Is the Robinhood Backlash Over?

Robinhood has been taking some heat in recent months. In previous years, the broker funneled client orders (order flow, as it’s known in the industry) exclusively through non-efficient channels as a result of internal partnerships, leading to less-than-optimal pricing models on trades across the board. Then, last year during the height of the pandemic, trading restrictions were implemented as a result of the company’s failure to cover their own financial obligations during the GameStop price surge (specifically, a “short squeeze”) and other trading abnormalities that occurred during the early months of the coronavirus onset in 2020.

But much of the backlash over Robinhood inequity as it relates to traders has subsided. There are a few pending legal issues over these moves that have yet to be resolved, but in large part, Robinhood remains a preeminent force in the world of investing in stocks, options, and cryptocurrencies.

Robinhood Cryptocurrency Trading

The Robinhood crypto environment is perhaps one of the most interesting asset classes that investors can take advantage of through the Robinhood app or Robinhood desktop site. Trading cryptocurrencies on Robinhood can be done 24/7, just like on a crypto exchange, but the volatility factor is removed in large part because, on the Robinhood trading space, these commodities operate just like stocks.

Rather than trading between a variety of pairs—and by extension needing to understand the relationships between a wide range of different coins and tokens—buying and selling cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), or Dogecoin (D) is done as a cash buy, just like the stocks you might hold in your Robinhood brokerage account. Of course, for an investor looking to get into crypto on Robinhood for the first time, reading Robinhood crypto reviews will help you to understand the trading environment far better.

Robinhood Gold and Leveraged Buying

Robinhood is also a friendly place for investors who are looking to incorporate leveraged purchasing options into the portfolio. Robinhood offers a program that it calls Robinhood Gold—essentially a matching scheme that allows you to double your stake in the market and keep the profits for yourself. Robinhood charges a minuscule interest rate on this line of credit and investors engaged with Robinhood have been taking advantage of this low-cost way to boost wealth for years.

Placing market orders on the Robinhood platform is simple, and with the additional buying power that comes from a Robinhood Gold account, earning additional returns can skyrocket your holdings and portfolio value in a matter of months.

Using the Robinhood app on a phone next to a laptop

“Gold” on Robinhood can be used for fractional shares, limit orders, and market orders. However, crypto assets exist separately from your Robinhood Gold account and don’t share in the same capacity for extended leverage.

This is perhaps a good thing for many traders on the Robinhood app though. Because of the limited interactivity of crypto holdings on the platform, many crypto traders who use Robinhood for their holdings are long-term holders or novice cryptocurrency investors. Bringing leverage into the mix can provide boosted profits, but it can also see your holdings decline rapidly during a market downturn—such as the one that struck at the beginning of the pandemic.

Utilizing smart fiscal decision-making processes will likely bring you back to Robinhood as a high-quality brokerage firm, even in the wake of these old sticking points. Robinhood remains at the forefront of the financial services industry and provides millions of investors with a quick and easy way to access the markets from options trading and leverage with Robinhood’s Gold program to cryptocurrencies and even the use of debit cards. The platform is evolving alongside users’ needs, and it remains a great place to park your investment capital.

This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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