5 things not to do in the Robinhood app for stock trading

With the ongoing pandemic, the surge of trading apps on the market has taken everyone by surprise. Lots of ‘Millennial’ traders are joining the race to deal with the economic turndown. Also, the usage of mobile phones for trading the stock market has swiftly gained recognition due to the efficiency and ease of placing orders. 

At present, there are a lot of apps available for trading offering full 360-degree experience right from advanced order types to a multitude of sophisticated trading tools. Based out of California, Robinhood is one such stock brokerage app popular with millennials — that allows customers to buy and sell the US stocks, options, ETFs, and cryptocurrencies but with zero commission.

How Robinhood was born?

The story of Robinhood begins almost a decade ago at Stanford, where Baiju and Vlad met as roommates and classmates. Soon after graduation, they built two finance companies in New York, selling trading software to hedge funds. 

However, they realised that big Wall Street firms pay effectively nothing to trade stocks, while most Americans are charged up to $ 10 (approx €9) for every trade. As a result, they decided to build products to democratise finance for all, not just the wealthy. 

A couple of years later, they moved back to California and built Robinhood. The trading platform offers commission-free trading in one, user-friendly platform. To date, the company has raised $ 1.2 billion (approx €1.07 billion) at a valuation of over $ 8 billion (approx €7.1 billion)

20-year-old committed suicide due to app glitch!

Recently, the company was in headlines after Alexander Kearns, a 20-year-old student at the University of Nebraska committed suicide on June 12, after he saw a negative cash balance of $ 730,000 on his account. According to his family, Alexander was misled by the app’s interface when he opened the app. It seems the negative balance was the result of a glitch inside the app. 

Making necessary changes!

Post the unfortunate event, the founders of the trading app have said that they will introduce changes and hire an education specialist to help users navigate through trading strategies. Furthermore, the company is also making changes in its product including improving app messages and emails sent to customers and more. According to the company, the changes will take time to go official. 

As we all know, entering the stock market is more like a gamble! And while the app is venturing in the US, it’s still not live in the UK and Europe. But if you’re using the app and are looking for a quick and easy way to get rich, there are some common mistakes that first-time investors have to be aware of in the Robinhood app before they try their hand at picking stocks. 

Below are the 5 things you should remember:

#1 Don’t buy stocks realtime!

Avoid buying stocks in real-time through the app! Why? Because when you buy it, you often don’t get the exact price since it takes time to enter and process the order. Instead, you can opt for “Order Types”, where you get different options including Limit Order, Stop Limit Order, Stop Loss, and Limit Order. 

#2 Don’t forget to deposit money well in advance!

Before buying your favourite stock, make sure you deposit money in your Robinhood account so that you can catch a great deal once it appears. Because time and stocks wait for none. Unless you have Robinhood Instant, it will take 3 days to get your money credited to your app from the bank account. 

#3 Don’t rush!

Patience is a virtue that is vital to success in trading and of course the hardest things for beginner traders. One of the biggest mistakes in stock market trading is getting out or getting in too early. In case you see a growing potential of your stock, don’t be in a hurry to sell it and lose money even before gaining. 

#4 Avoid checking stocks every day!

Just like social media, checking stocks can be addictive! Again, it’s not necessarily good for you, instead, you can allot on other things as well. Since the fluctuations are normal in the stock market, there is no reason to get freaked out. One needs to know, the stock price doesn’t change based on how many times you look at it. Subscribe for news alerts that involve the companies you hold stock in. Also, if you don’t want your stock to dip below a certain price, set up ‘Stop Loss’ order in the Robinhood app.

#5 Stop relying on one platform for stock research!

If you are planning to research on stock make sure you have at least two to three websites/apps. Just don’t rely on one (Robinhood). Stock research can help you analyse the company and decide whether it’s worth buying or not!

Main image credits: Robinhood

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