Robinhood is a mobile application which allows you to make trades with zero commissions. The margin rates are also lower than other trading platforms. Margin trading is 3.5%. For those unfamiliar, margin trading is borrowing money to purchase stock. There are no minimum deposits. The company also just released an Apple Watch app which you can see below.
I do not like Robinhood. I think it is a dangerous to encourage young people with little knowledge about financial markets to start buying and selling stocks on their phones. It encourages reckless behavior which could cause losses to exceed whatever money was saved from avoiding commission. Adding in cheap margin rates encourages consumers to borrow money to buy stocks which is what caused the 1929 stock market collapse.
Back in 2007 Zecco attempted to provide free online trades. I opened my first account with Zecco and I was disappointed when they started charging for trades. Because cheaper options have emerged free online trades doesn’t have the sex appeal it used to have. Tradier only costs $3.49 per trade which is a great deal.
Robinhood boasts that it doesn’t have a call center or website which lowers costs. That sounds like a terrible idea. New investors need a call center to ask basic questions. If your phone runs out of batteries, you won’t be able to make trades on your laptop. Therefore, I would highly recommend young investors avoid Robinhood.
Loyal3 is another free trading app which has no minimum deposits. It allows you to buy fractional shares which means you can buy $10 worth of Apple even though its share value is $129. It also allows investors to purchase shares in IPOs (initial public offering). The concept is surrounded on buying stocks in companies you love such as GoPro or Apple.
You must avoid this service at all costs. I know it sounds great to put $10 in GoPro stock for free, but when the losses mount your wallet will hurt. Investing because you love a company is the number one cardinal sin to avoid when investing. If you want to feel an emotional attachment to something, buy a pet. Do not buy stocks because you love them; they are just pieces of paper.
There are two other big negatives the service has. The first is it only has a limited amount of stocks which can be traded. This is a limiting factor which is not acceptable. You should be allowed to buy stock in whatever you want with a brokerage account. The second negative is it takes 1 day for a trade to get executed. This can cause losses which exceed the money you thought you were saving with free trades. For example, if Apple stock goes up after you put in the trade order, Loyal3 may cause you to pay the higher price for the stock because the trade was delayed.
You should use Tradier to make stock trades. It has $3.49 trades and has great customer support. I use it and I highly recommend it. Tradier is the true innovator in mobile trading applications. The company has built an open source interface which allows start-up companies to build apps to add-on to Tradier. This is akin to apps being used on Twitter or Facebook.