No matter where you live in Canada, you will probably need to find some ways to invest some money at one point of time. The robo advisor Robinhood prides itself on the fact that it does not charge any commissions for stock and options trading. Robinhood’s initial public offering was a mobile app. The app was chiefly aimed at millennials, and in November 2017 they launched a website that they say “is the best one out there” for teaching new investors.

The most appealing feature of Robinhood is definitely its simplicity. It’s extremely simple to use, both in its web and app versions. The fact that Robinhood doesn’t charge any commission also adds to its appeal to risk averse, cost conscious, small scale investors who prefer trading in very small volumes. However, the offerings are, in fact, very light on research and analysis, and there are serious questions on the standard of the trade executions. In this post, we will find out more about Robinhood, covering every important aspect that you should know.

Robinhood Canada: All you need to know

Trading Experience

Trade tickets are very simple for equities—just fill up the number of shares you would like to trade. The website as well as the app default to sending market orders. To place a limit or stop-loss order, tap or click on Order Types. When compared with real time prices streaming on a different platform, the bid and ask prices were a little delayed on Robinhood.This delay can make it difficult to work out an appropriate limit order price while working in a fast-moving market. If you are using Robinhood, it’s better to have a separate financial app or website that shows current pricing available once you place a trade.

Upon closing the portions, all customers gain instant access to deposits and funds. As soon as a deposit is made into your account, your buying power experiences a boost.

Trading Technology

Robinhood doesn’t publish its trading statistics the way all other brokers do, so it’s hard to match their payment for order flow statistics with anyone else’s. Contrary to the industry standards which mandate payment for order flow on a per share basis, Robinhood reports its payment for order flow on a per dollar basis. According to Robinhood, a per dollar basis payment represents the arrangements with market makers in a more accurate manner. The way a broker routes your order determines whether you’re likely to receive the optimal price at the time your trade is placed. This best price is understood as price improvement: a purchase above the price, or a buy below the asking price.

Usability

The website and the app score really high on the ease of usage. However, there’s little to nothing that the client can do to customize or personalize the experience.

Mobile and Emerging Technology

The platform itself was initially launched as a mobile app which is well-designed and really easy to use. Click on the search icon to look at collections of stocks if you’re trying to find trading ideas. Watchlists are continuously synced between the app and the website.

Range of Offerings 

You can trade stocks and ETFs long on Robinhood, but if you would like to sell them short, you’re out of luck. You can also trade options and six cryptocurrencies. Options trading capabilities are fairly simple, and there’s little help for selecting a technique. On the web site , you’ll buy single leg Calls and Puts, or sell a covered call after opening an extended stock position. You also have the option to exercise in-the-money options or sell put options which are covered by cash. The mobile app allows a couple of multi-leg options strategies, including things like iron condors, straddles, strangles, call and put debit spreads, and call and put credit spreads.You cannot trade mutual funds or fixed income on Robinhood though. 

News and Research 

Robinhood also features a newsfeed option which displays stories from trusted finance sources such as Yahoo Finance, Seeking Alpha, Associated Press, and Marketwatch. Clicking on a headline on the website opens a new window, so your browser might get messy and start slowing your system down if you click on too many news headlines without closing the ones you’ve already read. During fall of 2019, Robinhood launched a totally rebuilt newsfeed which was intended to help with keeping investors informed on the day’s biggest market news. The revamped newsfeed now features free of cost access to WSJ market news coverage, videos from CNN Business, Cheddar, and more. It also features news from several other sources, including Reuters and Barron’s.

The charting feature on Robinhood is quite basic to be frank. It only displays the price history from the last five years.

Robinhood launched Robinhood Snacks, a quick daily newsletter and podcast, in March 2019. Robinhood also made an update to its Gold subscription model in April 2019. With this update, customers who were paying $5 per month gained additional research and data on things like margin loans. Gold subscribers of Robinhood also enjoy the option of reading Morningstar research reports on more than 1,700 companies. In addition, the firm plans to feature Nasdaq Level 2 market data within the near future, which is extremely helpful in determining the demand and supply  of all the shares being traded for a particular stock. Brokers who offer trading capabilities for frequent traders have access to Level 2 market data, so this may be a welcome addition to the platform. Existing Robinhood customers have the option to run a 30 day free trial of the Gold subscription service.

Portfolio Analysis and Reports 

Portfolio analysis is restricted to viewing the present value of your stock or option holdings, with a chart showing the changes in value. You can change the time period shown on the chart with a tap or click, but your only options are one day, one week, one month, three months (quarter), and one year.

Customer Service and Help 

All customer service is completed via the app or the website; you can’t call them for assistance. You can place a trade through a live broker for $10, but they’re not there to provide any kind of help otherwise. You can click or tap on the Account tab to access FAQs and other tutorials/educational material. If you enter the wrong user ID or password, you don’t get an error message, which can confound the user who has entered the wrong password but doesn’t realise it.

In October 2019, after numerous missteps, Robinhood finally added a feature for cash management. This feature moves uninvested cash to program banks that provide a competitive rate of interest in the range of 2%. FDIC insurance does the job of covering your cash, and you’ll also get to customize your own debit card (provided by Mastercard).

Education and Security 

While Robinhood does feature a Help and Support center, the education offerings are actually quite limited. Most of the content is devoted to using the app or website, with very little information about learning to trade. The firm doesn’t hold live events and has no plans for organizing webinars in the future.

Costs 

Trades are free in general on Robinhood, but you’ll pay a $5 per month fee to access margin borrowing if you are a holder of the Robinhood Gold account. That $5 gives you up to $1,000 in margin, plus additional research and data. That data is present inside the “News and Research” section. If the Margin Loans are more than $1,000, they are assessed at an annual interest of 5%, which is well below the national average. The previous margin offering was very unusual, with customers paying beforehand every  month. If you didn’t use the margin you purchased , the value tended to be quite high. Luckily, Robinhood has moved to a pricing model that’s more in line with the remainder of the industry.

Conclusion

When it comes to free trades, you won’t get what you’re not paying for. A fee ranging between $1 and $7 per transaction is usually offered by most online brokers. Most of those brokers offer a lot of research, news, charting, and academic resources alongside the trading engine. Robinhood’s marketing message implies that a brokerage commission may be a ripoff and the research provided by other brokers is overrated. But keep in mind that if you are not paying a commission, you’re not the customer—you’re the product, and your trades are sent to market makers who pay Robinhood for that business, which points to the fact that you might not get a top quality fill on your order.

As expected, Robinhood vehemently disagrees with that assessment of its order routing practices. As per Josh Elman, Vice president of Product at Robinhood”We send your orders to the market maker that’s presumably to offer you the simplest execution quality, which incorporates price improvement.”  Robinhood robo advisor’s services can be availed by you whether you are living in Vancouver, Toronto, Edmonton, Calgary…literally everywhere in Canada.