Robinhood for Beginners

How to Use the Robinhood App for Beginners

Robinhood for Beginners

We all have to start somewhere as a beginner stock trader, but we want to make sure you understand how to use the Robinhood App for beginners, and to start buying and selling stocks. The stock market can be confusing for a beginner and even more so when you are dealing with options tradingcryptocurrency trading, a mutual fund or trading fractional shares.

Robinhood offers free trades and no minimums and is easily the best brokerage for beginner investors and one of the main reasons we think its the best investing app for first time investors. Robinhood allows you to trade real time at market price.

Is Robinhood a bank? Like other cash management products, Robinhood Cash Management is not a bank account, despite its features being similar to those of a checking or savings account. While having similar features of a savings account, the Robinhood Checking & Savings is not insured by the Federal Deposit Insurance Corp. (FDIC) Instead, the service is backed by the Securities Investor Protection Corporation (SIPC). Robinhood Instant Access is available when you confirm your transactions for bank transfers through the mobile app.

While most trading platforms make money on every trade you make, Robinhood makes money from its premium subscription service. Robinhood Gold subscription costs $5 per month and includes more than margin trading capabilities. Additional research tools are also provided in the fee.

Robinhood Review

Robinhood‘s story begins practically a decade ago at Stanford, where Baiju and Vlad fulfilled as roommates and classmates. After graduation they loaded their bags for New York and developed a financing business, selling trading software to hedge funds. With their newfound experience they understood that huge Wall Street companies pay absolutely nothing to trade stocks, while most Americans were chargecommission for every trade. They soon decided it was more crucial to build products that would offer everyone with access to the monetary markets, not simply the wealthy. Two years after heading to New York City, they moved back to California and developed Robinhood– a business that leverages technology to motivate everybody to participate in investing in stocks.

And it’s a model that’s working for people. A little over four years after launch, the company has a $5.6 billion valuation four times more than its 2017 valuation of $1.3 billion.

The app very first released in December 2014 and rapidly became a favorite among more youthful people looking to invest. It enables users the flexibility to finish a transaction without paying a processing charge, and ended up being the very first financing app to win an Apple Style Award thanks to its simple-but-stylish design.

In other words: It makes stock trading cheap, user-friendly, and mobile, which is apparently precisely what young investors were looking for. It began as invite-only, and by the time it opened to the general public in March 2015, the waiting list rose above 700,000 according to Fortune. By November of that year, TechCrunch reported that it had facilitated over $1 billion in transactions.

Robinhood App Setup?

The process from downloading, installing and setting up your account shouldn’t take more than four or five minutes. It will take you a few days before you will be able to trade as there are verification processes before you can fund your account and start trading on the Robinhood App.

Download and Installing

Robinhood has created an app for just about every mobile device platform. The majority of users have Android or Apple iPhones and the app can found in Google Play or the Apple App Store. Click the button below to create your account, download the app and get a FREE stock from Robinhood

Creating Account

After you sign up with email, it asks you to create a password (at least 10 characters), and then you have to share some personal information: your legal name, email address, phone number, date of birth, residential address (U.S. law apparently requires that brokerages collect this information), citizenship, and social security number.

It also asks you how much investment experience you have. I selected None. Then a few more questions about your employer and ties to companies or brokerages, review, and submit.

After you are finished creating your Robinhood Account, the next step will be to start the process of funding the account.

Funding Robinhood Accounts

To start trading with Robinhood, you must first link your bank account. Robinhood uses Plaid to link your bank which means your transactions are secure, transfer of your information is encrypted end-to-end and they also keep your information private, meaning that your credentials will never be made accessible to Robinhood.

Linking Your Bank

In the United States you will find that just about every major bank is listed and can be added by clicking the name of the bank. If your bank isn’t listed, don’t’ worry, there is an option for you as well by clicking “Don’t see your bank? Search instead” at the bottom of the screen. I found my bank by doing a quick search but if yours is not there, click on “Link Manually”, choose Checking or Savings, enter your routing number and account numbers and click the checkmarks to complete.

Funding your Robinhood account can take a few days because a couple of deposits will be made to your bank in 2-5 business days and you will have to verify the deposit amounts in order to start adding funds to your account. After completing the deposit verifications, you will have instant access to deposits and begin stock trading.

Transferring Funds

Once verified you will be able to click the person icon in the options at the bottom of your app and choose “Transfers”. You can fund your Robinhood account by clicking “Transfer to Robinhood” for a one time transfer. You will be taken to a screen that allows you to enter the amount you would like to transfer from your bank to your Robinhood account and click the checkmark.

You can also schedule regular automatic deposits into your brokerage account. Options for automatic deposits include weekly, twice a month, monthly and quarterly.

Robinhood Instant Transfer Limits

    Instant Deposit Limit – Your instant access limit is determined based on whether you are a Robinhood Gold member and on your current account value. For example, I subscribe to Robinhood Gold (more details on Robinhood Gold Subscription below) and my current instant deposit limit is $5,000 Total Pending Deposits – The amount of money still on its way from your bank. It takes 3-5 days to transfer money from your bank after you initiate your deposits. Make sure to maintain this balance in your bank account until the transfer is complete.
    Instant Deposits – The amount of money available for you to invest instantly while your money is still on its way from the bank. You can always click on the account settings and view your “Buying Power”. Buying Power is the amount of funds you can currently invest into stocks and cryptocurrencies at the current moment.

Beginners Guide to Trading Stocks

There are ton of different investment options on Robinhood mobile app and we will do our best to keep it from being overwhelming and answer all the important questions that a new investor might have. Tip: Options trading and margins can get you in a lot of trouble if you don’t know what you are doing. Until you become more educated on options trading, it is suggested to not activate that options.

Investment Types

Investors commonly invest in stocks but there are other options for investingRobinhood also offers the ability to invest in cryptocurrencies and ETFs. Crypto is considered riskier but the most popular coins are available at the time of writing this article and include Bitcoin, Ethereum and Litecoin. If you just aren’t sure about choosing a company’s stock to purchase but you like a certain industry, then consider ETFs. Recently I made an investment into an Electric Vehicle ETF because I do think there is a great future for these stocks but it can be less risky than choosing an individual stock. Robinhood also offers options and margin trading but seeing as this is an article for beginners, more knowledge and experience is needed before considering these types of investments.

Finding and Researching Stocks

Many people choose to invest in companies and industries they’re passionate about and believe will be successful in the long-term. The reason is that when you invest in a company, you own a piece of that company. The value of your investment will depend on how that company is doing. If the company is doing well, your piece of that company becomes worth more.

Step 1 : Find a Company Think about different products and brands you can’t live without:

  • What products did you use today?
  • What stores do you visit regularly?

Talk to friends and family:

  • What industries do they work in?
  • What do they invest in and why?

Think about causes that are important to you:

  • Are there companies or industries that support these causes?
  • Stay up to date on the news:
  • What companies and industries are doing well?

Step 2: Do Your Research If there’s a specific company you want to invest in, you may want to learn more about:

  • Their annual profits and losses
  • Consumer demand for their product or service
  • Their executive team

You can do some of this research on Robinhood by scrolling down on a company’s page. If what you learn gives you confidence in a company’s long-term performance, you may consider investing in it.

If there’s a specific industry that you feel has significant growth potential or room for innovation, you may consider investing in a fund. Funds (ETFs) are a great way to invest in an industry or group of companies at once.

Buying Stocks

Buying stocks on Robinhood is much simpler than you might expect. There is only one thing you should probably know before you start trading stocks. As a beginner you are going to focus on two different types of buys called “Market Order” and “Limit Order”. A market order will set a buy the stock at the current asking price (price a seller is willing to sell at). A limit order will allow you to set a price at which you want to buy the stock. I prefer to use limit orders because I can determine a price I want to pay, but there are occasions when my order doesn’t fill because the stock price doesn’t hit my target.

Steps to buying stocks using the Robinhood App on IOS and Android Devices

  • Navigate to the stock’s Detail page.
  • Tap Trade.
  • Tap Buy.
  • Tap Order Types in the upper right order.
  • Select your preferred order type.
  • Confirm your order.
  • Swipe up to submit your order.

Selling Stocks

Everyone wants to buy at the bottom and sell at the top but that rarely ever happens. I can’t give you financial advice but I can tell you my strategy for determining when to sell my stocks. I set prices in my mind of where I am willing to sell my investments. My goal is to be able to pull my original investment out and hold the remaining shares for a long term.

An example would be that I buy 100 shares at $10 per share with a total of $1,000 investment. If my goal is to sell at $20.00 then I would sell 50 shares at $20.00 to recoup my investment and keep the remaining 50 shares long term.

Steps to selling stocks using the Robinhood App on IOS and Android Devices

  • Navigate to the stock’s Detail page.
  • Tap Trade.
  • Tap Sell.
  • Tap Order Types in the upper right order.
  • Select your preferred order type.
  • Confirm your order.
  • Swipe up to submit your order

Dividends

A dividend is the distribution of some of a company’s earnings to a class of its shareholders, as determined by the company’s board of directors. Common shareholders of dividend-paying companies are typically eligible as long as they own the stock before the ex-dividend date. Dividends may be paid out as cash or in the form of additional stock.

Dividend-Paying Companies

Larger, more established companies with more predictable profits are often the best dividend payers. These companies tend to issue regular dividends because they seek to maximize shareholder wealth in ways aside from normal growth. Companies in the following industry sectors are observed to be maintaining a regular record of dividend payments:

  • Basic materials
  • Oil and gas
  • Banks and financial
  • Healthcare and pharmaceuticals
  • Utilities

Collecting and Investing Dividends

Robinhood processes your dividends automatically. Cash dividends will be credited as cash to your account by default. If you have Dividend Reinvestment enabled, you can choose to automatically reinvest the cash from dividend payments back into individual stocks or ETFs.

You can view your received and scheduled dividends in your mobile app:

  • Tap the Account icon in the bottom right corner.
  • Tap Statements & History.
  • Tap Show More.
  • Tap Dividends on the top of the screen.

Get Started Trading on Robinhood App

Now that you have some great knowledge on trading stocks on Robinhood, you shouldn’t feel like a beginner any longer. We would love to hear about the your experience on Robinhood and what your favorite stocks are.

One Last Tip: Continue to research and educate yourself on stock trading and investments!

High-yield savings: In December 2019, Robinhood started offering a cash management account that currently pays 0.30%. The account comes with a debit card and free ATM withdrawals from more than 75,000 ATMs, and offers up to $1.25 million of FDIC insurance thanks to Robinhood’s agreements with several banks. (nerdwallet.com)

Access is rolling out on a state-by-state basis. Currently, about 50% of the U.S. population can use Robinhood Crypto. (investorjunkie.com)

Gold starts $5 per month for up to $1,000 margin. Anything over $1,000 is charged 5% interest. (investorjunkie.com)

They key is to realize that the patterns are higher probability trading setups – they might work 70% of the time. But they will never work 100% of the time. (fitnancials.com)

Robinhood is a free, US-based stock trading app that allows 100% commission-free stock, options, cryptocurrency and ETF trades. This guide will teach you everything you need to know about Robinhood so you can trade effectively. (tradingstrategyguides.com)