The basic steps to place your first trade

To trade on Robinhood, you first fund your account, then search for a stock or other security, and place a buy or sell order. The app shows you the current price, lets you choose how many shares you want, and confirms the order before it goes through. Once you submit, the trade executes during market hours — usually within seconds — and the shares appear in your account.

The process is the same whether you're buying or selling, and whether you're trading stocks, exchange-traded funds (ETFs), or options. The main difference is that options require you to turn on options trading in your account settings first, and they have stricter rules about when and how you can trade them.

Key Takeaways

  • You must fund your account with real money before you can trade, either by linking a bank account or transferring funds manually.
  • Robinhood charges no commission per trade, but you still pay the bid-ask spread — the difference between what buyers and sellers are willing to pay.
  • Market orders execute immediately at the current price, while limit orders only execute if the price reaches the level you set.
  • Day trading rules require you to maintain at least $25,000 in your account if you make more than three round-trip trades in five business days.
  • Trades settle in two business days, meaning you cannot withdraw the money or use it to buy something else until settlement is complete.

Funding your account before you trade

Robinhood requires you to deposit money into your account before you can place any trades. You can link your bank account directly through the app, which usually takes one to three business days to verify. Once verified, you can transfer money instantly up to a daily limit (typically $1,000 to $5,000 depending on your account history), or schedule larger transfers that take a few days.

You can also deposit by mailing a check or using wire transfer, though these methods are slower. The money must be in your Robinhood account and cleared before your trade will execute — you cannot trade on funds that are still pending.

Market orders versus limit orders

A market order buys or sells immediately at whatever price the market is currently offering. If you place a market order to buy Apple stock at 2 p.m. on a trading day, it will execute within seconds at the price shown on your screen at that moment. The actual price you pay may be slightly different from what you saw, especially for less-traded stocks, because prices move constantly.

A limit order lets you set a maximum price you're willing to pay (for a buy) or a minimum price you're willing to accept (for a sell). If you set a limit order to buy Apple at $150 and the stock is currently $155, your order waits. It only executes if the price drops to $150 or lower. Limit orders can expire at the end of the trading day, or you can set them to stay open for up to 90 days.

Market orders are faster and more certain to execute, but you don't control the final price. Limit orders give you price control but may never execute if the stock doesn't reach your target price.

Understanding the bid-ask spread and other costs

Robinhood advertises zero-commission trading, which means you don't pay a per-trade fee. However, you still pay the bid-ask spread — the difference between what buyers are willing to pay (the bid) and what sellers are asking (the ask). When you buy, you pay the ask price. When you sell, you receive the bid price. That gap is how market makers profit, and it's a real cost you bear on every trade.

For popular stocks like Apple or Microsoft, the spread is usually just a penny or two per share. For less-traded stocks or ETFs, the spread can be much wider — sometimes 10 cents or more per share. On a 100-share order, a wide spread can cost you $10 or more.

Robinhood also charges interest if you use margin (borrowed money to trade). The interest rate varies but is typically 2.5% to 3% per year on borrowed funds. If you stick to trading only the money you've deposited, you avoid margin interest entirely.

How settlement works and why it matters

When you sell a stock or close an options position, the trade settles in two business days. This means the money doesn't appear in your account immediately — it takes two trading days for the transaction to clear. During that time, you cannot withdraw the money or use it to buy something else.

This matters most if you're day trading or making frequent trades. If you sell a stock on Monday and want to buy something else on Tuesday, you may not have the cash available yet. Robinhood offers a feature called "Instant Settlements" for Gold members (a paid subscription), which lets you use unsettled funds immediately, but you still owe the money once settlement completes.

The pattern day trader rule and the $25,000 minimum

If you make more than three round-trip trades (a buy and a sell of the same security) in five business days, the SEC classifies you as a pattern day trader. Once classified, you must maintain at least $25,000 in your account at all times. If your balance drops below $25,000, you cannot place new trades until you deposit more money.

This rule applies to all brokers, not just Robinhood. It's designed to protect less experienced traders from the risks of frequent trading. If you're not actively day trading, you can avoid this rule by spacing out your trades or keeping your round-trip trades to three or fewer per five-day period.

Robinhood will notify you if you're approaching pattern day trader status, and you can choose to accept or decline the classification. If you decline, you cannot make more than three round-trip trades in the next five business days.

Placing your first trade step by step

Open the Robinhood app and tap the search icon at the bottom. Type the stock ticker or company name — for example, "AAPL" for Apple or "VOO" for the Vanguard S&P 500 ETF. Select the security from the results.

On the security's page, you'll see the current price, a chart, and news. Tap the "Buy" button (or "Sell" if you're selling shares you already own). Enter the number of shares you want to trade. Robinhood will show you the estimated total cost or proceeds. Choose between a market order (executes immediately) or a limit order (executes only at your set price). Review the details and tap "Submit" to confirm.

The order goes through immediately during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). After hours, your order waits in the queue and executes when the market opens the next day. Once executed, the shares appear in your portfolio and the cash is deducted from your account balance.

Frequently Asked Questions

Can I trade before the market opens or after it closes?

Robinhood offers extended hours trading from 4 a.m. to 8 p.m. Eastern time, but not all stocks are available during these times. Extended hours trading typically has wider bid-ask spreads and lower volume, meaning fewer buyers and sellers. Orders placed outside regular market hours (9:30 a.m. to 4 p.m.) execute when the market opens or during the extended hours session.

What happens if I don't have enough cash to buy a stock?

Robinhood will reject your order if you don't have enough settled cash in your account. You can deposit more money, or you can use margin (borrowed money) if you have a Robinhood Gold subscription. Margin lets you borrow up to a certain amount based on your account balance, but you'll pay interest on the borrowed funds.

Can I cancel a trade after I place it?

If your order hasn't executed yet, you can cancel it from your order history in the app. Once the order executes, you cannot cancel it — you would have to place a separate sell order to exit the position. Cancellations are instant during market hours.

Do I have to pay taxes on my trades?

Yes. When you sell a stock for a profit, you owe capital gains tax. Short-term gains (stocks held less than one year) are taxed as ordinary income. Long-term gains (stocks held one year or more) usually have lower tax rates. Robinhood provides tax documents at the end of the year, but you're responsible for reporting all trades to the IRS.

What's the difference between a stock and an ETF on Robinhood?

A stock is a share of a single company. An ETF is a fund that holds many stocks or bonds. ETFs let you diversify with one trade, but they trade like stocks — you buy and sell them the same way. Both have no commission on Robinhood, though both have bid-ask spreads.