How to Invest on Robinhood

Last Updated: January 31, 2023

This wikiHow will walk you step by step through downloading, and eventually making money using the Robinhood investing platform.

Part 1

Part 1 of 3:

Setting Up

1
Decide how you will use Robinhood. You can use the web based version which is compatible with most new web browsers, or you can get the app on the Apple App Store or Google Play Store.
2
Create an account. Once you have either the mobile app or decide to use the web based version, you will need to create an account. You need to come prepared with your driver’s license, Social Security number, address and birthday. They will also ask a few questions about your investing to make sure all the financials are legal and that you are not a majority stakeholder in any stock prior to your account.

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3
Add stocks you’re interested in to your watchlist. Once you create your account, you will be prompted to select some industries that you either like or would like to invest in. Select some industries or companies that you like or believe could make you money or feel comfortable investing in. You can always add more later, so don’t worry about your initial picks.
4
Add a bank account to your account. Either during the registration process or after you have selected the companies you want to invest in, you must add a bank account so that you can deposit money for investing as well as withdraw money if need be.
- If not set up during the “Funding” step of creating your account, you can go to the “Account” tab and then click “Banking.” Under your name you will see a button that says “Add an Account”. Upon clicking you will need to provide the routing number and account number for the account. It will make a two nominal charges to ensure that there is in fact money in the account and upon verification of your identity you will be ready to invest.
5
Deposit money. Once you have linked your bank account, you will need to deposit money into your account. Whether you decide you want to purchase a certain stock and then invest that much or would like to just deposit some extra money you have is completely up to you. In general, however, the greater the investment the greater the return.

Part 2

Part 2 of 3:

Researching Your Investment Options

1
Determine your investing goals/timeframe. Before really considering what stocks you should invest in, you need to think about when you might need or want the money you invest back.
- If you only have money for the weekend, then maybe you’re better off going to the casino. If you are in the market for mid to long term investing, however, the stock market may be right for you. If you are in it for the long haul, then maybe a mutual fund or IRA is best. If you only have a couple months then maybe Apple or another tech stock is a worthy buy. It all depends on the market when you start.
2
Select stocks from your watchlist that you believe are a worthy investment. Take a look at your watchlist as well as the “People Also Bought” section and the popular lists to see what stocks are priced where.
- If you see that Microsoft is at a 52-week high, then maybe wait for it to become a little cheaper. By the same token, if a stock is at a 52-week low, wait for it to have an upswing before investing. Some companies can have long periods of growth while others trade nearly horizontal (meaning that their periods of rising and falling are relatively short).
3
Review what professional stock analysts are saying. It is always helpful to take a look at what professional stock analysts are saying about a stock. If 100% of analysts say a stock in a sell, then maybe its best to look elsewhere.
4
Look at the average price paid by users. Look at the price that people paid, on average for the stock you are considering investing in. If it is below, it is often a better buy than to buy it above average, or even at peak.
- There are some circumstances where this could be profitable in the long run (recently AMD had several weeks of high percentage gains in a row) but often this is not the way to invest. Look for stocks that are at, near or below their average price paid by other users.
5
Take a look at their earnings. Its always important to look at how a company is doing in terms of sales or revenue. Robinhood provides two great ways to check this. You can look at a companies PE ratio (which stands for price earnings ratio) as well as their projected vs actual earnings per share. You can view both of these by scrolling down a stocks sale page.
6
Find out what the company’s current involvements are. By looking at and reading the articles that are posted about the company you can often find out their current proceedings. By looking at the articles you can get a good indication of how the stock will perform soon.
- For example, if the company is about to enter a large legal battle, it is often not a good idea to buy that stock, at least not after its price has dropped below its usual minimum and could then become profitable.

Part 3

Part 3 of 3:

Making Investments

1
Buy the stock. Once you have taken a look at the stock, the cost, the trends and spikes, the professional analysts takes on it, and deposited the funds to buy it. You can buy the stock. There are 4 types of orders, you will want to use market buy as it is the easiest to understand as a beginner. The easiest order type to be profitable as a beginner is to use a regular market order, execute a market order when you are ready to buy the stock.
2
Wait. Once you have purchased a stock, it is best to wait until the current trading day is over. If you buy and sell a stock the same day that is known as a day trade. If you day trade too often you will be flagged as a day trader and will no longer be able to execute trades. Wait until your stocks value has risen enough to make sense (typically 1~2% is good for higher value trades, a little more for lower) and then you will be ready to sell.
3
Sell the stock. Once your stocks price has risen and you are ready to sell, you can execute your sale using the same method that you purchased it with. The money will return to your account as withdraw able funds within a few days.
4
Repeat. Keep repeating the previous steps until you have made the money you wanted to or have to withdraw your funds!

Expert Q&A

Question

How do you use Robinhood effectively?

Andrew Lokenauth
Finance Executive
Andrew Lokenauth is a Finance Executive who has over 15 years of experience working on Wall St. and in Tech & Start-ups. Andrew helps management teams translate their financials into actionable business decisions. He has held positions at Goldman Sachs, Citi, and JPMorgan Asset Management. He is the founder of Fluent in Finance, a firm that provides resources to help others learn to build wealth, understand the importance of investing, create a healthy budget, strategize debt pay-off, develop a retirement roadmap, and create a personalized investing plan. His insights have been quoted in Forbes, TIME, Business Insider, Nasdaq, Yahoo Finance, BankRate, and U.S. News. Andrew has a Bachelor of Business Administration Degree (BBA), Accounting and Finance from Pace University.

Andrew Lokenauth

Finance Executive

Expert Answer

Take some time to educate yourself about the trades you're making, so you reduce your risk of losing money. In general, it's a good idea to start investing a small amount of money, so you lower your risk of losing money as a beginner. Try to split your money between 5-10 different investments, too—that way, you reduce your risk of losing all your money since you won't have all your eggs in one basket.
Question

What is the downside to Robinhood?

Andrew Lokenauth
Finance Executive
Andrew Lokenauth is a Finance Executive who has over 15 years of experience working on Wall St. and in Tech & Start-ups. Andrew helps management teams translate their financials into actionable business decisions. He has held positions at Goldman Sachs, Citi, and JPMorgan Asset Management. He is the founder of Fluent in Finance, a firm that provides resources to help others learn to build wealth, understand the importance of investing, create a healthy budget, strategize debt pay-off, develop a retirement roadmap, and create a personalized investing plan. His insights have been quoted in Forbes, TIME, Business Insider, Nasdaq, Yahoo Finance, BankRate, and U.S. News. Andrew has a Bachelor of Business Administration Degree (BBA), Accounting and Finance from Pace University.

Andrew Lokenauth

Finance Executive

Expert Answer

In the past, Robinhood had a lot of publicity issues because they would sell trades to brokerages—so, nothing is really free. The reason they could offer a commission for trading was because they would make money by selling information on their clients' trades to big hedges funds. If you do use Robin Hood, keep in mind that your information could be sold or shared with a third party.
Question

Step 3: selling the stock - it states "The money will return to your account as withdrawable funds within a few days" in those few days are we really waiting for someone to buy the stock I sold.

Donagan

Top Answerer

No. The stock has sold, but it takes a while for your bank to receive that money and make it available for you to use.