Not that long ago, investing was a lot more complicated. Regular people couldn’t place trades on their own and had to work through a human stockbroker. The average investor also didn’t have the market research, tools, and specialty strategies available to professionals.
Today, modern brokerage apps have leveled the playing field. Robinhood launched its mobile app back in 2015. Since then, there has been considerable progress on what’s offered through apps.
A simple but sophisticated system
Investment apps revolutionized investing. First, they substantially reduced trading costs. Before, anyone wanting to invest would need to pay a commission to their stockbroker. Today, most brokerage apps offer commission-free trades on popular investments like stocks and exchange-traded funds (ETFs).
Brokerage apps are also user-friendly and intuitive for newer investors. Robinhood built its app’s UI/UX for the mobile-first generation and to expand access to the financial system for a more diverse group of investors. Robinhood’s app won the Apple Design Award when it first came out.
Some of the ways brokerage apps improve the investment user experience include:
- A fast enrollment process
- A design made for mobile devices. For example, users make trades by swiping a finger on their screens
- Ongoing access to market news and information about investments
- The ability to create watchlists of target investments to follow their price trends
- Cards that present information tailored to an investor’s account, like new features, account updates, and market updates.
Research and tools
Despite their simple designs, modern brokerage apps still provide important trading tools for users to build portfolios. For example, Robinhood offers stock screeners. Users can choose from over 20 filters, such as share price, sector, trading volume, price-to-earnings ratios, and research analyst ratings. The screener then identifies possible investments that meet these criteria.
Robinhood also offers charts. Users can see how the price of a stock, ETF, cryptocurrency, or other asset has changed over time to find patterns. There are more advanced candlestick charts tracking open and close prices, lows and highs, and the overall price direction.
Robinhood Gold users gain access to Morningstar’s premium research and reports for roughly 2,700 stocks. Morningstar is a leading independent research company famous for its reports. With these tools and research, investors can compete more effectively with professionals.
Advanced investment strategies
Margin investing: Serious investors can access sophisticated trading strategies through brokerage apps. Robinhood offers margin investing, where users can borrow money temporarily to make trades.
To qualify for margin investing, someone must have at least $2,000 in their account, $25,000 if they trade frequently enough to be a pattern day trader. Brokerage apps may consider income, net worth and credit history when deciding whether to allow this strategy.
Options trading: Brokerage apps also offer options trading. This investment strategy aims to make money based on the future price of a stock, ETF, or other asset.
For example, if someone buys a call option, they temporarily have the right to buy the investment at a set price in the future, no matter how high the market price goes. If the market price does go up, an investor can make more money using a call option versus simply buying the investment. However, the investor could lose all the money placed in an option if the position doesn’t work out before the option expires.
Robinhood provides options chains for research. An options chain shows all the possible prices available for options on a security. It also shows the cost and trading volume for each position. It’s like a menu for options investors.
It should be noted that these advanced strategies are not for everyone. They carry a higher risk of losses and require more research. But they are available to investors with the right skills and knowledge.
High-yield sweeps accounts and bonuses
Brokerage apps provide more than investments. Many now also offer high-yield sweeps accounts, where users earn interest on their uninvested cash. Robinhood currently pays 5.00% APY for Robinhood Gold users, a rate that rivals the top online high-yield savings accounts.
Robinhood Gold costs less than $7 per month. Someone with a cash balance of just $1,400 would earn enough interest to cover the fee while unlocking the other investment benefits of Robinhood Gold, like bigger instant deposits, lower interest rates for margin trading, and a 3% match for contributions into an individual retirement account (IRA).
Robinhood users receive up to $2.25 million in FDIC insurance on their deposits. It’s far more than the $250,000 available at an individual bank because Robinhood spreads the money with multiple partner banks.
Getting started with brokerage apps
Brand-new investors can start with a brokerage app by depositing cash. Investors with portfolios can transfer their securities straight into their new account.
People looking to take control of their investing and financial futures can now do so with brokerage apps. It’s a new world for regular investors.
Learn more about getting started with a Robinhood brokerage account.
Disclaimer
Options trading entails significant risk and is not appropriate for all investors. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Customers should consider their investment objectives and risks carefully before investing in options. Supporting documentation for any claims, if applicable, will be furnished upon request.
Margin borrowing increases your level of market risk, as a result it has the potential to magnify both your gains and losses. Before using margin, customers must determine whether this type of strategy is right for them given their investment objectives and risk tolerance. Regardless of the underlying value of the securities you purchased, you must repay your margin loan. Robinhood Financial can change its maintenance margin requirements at any time without prior notice. If the equity in your account falls below the minimum maintenance requirements (varies according to the security), you’ll have to deposit additional cash or acceptable collateral. If you fail to meet your minimums, Robinhood Financial may be forced to sell some or all of your securities, with or without your prior approval. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information.
Robinhood Gold is offered through Robinhood Financial LLC and is a membership offering premium services available for a fee.
