Opening an Account and Funding It
To start using Robinhood, you create an account through the mobile app or website, provide your name, date of birth, Social Security number, and address, then link a bank account. Robinhood verifies your identity against public records — this usually takes a few minutes, though sometimes it takes a day or two if the system flags something for manual review.
Once your account is open, you transfer money from your linked bank account into Robinhood. The first transfer typically takes three to five business days to settle. After that, transfers usually arrive within one to two business days. You can transfer out the same way, though cash leaving your Robinhood account takes three to five business days to reach your bank.
Robinhood does not charge account fees, monthly minimums, or commissions on stock and options trades. You pay nothing to hold cash in the account. The company makes money through payment for order flow — they sell information about your trades to other firms — and through Robinhood Gold, a paid subscription tier that offers margin and other features.
Key Takeaways
- You need a Social Security number, proof of identity, and a linked bank account to open a Robinhood account, and the whole process takes minutes to a few days.
- Money you transfer in takes three to five business days to settle the first time, then one to two business days afterward.
- Stocks, ETFs, and options trades have no commission, but you still pay the bid-ask spread — the difference between what buyers and sellers are willing to pay.
- Fractional shares let you buy a piece of a stock for any dollar amount, so you can own a share of a $500 stock for $50.
- Robinhood Gold is optional and costs $5 per month; it unlocks margin (borrowed money) and other features most beginners do not need.
Buying and Selling Stocks
To buy a stock, open the app, search for the company by name or ticker symbol, and tap the stock. You will see the current price, a chart, and a "Buy" button. Tap it, enter the dollar amount or number of shares you want, choose whether to place a market order (buy at the current price right now) or a limit order (buy only if the price drops to a number you set), then confirm.
Market orders execute almost instantly during market hours (9:30 a.m. to 4 p.m. Eastern, Monday through Friday). Limit orders sit in the system and fill only if the stock hits your price. If the market closes before your limit order fills, it cancels automatically unless you set it to stay open for multiple days.
Selling works the same way: find the stock in your holdings, tap "Sell," enter how many shares, choose market or limit order, and confirm. You can sell fractional shares — if you own 2.5 shares of Apple, you can sell all 2.5 or just 1.5. The cash from a sale settles in your account immediately and is available to trade again, but it takes three to five business days to transfer back to your bank.
Understanding Fractional Shares and Dividends
Robinhood lets you buy fractional shares, meaning you can invest any dollar amount, not just whole shares. If a stock costs $200 per share and you have $50, you can buy 0.25 shares. This is useful if you want to own a piece of an expensive stock without saving up for a full share first.
When a company pays a dividend — a cash payment to shareholders — Robinhood deposits it into your account automatically. If you own 0.25 shares of a stock that pays a $1 dividend per share, you receive $0.25. Dividends settle within a few days of the payment date. You can reinvest dividends manually by buying more shares, but Robinhood does not offer automatic dividend reinvestment the way some brokers do.
Placing Orders Before and After Market Hours
Robinhood lets you trade during extended hours: pre-market (4 a.m. to 9:30 a.m. Eastern) and after-hours (4 p.m. to 8 p.m. Eastern). Extended-hours trading is riskier than regular trading because fewer traders are active, so prices can swing wildly and orders may not fill at the price you see.
To place an extended-hours order, tap "Buy" or "Sell," then look for a time option — it usually defaults to "Market Hours." Tap that and select "Pre-Market" or "After-Hours." The order will sit until the session opens, then execute according to your order type. If it does not fill during that session, it cancels unless you set it to carry over to the next regular market session.
Monitoring Your Holdings and Performance
The "Stocks" tab shows all your holdings with the current price of each, how much you have invested, and your gain or loss in dollars and percentage. Tap any holding to see a detailed chart, news about the company, and options to buy or sell more shares.
The "Account" tab shows your total portfolio value, buying power (cash available to trade), and a breakdown of your holdings. You can also see your trade history — every buy and sell you have made — by scrolling down. This history is useful for tax purposes because you need to report gains and losses when you file.
Robinhood sends you a tax document called a Form 1099 at the end of the year if you had taxable events (sales at a gain, dividends, or interest). You use this form when you file your taxes. Keep records of your trades throughout the year in case you need to verify anything.
Using Watchlists and Alerts
You can create watchlists to track stocks you are thinking about buying but have not yet purchased. Tap the heart icon on any stock to add it to your watchlist, then view all your watched stocks in one place. This is useful for monitoring prices before you decide to buy.
Robinhood does not offer price alerts — you cannot set a notification to go off when a stock hits a certain price. You have to check the app manually or use a third-party tool. Some traders use their phone's stock app or a financial website to set alerts, then switch to Robinhood to place the actual trade.
Withdrawing Money and Closing Your Account
To withdraw money, go to the "Account" tab, tap "Transfers," then "Withdraw." Enter the amount and confirm. The money leaves your Robinhood account immediately but takes three to five business days to appear in your linked bank account. You can withdraw any amount, including partial holdings — you do not have to sell everything at once.
If you want to close your account entirely, you must first sell all your holdings and withdraw all your cash. Robinhood does not charge a closing fee. Once your account is empty, contact Robinhood support through the app to request account closure. They will confirm and close it within a few business days.
Frequently Asked Questions
What is the difference between a market order and a limit order?
A market order buys or sells immediately at the current market price. A limit order only executes if the stock reaches a price you set — useful if you want to buy lower or sell higher but are willing to wait. Limit orders may never fill if the stock does not hit your price.
Can I trade on weekends or holidays?
No. The stock market is closed weekends and federal holidays. You can place orders during extended hours (4 a.m. to 8 p.m. Eastern) on weekdays, but the market itself only opens 9:30 a.m. to 4 p.m. Eastern, Monday through Friday. Orders placed outside market hours execute when the market opens.
What happens if I buy a stock and the price drops immediately?
You own the shares at the price you paid. If the price drops, your account shows a loss, but you have not lost money unless you sell. You can hold the shares and wait for the price to recover, sell and lock in the loss, or buy more shares at the lower price. Robinhood does not force you to do anything.
Do I owe taxes on my trades?
Yes. When you sell a stock for more than you paid, you owe capital gains tax on the profit. Robinhood sends you a Form 1099 at the end of the year listing all your gains and losses. You report this on your tax return. Dividends are also taxable income. Losses can offset gains, which can lower your tax bill.
What is Robinhood Gold and do I need it?
Robinhood Gold is a $5-per-month subscription that gives you access to margin (borrowed money to trade with), extended-hours trading, and other features. Most beginners do not need it. You can trade stocks and ETFs without it. Gold is mainly useful if you want to borrow money to amplify your trades, which also amplifies your losses.