood goes out of business?

Your securities are protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account if a brokerage fails. This means your stocks and cash are yours even if Robinhood closes. SIPC does not protect you from investment losses — only from the brokerage losing your money.

Can I set up automatic investments on Robinhood?

Robinhood does not offer automatic recurring investments like some other brokers do. You must manually transfer money to your account and place trades yourself. Some investors set phone reminders to buy regularly on a schedule.

How do I close my Robinhood account?

Go to the Account menu, select Settings, scroll to the bottom, and tap "Deactivate Account." You must have zero cash and no open positions (all securities sold) before you can deactivate. Robinhood will then close the account and you can withdraw any remaining cash.