Is Robinhood Good For Beginner Investors?

Discover what makes Robinhood good for beginners, how it got its name and the pros and cons of joining the community.

By Thorsten Steins
Edited by Taj Schlebusch

Published April 16, 2021.

Robinhood is an App that is very popular among beginners who have just started trading stocks. The name has been chosen because it sees itself as a counterweight to the hedge funds that rule the stock trading market, similar to how the character, Robinhood, took money from the rich to give back to the poor. The idea behind this platform is to give investors with small budgets the opportunity to work together and have more success as a team.

In the past, this app had several - quite inspiring - successes which lead to a fast-growing community of stock traders. Nevertheless, there are also several disadvantages. One of the main problems is that the success of this app inspired beginners to invest more - if not all - of their reserves, and because beginners generally lack knowledge, there is a high risk of losing all of it. For example, although Robinhood is conceived for beginners, it works with leverages that are not always easy to understand.

Another disadvantage is the fact that Robinhood decides which stocks can be bought through the app, somewhat limiting the users. I would suggest not joining the Robinhood community without a certain amount of understanding of how stock trading works.