Robinhood is one of the recommended brokers on this site because I use the platform to trade stock and options commission-free.
Best Options Broker: Robinhood
- Robinhood is a good stock, ETF, crypto, and options trading app for beginners who want to start investing without paying lots of fees.
- Earn 4.9% APY on your cash with Robinhood Gold plus up to 3% match on all retirement contributions.
- If you’re a complete beginner then Robinhood is the cheapest and best brokerage for US residents.
To get started, Signup for a Robinhood Account and get a free stock if you use my referral link. You can start investing with as little as $100 if you want to grow your account and build up substantial savings. Check out my comprehensive Robinhood Review if you want to know more before you sign up.
However, Robinhood operates like a casino and it’s easy to make mistakes and blow up your trading account. When you start out with a small account, you need to follow certain rules to grow your account without losing all your money.
5 Tips for Growing a Small Robinhood Account
Here are some tips and strategies for growing a small Robinhood account.
1. Take Profits Quickly and Avoid Big Losses
The days of buy and hold for the long term don’t apply in modern-day markets. You must take your profits quickly and avoid huge losses. There is so much manipulation in the stock & crypto markets that you cannot assume your gains will hold up over time.
2. Trade Options to Grow Your Account Quickly
You can trade stocks & ETFs with a small account but it will take you much longer to grow your savings. That’s because you cannot buy as much equity with a small account.
Options, on the other hand, allow you to control a large number of shares with a small amount of capital. If your Robinhood account is under $500 or less then focus on options trading to grow your small account faster.
Once your Robinhood account grows then you can dabble into stocks & ETFs if you want.
3. Trade Popular Stocks & ETFs
Popular stocks and ETFs such as Tesla, Coinbase, Apple, SPY, and QQQ have made me the most money trading with a small account. They are volatile and move quickly, which allows you to turn a small amount of money into a much larger amount without a ton of extra risk.
Volume is key so pay attention to stocks & ETFs with lots of volume.
4. Hold The Majority of Your Balance in Cash
You need a lot of liquid cash to grow your small amount over time. I typically hold around 80 to 90% of my entire Robinhood account balance in cash to take advantage of new trades and reduce risk.
Cash is like oxygen and gives you flexibility whenever a new stock or options trade presents itself. If you invest the majority of your balance into stocks or crypto then you need to play the waiting game to make good returns.
Crypto markets are unpredictable and the S&P 500 returns around 10% annually over the long run. Invest in stocks & ETFs when your account is much larger but avoid these slow-growing investments when you have a small account.
5. Don’t Use Margin
Robinhood offers margin trading at ~5.5% interest for investors that want to multiply their gains by borrowing money. The problem is that you can blow up your account and end up owning Robinhood money if you use margin.
You don’t need margin trading to grow a small account. It adds extra risk and doesn’t guarantee better gains. Stick with a regular cash account and make profitable trades to grow your account steadily over time.
These tips will help your account grow slowly over time instead of quickly in the short run. Quick wins are great but you may blow up your account if you keep aiming for home runs.
You win with the running game, not the long bomb. Be prepared to take profits while minimizing your losses in trades.