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Robinhood is a U.S.-based crypto exchange platform. Since the year 2021, a significant increment has been observed in the no-commission online stock brokers and this is the reason why Robinhood was first established. This platform is developed for the trading of crypto assets but now a question arises, Can people day trade on Robinhood? To see the answer you need to read the article.
Introducing Robinhood
Robinhood is an online no-commission brokerage. For those who do not know what a broker is, a broker is a business that carries out financial transactions in the name of a customer. Robinhood was initially a stockbroker.
The job description of stockbrokers is to purchase and sell stocks following the instructions of their customers and normal people. People who have been involved in the stock market must be pretty much familiar with stockbrokers and their work.
Stockbrokers used to charge money known as commission charges for every single transaction made which tells us that only wealthy people were able to afford this service. Over the last few years, there has been an increment in the no-commissions online brokerages.
This type of online brokerage works on an advanced type of software to earn profit from the trades their customers make without directly charging them fees. This method lets people purchase stock without paying any sort of charges and makes it quite affordable for a larger number of people.
With every passing day, cryptocurrencies are becoming more popular, and more people are willing to get engaged in the crypto business. As these digital assets are highly volatile, more and more people want to opt to try and profit from its features. In contrast to it, direct trading of cryptocurrencies comes with some complexities. Some people find rearranging crypto wallets on various blockchains quite complicated, for them just a simple central application for trading is all they need.
Crypto exchange platforms can be of two categories, centralized and decentralized. The centralized exchange platforms like Coinbase already offer this functionality but then again it does not let trading stocks and similar financial stuff.
Here is the answer to your question about day trading on Robinhood. People can day trade on Robinhood simply as you do on stocks, ETFs, and other options. There is only one distinction: there are no trading hours specified for crypto assets. On the Robinhood platform, you can trade crypto any time of the day without any restrictions or limitations.
For any type of cryptocurrency trading, you can also use Genius trading platform and Coinbase.
Day Trading On Robinhood and Its Risks
There must be a huge line of day trading platforms but it is a must to understand that there are only a few day traders that make a profit constantly. For people who want to get rich within no time, day trading with Robinhood is not what they are looking for.
Day trading any service or good on any platform is inherently very risky work. Just one misjudge about the market and boom a big loss is on your way. For indulging yourself in day trading, it is a must to understand all the day trading strategies. While doing day trading, it is also necessary to stick to your strategy and shun all emotional decisions as cryptocurrency is highly volatile and price fluctuations never stop.
Another big risk of day trading is that the Robinhood application can be unavailable or inaccessible at critical times, mostly when the market is most unpredictable.
Back in 2021, the company was indicted of conspiracy with major player names in the financial market by users. This occurred due to thousands of users being banned from doing trades with profits amid the major instability of Gamestop (GME) and AMC prices.
All this caused a major loss to the company. Initially, the firm denied all the unlawful activities but then the United States regulators remained unmoved. In July 2021, Robinhood market Inc was ordered by the Financial Industry Regulatory Authority (FINRA) to pay $70 million in fines and penalties for the outages and wrongdoing with the clients.
When the outages take place, be it deliberate or unintentional, high impulsiveness leads to plenty of problems accessing people’s funds. This issue can occur in any centralized platform. To avoid this issue, you must use a decentralized platform for trading and exchange of crypto assets.
Conclusion
Robinhood works based on zero-commission as an online stock brokerage. As it rose in popularity, people started wondering if this platform can assist in performing day trading. In recent times, Robinhood has initiated crypto trading on its platform. On Robinhood, now people can trade a variety of cryptocurrencies without any time restrictions on their smartphones using the Robinhood application.
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