E Should You Really Trade Stocks Using Robinhood?

There's been a huge surge in new traders seeking exposure to the stock market over the last 18 months. Whether you're talking about blue-chip stocks like Apple (AAPL) and Tesla (TSLA) or any of the thousands of penny stocks, Robinhood has become the go-to for day traders. You've also got increased attention on cryptocurrencies, and right now, the platform also offers access to a handful of popular digital currencies like Dogecoin. But is this just window dressing? Is Robinhood really a good platform to use to trade penny stocks, cryptocurrencies, and large caps? While everyone has their own opinion on the matter, there are some positives and negatives to keep in mind.

RObinhood stocks

Pros & Cons To Robinhood

I usually write about small-caps and penny stocks. In light of this, I'll talk about these for a moment. One of the great things about this application is that it's simple. There are few advanced tools to configure, and there aren't many charting options that would cloud the application or slow things down. It's also very straightforward when it comes to placing a trade: Buy or Sell and what type of order you'd like to place (limit, market, etc.). This has all led to the growing interest of the new traders who found stocks to make money during the pandemic. What's more, if you look at the penny stock brokerage growth statistics of 2020, the only other "application" or broker that saw larger growth was that of TDAmeritrade/Schwab for the simple fact that they affected a merger and combined their userbase. 

Needless to say, there is a problem when it comes to trading penny stocks on Robinhood. The application restricts access to certain types of stocks. With very few exceptions, OTC penny stocks are inaccessible to users. The company that owns the Robinhood app has consistently emphasized its active push for protecting clients from risky types of investments. While this may be a catch 22 in light of offering highly speculative things like Dogecoin, the results are the same. If you're trading any of the stocks under $5 on Robinhood, you're going to need to choose from those listed on the NYSE or Nasdaq. 

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Disclosure: None. 

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William K. 1 week ago Member's comment

Definitely information that is good to have.

Small Cap Reporter 2 weeks ago Author's comment

Brain fart on this. merger was TD/Scottrade not schwabb FYI