Is Robinhood the Best Day Trading Platform Out There? Let’s Find Out!

Trading Costs Are One Consideration but Other Features Matter More


Source: StockCharts MGEN (MiRagen Therapeutics, Inc)

Before we begin, it’s important to define day trading. There is unanimous agreement among experts that day trading specifically refers to, ‘Trades that you open and close within the same trading day… Officially, there aren’t overnight holds with day trading. But sometimes it’s worth holding overnight…’ Against this backdrop, it becomes all the more important to select the right trading platform from the outset.

Among the top brokers, traders can count on innovative technology that delivers up-to-the-minute stock prices, market movements, financial news, and other important updates. The premier trading platforms are cut from the same cloth. They are reliable, licensed, cost-effective, utilize powerful trading software, and they provide technical analysis tools to help boost your trading activity.

Behind-the-Scenes: Robinhood Good for A Lot of Things

Robinhood presents as a top-tier trading platform, but closer analysis suggests that traders may want to assess alternatives before settling on this hugely popular option. For example, anyone who trades on Robinhood with an account balance below $25,000 will be subject to day certain trading restrictions. They are not overly worrisome, but they do exist.

Robinhood’s low costs of operations are hamstrung by a few factors. For example, you can’t trade (OTC), and some traders complain of poor execution, and a degree of difficulty getting hold of live customer support (ostensibly because Robinhood is so popular). Live support is a particularly important aspect of any trading platform, especially for beginners. Day trading on Robinhood certainly has its pros and its cons.  One cannot summarily dismiss Robinhood either. It really is the people’s trading platform, but there are some shortcomings that must be highlighted.

Robinhood touts itself as follows: ‘Investing for Everyone… Robinhood, a pioneer of commission-free investing, gives you more ways to make your money work harder.’ And other statements such as, ‘Break Free from Commission Fees… Make unlimited commission-free trade in stocks, ETFs, and options with Robinhood financial, as well as buy and sell Cryptocurrencies with Robin Hood crypto.’

These are certainly bold assertions to make, and for the most part they do hold true. Closer investigation of Robinhood reveals that some traders don’t fare as well, with trades not executing at stop loss figures. This means that an order to sell stocks may get messed up, leaving the day trader at a loss. If for example, you set a stop loss at $3.85, with 1000 shares, and it executes at $3.55 per share, you are already $300 more in the red than had you picked a trading platform with rapid, and accurate executions of trades.

Robinhood really is great for run-of-the-mill listed stocks. They’re all there for you to buy and sell at your leisure. But, if you like many newbie traders are looking to trade low-cost stocks such as OTCs, Robinhood is not your go-to trading platform. Just a quick refresher for those who don’t know, OTC stocks include penny stocks. The media has done a fine job of debunking the validity, and attractiveness of penny stocks, but the reality of these tradable instruments is substantially different. Robinhood does not offer OTC stocks, and they have their reasons. For traders who want to trade these volatile instruments, it’s best to look elsewhere.

If you want to trade OTC stocks you may want to find other platforms

It is possible to pick lucrative opportunities in the penny stocks arena and generate substantial profits from them. Penny stocks, while extremely volatile, have the potential for outsized gains. Naturally, diligence, intensive research, a sound understanding of the financial markets, and an ability to separate emotion from logic bodes well for trading penny stocks. Robinhood does not provide such opportunities, leaving a portion of the market unavailable to day traders.

According to Robinhood’s articles, ‘Over-The-Counter’ (OTC) refers to how stocks are traded when they are not listed on a formal exchange. Such trades might happen directly with the company owners, or might be done through a broker. In the United States, listed companies are bought and sold on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation (NASDAQ).

Companies not listed on the NYSE or NASDAQ can sell equity in their business over the counter. Despite not offering OTC stocks, Robinhood details the merits of trading the stocks, including the fact that traders and investors can get in on the ground floor, take a position and watch that stock skyrocket. Believe it or not, Facebook (FB) was initially an OTC stock!

What are your alternatives to using Robinhood?

Robinhood is truly the people’s favorite for most types of day trading activity. But, if you want to trade OTC stocks, you may want to consider other platforms. Fortunately, the number of reputable trading platforms and brokerages is growing by the year. Among the leading providers of stock trading platforms are Stocks to Trade (STT), Interactive Brokers (IB), and E*TRADE.

Sure, each option has its merits and its pitfalls, but overall, these trading platforms and/or brokers are well worth their weight in gold. They present traders with opportunities to profit from their day trading activity with a wide range of financial instruments to trade, innovative software, top-tier trading tools, real-time updates, and rapid executions of trades.


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