5 red flags on the use of Robinhood for the trading of actions, according to experts
Here is what you need to know about the popular brokerage service.
Depending on the way you manage your Finances and investments , there is a good chance that you heard something on Robinhood. The application has skyrocketed in popularity as an easy way to buy and sell shares directly from your phone without paying a commission. But while service fans say that he has democratized these types of transactions for the public, there are still some parts of the service that could take a break from people. Read the rest to discover the red flags on the use of Robinhood for the trading of actions, according to the experts.
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1 It can be unreliable.
Part of the attraction of Robinhood is the speed with which it allows users to place the purchase orders. Unfortunately, this might not always work as announced.
"Robinhood had to face several failures and technical problems in the past, leaving users unable to access their accounts or execute transactions during critical market moments," said Ryan Lei , A old trader and founder of PADPCB. "This can cause significant financial losses for merchants who rely on the platform."
2 This can cause more important losses than traditional accounts.
Most people are attracted to robination by the ease with which he can make it to start buying and selling stocks while doing a profit, let's hope. But experts warn that an element of the application could eventually injure you more than you plan. AE0FCC31AE342FD3A1346EBB1F342FCB
"One of the greatest risks of the use of Robinhood is the so-called margin trading, which allows users to borrow money from their brokerage account and to engage in trading to effect lever", " Harry Turner , financial expert and founder of The sovereign investor , recount Better life . "The lever amplifies both gains and losses, which means that even small market fluctuations can have a drastic impact on the balance of your account. As such, margin trading can make you lose more 'Money that you initially invested. "
"The other risks associated with margin trading include higher costs of interest payments as well as all the reimbursement costs of missing loans," he adds.
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3 It may not be the best long-term trading platform.
Thanks to its relatively easy to use features, Robinhood is popular among many traders for the first time who are barely starting to develop their portfolios. However, it might not be best suited to anyone looking to pass its investment strategy to the next level.
"I would say that many people generally" exceed "robination as a platform," explains Robert Farrington , founder and CEO of The college investor . "As it is first mobile, it does not offer all types of account and investments are limited. So, if you build an account there, you may find yourself exceeding the options they offer. ""
Others note its limited features to consult new opportunities. "Robinhood's user -friendly interface is designed for beginners, but it does not have advanced research tools and mapping capabilities found in other trading platforms. This can hinder the ability of users to make informed decisions And to develop a robust trading strategy, "said Lei.
And unfortunately, although the platform works on a commission without a commission, it will always cost you to take your funds elsewhere. "When you go to a large full -service company, Robinhood will charge you $ 75 to leave," explains Farrington.
4 Its structure can create problems when buying actions.
In addition to its ease of use, customers are also attracted to Robinhood for its committee -free structure, which can maximize profits and encourage more trades. But experts point out that this configuration can also create more important potential problems for users at the end.
"Robinhood earns money thanks to the payment of the order flow, a practice in which he receives the payment of market manufacturers to direct the user professions," explains Lei. "This can create a conflict of interest and raise questions to find out if users get the best possible execution prices for their businesses."
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5 Help may not be easily available if you have problems.
Trading of traditional actions is generally delivered with a full support network of a company or at least the expertise of a broker who can examine the problems you encounter. But if you ever have a problem when using Robinhood, you could be left a little longer than you want.
"Robinhood customer support is mainly carried out by e-mail or integrated messaging, which can lead to slow response times and a lack of real-time assistance in critical commercial situations", explains Lei.
Best Life offers the most up -to -date financial information for high -level experts and latest news and research, but our content is not supposed to replace professional advice. Regarding the money you spend, save or invest, always consult your financial advisor directly.
