Robinhood is a commission-free investing platform that lets you buy, trade and sell stocks.
When you first sign up, you can get your first stock for free just for joining.
Robinhood makes getting started as a new trader relatively easy. You can invest any amount
and trade in real-time to build a balanced portfolio. There is no minimum balance, meaning that
you can start trading with as little as a dollar. Also, you can be among the first to invest in new
companies before they ever start trading on public exchanges.
Your entire portfolio can be controlled from the app, meaning that your ability to trade is always
just in your pocket whenever you need it.
While this sounds great for casual trades, what about day trading? Day trading is basically
buying stocks in the morning and selling them later in the same day. People have been known
to be very successful day trading, but is Robinhood a good place to do it? Keep reading to find
Can You Day Trade On Robinhood?
The short answer is yes. There are some limitations in place, but for the most part, you can day
trade on Robinhood.
The only thing to consider is if you truly want to get involved in day trading. As mentioned
before, day trading is simply buying and selling stocks within the same day. This system takes
advantage of the small changes that a stock can make over the course of the day.
In working with such small margins, it tends to mean that you will be trading with larger amounts
of money than your typical casual investments. So over the course of the day, pennies’
differences in stock could mean massive wins or tragic losses.
It is the mission of Robinhood to make trading accessible and easy for everyone and anyone.
So long as you have a phone, you can trade. The name Robinhood no doubt was based on the
legendary figure of Robin Hood, who would steal from the rich and give to the poor. While
Robinhood obviously does not condone stealing, it does open up the possibilities to invest in
stocks to those who otherwise wouldn’t have had the means to.
They strive to keep their platform as simple as possible to make it easy for beginner traders to
just jump in.
Realistically, beginner traders will likely not be day trading. As a beginner, you’re better off
making some longer-term trades to learn. Through Robinhood, you can set up your portfolio to
hold your stokes and EFTs. With sticking to long-term trades, your risk will be less.
As you learn and gain more experience, you may decide to explore the option of day trading.
You could day trade on Robinhood, but this is where its beginner-friendly interface becomes a
problem. To day trade on Robinhood, you won’t have all the tools and data at your disposal that
other day traders use on a daily basis.
There are other tools you could use outside of Robinhood, such as Moomoo, that offer market
data for free. However, if you would prefer to keep all of your tradings to one app, you may need
to upgrade to Robinhood Gold. This subscription package unlocks Level II Market Data, which
you will need as a day trader.
Robinhood Limitations for Day Trading
When you first open your account, you are limited to three daily trades in a five-day period. As
day trading involves trading every day, sometimes multiple times a day, these limitations don’t
really allow you to day trade.
However, this limitation lifts once you have $25000 in your account. Specifically, you need to
have $25000 in your account the day previously. In general, this means that if you want to day
trade on a Wednesday, at the end of Tuesday, you need to have at least that amount in your
account. Once you cross that threshold, you have access to unlimited trades and can then
theoretically begin day trading.
As we mentioned before, the beginner nature of Robinhood doesn’t make it very effective for
day trading even once you unlock unlimited trades. You will need to upgrade your account to
Robinhood gold to at least have the tools you need for day trading. Alternately, there are free
tools available on the internet.
If you still want to day trade but you’re not partial to the platform, something like Webull offers
more tools for day trading as opposed to Robinhood.
Pattern Day Trading
The Finance Industry Regulatory Authority (FINRA) implemented a rule back in 2001 that is
meant to stop you from taking on too much risk. This rule will be in place across all apps that
you use, so keep that in mind if you plan on day trading.
The way it works is that your account will be flagged for pattern day trading if you make four or
more day trades within a five-day period. When you do this, it is possible that your account will
face further restrictions unless you meet some requirements.
On Robinhood, if you are flagged for pattern day trading, your account will be banned from
making any trades for ninety calendar days. You won’t need to worry about this restriction if you
meet the $25000 minimum that was mentioned in a previous section.
If you try to keep day trading on your account before it has an account value of $25000,
however, you will have even more restrictions piled on you. Again, the FINRA did this for your
protection and to keep you from getting in over your head. But it can get in the way of day
Thankfully, if you still want to do some light day trading below the $25000 threshold, the
Robinhood app does have a tracker so that you can see if you are close to being flagged as a
Pattern Day Trader. This does mean you’ll have to be more selective about your trades, but until
you reach the $25000 threshold, it’s a limitation you will be faced with on any app.
Day Trade Calls
Further, in the day trading limitation, you will receive a day trade call if you exceed your day
trading limit. This limit has more to do with the type of assets you are trading, such as highly
volatile stocks, as opposed to the number of trades.
If you are often trading high volatility stocks, you will likely burn through your day trading limit
more quickly. The reason for this is such stokes that experience big swings in value in a short
period of time are a higher risk for Robinhood.
If you want to increase your day trade limit, you simply need to deposit more money into your
account. The limit is not changed by selling your volatile stock.
You will receive a day trade call from Robinhood if you make a trade that goes over your
account’s limit. The call will require you to deposit more money into your account in order to
raise your trading limit. This deposit needs to be made within five business days, or you will
have a ninety-day trade ban placed on your account.
Once the day trade call is resolved, you don’t need to keep your deposited money in your
Robinhood account. You will need to wait the standard five-day settlement period, and then you
can withdraw your money once again.
After a day trade call has been resolved, you will be able to start trading again in the next
business day. If you plan on continuing to day trade with highly volatile stocks, it may be wise to
have extra money on hand in the case of a day trade call.
Robinhood, like many other trading platforms, offers free stock for signing up.
Robinhood will give you one free stock that will be valued anywhere between $2.50 to $200.
The stock you get will be based on a lottery, so you don’t know what you’ll be getting.
You can get additional free stock by referring a friend to Robinhood.
If you are interested in other platforms that offer free stock on sign-up, other options include
Webull (2 free stock up to $1850), Firstrade (2 free stock up to $400), and SoFi (1 free stock up
Other platforms have slightly different sign-up bonuses. M1Finance offers $30 when you deposit
$1000, and acorns have a free $10 bonus.
Robinhood is a beginner-friendly, simple, commission-free trading platform that makes it easy to
jump in when you are first learning to trade.
While you can day trade on Robinhood with just a standard account, you will be faced with
restrictions and a lack of tools that day traders need to make smart trades. Day trading is not
what Robinhood was made for, even if you can day trade on the platform.
If you are serious about day trading, you will need to either upgrade to Robinhood Gold, find
some exterior market tools, or find a new platform altogether.