Robinhood lets you trade stocks, exchange-traded funds (ETFs), options, and cryptocurrencies from your phone or computer

Robinhood is a brokerage platform, meaning it's the middleman between you and the markets where these assets trade. You can buy and sell individual company stocks (like Apple or Tesla), bundles of stocks called ETFs, options contracts that bet on price movement, and cryptocurrencies like Bitcoin and Ethereum. The platform doesn't restrict what you can trade based on account size — you can start with whatever amount you have. What you can trade depends on your account type and whether you meet certain requirements, which vary by asset class.

The most common starting point is stocks and ETFs because they have no special requirements. Options and cryptocurrencies have additional rules. Robinhood also offers fractional shares, meaning you can buy a piece of an expensive stock instead of waiting to save for a whole share.

Key Takeaways

  • Stocks and ETFs can be bought when ready after your account is funded, with no minimum balance or special permissions needed.
  • Options trading requires you to request options approval, which Robinhood grants based on your experience level and financial situation.
  • Cryptocurrencies are available on Robinhood but are separate from your regular brokerage account and have their own rules around transfers and withdrawals.
  • Fractional shares let you invest in high-priced stocks by buying a percentage of one share instead of a whole share.
  • Robinhood charges no commission on trades, but you still pay the bid-ask spread and may face other costs depending on what you trade.

Stocks: Individual company shares and how to buy them

A stock represents a small piece of ownership in a company. When you buy Apple stock, you own a fractional share of Apple. Robinhood lets you search for any publicly traded company by its ticker symbol (AAPL for Apple, TSLA for Tesla) and buy as many or as few shares as you want. You can place a market order, which buys at the current price when ready, or a limit order, which only buys if the price drops to a number you set.

You can hold stocks indefinitely. Robinhood doesn't charge you a commission to buy or sell, though the bid-ask spread (the difference between what buyers will pay and what sellers will accept) is a real cost you pay at the moment of trade. If you hold a stock that pays dividends, Robinhood deposits those payments into your account automatically.

There's no minimum amount you need to invest, no minimum account balance, and no restrictions on how many times you trade per day — unlike some brokerages that limit day trades for accounts under $25,000. You can start with $1 if you want.

ETFs: Pre-built collections of stocks or bonds

An exchange-traded fund (ETF) is a basket of stocks or bonds bundled together and traded as a single ticker. The SPY ETF, for example, holds shares in 500 large US companies. When you buy one share of SPY, you're buying a tiny piece of all 500 companies at once. ETFs are useful if you want broad exposure to a market without picking individual stocks.

Robinhood treats ETFs exactly like stocks: no commission, no minimum balance, and you can buy fractional shares. You can hold them forever, and if an ETF pays dividends, the money lands in your account. ETFs are generally considered lower-risk than individual stocks because you're spread across many companies instead of betting on one.

Common ETFs on Robinhood include VOO (US large companies), VTI (the entire US stock market), QQQ (tech-heavy companies), and BND (US bonds). You search for them by ticker just like stocks.

Options: Contracts that bet on price movement

An option is a contract that gives you the right to buy or sell a stock at a set price by a certain date. A call option bets the stock price will go up. A put option bets it will go down. Options are more complex and riskier than stocks because you can lose your entire investment quickly, and the contract expires on a specific date.

To trade options on Robinhood, you must request options approval first. Robinhood asks about your investment experience, your income, your net worth, and what level of options trading you want to do. Level 1 approval lets you buy calls and puts. Level 2 adds covered calls (selling calls against stock you own). Higher levels allow more complex strategies. Robinhood typically approves or denies your request within a few minutes to a few hours.

Options require more knowledge than stocks. If you're new to investing, it's worth learning how they work before trading them. Robinhood offers educational materials in the app, but you should also read about options elsewhere to understand the risks.

Cryptocurrencies: Bitcoin, Ethereum, and other digital assets

Robinhood lets you buy and sell cryptocurrencies like Bitcoin, Ethereum, Dogecoin, and dozens of others. Crypto trading works similarly to stocks: you search for the asset, place a market or limit order, and hold it or sell it whenever you want. There's no commission.

The main difference is that Robinhood's crypto is held in a separate account from your stocks and ETFs. You cannot transfer crypto out of Robinhood to another wallet or exchange — you can only buy and sell it within the app. If you want to move crypto somewhere else, you have to sell it first, then withdraw the cash. This is a significant limitation if you plan to use crypto for anything beyond trading.

Crypto is highly volatile, meaning prices swing wildly and quickly. It's also a newer asset class with less historical data than stocks. Most financial advisors suggest crypto should be a small part of a diversified portfolio, not the main focus.

Fractional shares: Buying pieces of expensive stocks

Fractional shares let you buy a portion of a stock instead of waiting to save for a whole share. If Tesla stock costs $250 per share and you have $50, you can buy 0.2 shares instead of waiting. Robinhood offers fractional shares on most stocks and ETFs, and you can buy as little as $1 worth of any asset.

Fractional shares trade at the same commission-free rate as whole shares. You can sell them anytime, and if the company pays dividends, you receive a proportional amount. The main limitation is that some brokerages don't accept fractional shares if you transfer your account, though this is becoming less common.

What you cannot trade on Robinhood

Robinhood does not offer bonds (except through bond ETFs), mutual funds, futures, forex, or penny stocks. You also cannot short-sell stocks directly, though you can use put options to bet on price declines. If you need access to these assets, you would need a different brokerage.

Robinhood also has restrictions on certain stocks during extreme volatility. During the GameStop trading frenzy in 2021, Robinhood temporarily restricted buying on certain stocks, which sparked controversy. The company has since changed its policies, but restrictions can still happen during unusual market events.

Costs and fees to know about

Robinhood charges no commission on stocks, ETFs, options, or crypto. However, you still pay the bid-ask spread, which is the cost of the trade itself. When you buy a stock, you pay slightly more than the current price. When you sell, you receive slightly less. This spread goes to market makers, not to Robinhood, but it's a real cost.

If you use margin (borrowing money to invest), Robinhood charges interest on the borrowed amount. The rate varies but is typically between 2.5% and 12.5% per year depending on your account balance. Options also have wider bid-ask spreads than stocks, so they cost more to trade in and out of.

Robinhood Gold is a paid subscription ($5 per month or $55 per year) that gives you access to margin, extended trading hours, and research tools. It's optional — you can trade stocks and ETFs without it.

Frequently Asked Questions

Can I trade during after-hours or pre-market hours on Robinhood?

Yes, but only with Robinhood Gold. Extended hours let you trade stocks before the market opens (4 a.m. to 9:30 a.m. ET) and after it closes (4 p.m. to 8 p.m. ET). Prices are less stable during these times because fewer traders are active, so spreads are wider and your order might not fill at the price you expect.

What's the difference between a market order and a limit order?

A market order buys or sells when ready at whatever the current price is. A limit order only executes if the price reaches a number you set. If you place a limit order to buy Apple at $150 and the stock is currently $155, it will wait until the price drops to $150 or below. Limit orders are safer if you're worried about price swings, but they might never fill if the price never reaches your target.

Do I have to pay taxes on trades I make on Robinhood?

Yes. When you sell a stock or crypto at a profit, you owe capital gains tax. Short-term gains (held less than a year) are taxed as ordinary income. Long-term gains (held over a year) get a lower tax rate. Robinhood sends you a tax form (1099) at the end of the year with all your trades. You report this on your tax return. Dividends are also taxable income in the year you receive them.

Can I lose more money than I invested on Robinhood?

With stocks and ETFs, no — the worst case is losing your entire investment. With options, yes — you can lose more than you put in, especially if you're selling options or using margin. With margin, you can owe money to Robinhood if your account value drops below zero. This is why options and margin are riskier and require approval first.

What happens to my stocks if Robinhood goes out of business?

Your stocks are held in your name at a clearing firm, not owned by Robinhood. If Robinhood fails, your assets are protected and transferred to another brokerage. Robinhood is also a member of the Securities Investor Protection Corporation (SIPC), which insures up to $500,000 per account if a brokerage fails. Your cash is also protected up to $250,000 per account.