Robinhood works best if you want to trade stocks and options with no commission and a simple interface, but it is not the right choice for everyone and has real limitations you should understand before opening an account.
The core question is not whether Robinhood is "good" in the abstract — it is whether it fits what you actually want to do with money. Robinhood charges no commission on stock trades, options, and cryptocurrencies, which saves money compared to brokers that charge per trade. But it has no physical locations, limited research tools, no financial advice, and a history of outages during high-volume trading days. The platform is designed for people who want to make their own decisions quickly and cheaply, not for people who want guidance or who trade during market chaos.
Key Takeaways
- Robinhood charges zero commission on stocks, options, and crypto trades, which is cheaper than brokers that charge per transaction.
- The platform has no human advisors, limited research tools, and no way to speak to someone on the phone if something goes wrong.
- Robinhood has experienced outages during major market events, which means you cannot trade when you most need to.
- The platform is built for frequent traders who make their own decisions, not for people saving for retirement or seeking personalized guidance.
- You should compare Robinhood against other zero-commission brokers like Fidelity, Charles Schwab, and E-Trade before deciding.
What Robinhood costs and what you save
Robinhood's main selling point is that it charges no commission on stock trades, options trades, or cryptocurrency purchases. That means if you buy 10 shares of a stock, you pay nothing extra — you pay only the price of the shares themselves. Brokers like E-Trade and Fidelity also offer zero-commission stock trading now, so the commission savings alone are no longer a reason to choose Robinhood over competitors.
Where Robinhood does cost you money is in how it makes its revenue. The company uses a practice called payment for order flow, which means it sells information about your trades to other trading firms. This does not show up as a fee on your statement, but it can affect the price you get on each trade — sometimes by a fraction of a cent, sometimes by more. Other brokers use the same practice, but some brokers (including Fidelity and Charles Schwab) have moved away from it. If you want to avoid payment for order flow entirely, you will need to use a broker that has publicly committed to not using it.
Robinhood also offers a paid subscription called Robinhood Gold, which costs $5 per month and gives you access to margin (borrowed money to trade with) and slightly better research tools. For most people starting out, the free version is enough.
What you cannot do on Robinhood
Robinhood has no human advisors and no phone support. If something goes wrong with your account or you have a question about how to use the platform, you can only contact support through email or the app. Response times vary, and during busy periods you may wait days for an answer. If you want to talk to someone about your overall financial plan or get advice on what to buy, Robinhood is not the place.
The platform also does not offer certain types of accounts or investments. You cannot open a traditional IRA or Roth IRA on Robinhood (though it does offer a SEP IRA for self-employed people). You cannot buy bonds, mutual funds, or most ETFs. You cannot set up automatic rebalancing of your portfolio. If any of these matter to you, you need a different broker.
Robinhood's research tools are basic. You get stock quotes, charts, and limited news, but not the detailed research reports, analyst ratings, or screening tools that other brokers offer. If you rely on research to make decisions, you will need to use other websites (like Yahoo Finance or Morningstar) alongside Robinhood.
Robinhood's history of outages and reliability
Robinhood has experienced multiple outages during high-volume trading days, most notably in March 2020 during the pandemic market crash and in January 2021 during the GameStop trading frenzy. During these outages, users could not place trades, check their accounts, or access the app at all. For a day trader or someone trying to respond quickly to market moves, an outage means you cannot execute your strategy when it matters most.
Other brokers have also had outages, but Robinhood's outages have been more frequent and more widely reported. If reliability during volatile markets is important to you, research the outage history of any broker you are considering, not just Robinhood.
Who should use Robinhood and who should not
Robinhood makes sense if you want to buy and hold stocks or options, you make your own investment decisions, you do not need research tools or human advice, and you can tolerate occasional outages. It is a good fit for someone who has already decided what they want to buy and just needs a cheap, simple way to buy it.
Robinhood is not a good fit if you want to invest for retirement through a tax-advantaged account like an IRA, if you want to buy bonds or mutual funds, if you need research and analysis to make decisions, if you want to talk to a human advisor, or if you need may provide access to trading during market chaos. It is also not a good fit if you are new to investing and want guidance on what to buy.
How Robinhood compares to other brokers
The main competitors to consider are Fidelity, Charles Schwab, E-Trade, and TD Ameritrade. All of them now offer zero-commission stock trading. Here is what differs:
| Broker | Commission | Phone Support | Research Tools | IRA Accounts | Payment for Order Flow |
|---|---|---|---|---|---|
| Robinhood | $0 | No | Basic | SEP IRA only | Yes |
| Fidelity | $0 | Yes, 24/5 | Extensive | Yes | No |
| Charles Schwab | $0 | Yes, 24/5 | Extensive | Yes | No |
| E-Trade | $0 | Yes, 24/5 | Extensive | Yes | Yes |
| TD Ameritrade | $0 | Yes, 24/5 | Extensive | Yes | Yes |
If you want phone support and research tools, Fidelity and Charles Schwab are stronger choices. If you want to avoid payment for order flow, Fidelity and Charles Schwab are the only major brokers that have committed to not using it. If you want simplicity and low cost and do not need support, Robinhood is still competitive.
What to check before opening an account anywhere
Before you choose any broker, including Robinhood, make sure it is registered with the SEC and protected by SIPC (Securities Investor Protection Corporation). SIPC insurance covers up to $500,000 per account if the broker fails or goes out of business. You can check whether a broker is registered by searching the SEC's FINRA BrokerCheck database.
Also read the broker's fee schedule and account agreement carefully. Look for any fees you might not expect — account maintenance fees, inactivity fees, wire transfer fees, or fees for closing an account. Most major brokers do not charge these, but some smaller brokers do.
Frequently Asked Questions
Is my money safe on Robinhood?
Your money is protected by SIPC insurance up to $500,000 per account if Robinhood fails. Cash in your account is also protected by FDIC insurance through Robinhood's banking partners. Robinhood is registered with the SEC and regulated like other brokers. The risk is not that your money will disappear — it is that you cannot trade during an outage.
Does Robinhood report to the IRS?
Yes. Robinhood sends you a 1099 form at the end of each year showing your capital gains and losses. You are responsible for reporting this on your tax return. Robinhood does not file your taxes for you or offer tax-loss harvesting tools like some other brokers do.
Can I use Robinhood if I am just starting to invest?
You can, but you should understand what you are buying before you buy it. Robinhood does not provide investment advice or education. If you are new to investing, you may want to start with a broker that offers more research and guidance, or spend time learning on free websites like Khan Academy or Investopedia before opening any account.
What happens to my account if Robinhood goes out of business?
Your stocks and cash are protected by SIPC insurance. Robinhood would transfer your account to another broker, and you would keep your holdings. You would not lose your investments, though the transfer process might take time.
Can I day trade on Robinhood?
Yes, but you need at least $25,000 in your account to day trade (buy and sell the same stock on the same day). This is a federal rule, not specific to Robinhood. If your account falls below $25,000, you cannot day trade until you deposit more money.