Are you ready to make money on Robinhood? This comprehensive guide has got your back.
Robinhood is a popular online stock & crypto trading platform with 10.3 million active users as of Q3 2023. I wrote a comprehensive Robinhood review after using the platform for 4+ years if you’re curious about opening an account.
Whether you’re a seasoned pro or just starting, we’ll cut through the noise and give you the lowdown on strategies, tips, and tricks to make the most out of Robinhood.
No fluff, just straightforward insights to help you grow your wealth. Let’s get started!
What You’ll Need
Making money on Robinhood is easy but you’ll need a few key things to start raking in the cash fast! Here’s what you need to get started:
- Verified Robinhood Account (for USA and UK citizens only)
- Initial Deposit ($100 or more is a good start)
- Reliable internet connection
To get started, you’ll need to open a Robinhood account and deposit some money to start using the platform.
Robinhood doesn’t require a minimum amount to open an account. $100 is a good starting point for beginners but you can always deposit more money if you build up good savings.
Robinhood is only eligible for United States (USA) and United Kingdom (UK) residents at the moment but the company plans to expand across the globe in the future.
I’m an American citizen living in SE Asia and haven’t had any problems trading stocks or ETFs while living abroad. However, I had trouble opening a Robinhood crypto account due to living abroad.
If you’re a USA or UK citizen living abroad then use a VPN if you’re worried about logging in from a restricted location while you travel away from home.
How to Make Money on Robinhood: 5 Best Ways
1. Earn Interest on Your Cash
Robinhood users receive 1.5% APY interest on all uninvested cash. This number is below the Fed Fund rate so you aren’t making as much money as you would using a high-yield savings account.
However, there is a simple way to increase your annual interest yield by upgrading to Robinhood Gold.
Robinhood Gold costs $5 per month and you receive a 5% APY on your cash balance, which closely matches the Fed Fund rate.
2. Buy Stocks & ETFs
Trade popular stocks such as Tesla (TSLA), Nvidia (NVDA), and Meta (META) on Robinhood without paying any commissions. You need to buy stocks at a lower price and then sell them higher to make money.
You can trade fractional shares of your favorite stocks if you don’t have enough for a full share.
Robinhood also supports popular ETFs such as QQQ & SPY if you rather trade a group of stocks rather than just 1.
Holding onto your stocks over the long term is the easiest way to make money but you can daytrade or swing trade stocks/ETFs on Robinhood for quick profits.
Avoid the Pattern Day Trading Violation: If you have less than $25,000 in cash then you cannot make more than 4-day trades within a 5 business day period or you will trigger the Pattern Day Trading warning on Robinhood.
If you want to daytrade for quick profits on Robinhood then spread out your trades over time if you have less than $25,000.
3. Trade Options
Trading options give you leverage by controlling a larger amount of shares with a smaller initial investment.
4. Trade Crypto
Robinhood offers crypto trading for popular cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and other popular coins.
5. Stock lending Program
Robinhood pays you interest if you enable stock lending on your account. It’s a simple way to lend your shares to short sellers who will bet against your shares by selling them on the open market.
If you don’t want short sellers to borrow your shares then turn off stock lending in your account settings.
Has Anyone Gotten Rich from Robinhood?
Yes. Some Robinhood users have made hundreds of thousands or even millions of dollars using the platform. The WallStreetBets subreddit is full of people who made a lot of money either trading options or buying stocks on Robinhood.
However, studies show 90% of traders lose money and sometimes Robinhood users lose their entire life savings.
Robinhood has been criticized in the past for “gamifying” its platform to encourage risky trading behavior from its users. Many Robinhood users treat the platform more like a casino than a traditional investment app.
I’ve made thousands of dollars on Robinhood from just 1 trade but also lost thousands by making stupid careless mistakes.
I turned $500 into $2000 trading Tesla (TSLA) options in 2019 but could have made $40,000 if I held my options just 1 more day.
I also turned $300 into $3,000 trading Bed Bath & Beyond (BBBYQ) options only to lose nearly all of my investment due to greed.
After using Robinhood for over 4 years, I recommend these several safety tips to protect yourself from going broke on the platform:
- Start Small: Don’t put your entire life savings into Robinhood if you are a complete beginner. Start with a small amount to get your feet wet.
- Never Trade with More Than 10% of Your Capital: Going all-in can make you rich but can also blow up your Robinhood account. Risking only 10% for each trade/investment protects you from mistakes because you won’t make money on every trade
- Research, Research, Research: Become a student of the finance world and study so you become more skilled as a trader/investor. Read as much as you can and do research before placing any trades.
- Focus on 1 Trade at a Time: Don’t over-diversify and hold too many stocks/ETFs or options at once. Holding too many positions makes it difficult to keep track of everything and react when it’s time to cash in your profits. I prefer to focus on 1 trade at a time to help me nail a perfect setup.
How to Make Money on Robinhood with $100
Here are some tips on how to make money on Robinhood with $100:
- Start Small, Think Big: Begin with a conservative approach. Invest a portion of your $100 in a few well-researched stocks rather than spreading it too thin.
- Diversify Smartly: Allocate your funds across different sectors or industries to spread risk. Diversification can be key to managing potential losses.
- Research and Stay Informed: Understand the companies you’re investing in. Keep an eye on market trends, news, and financial reports to make informed decisions.
- Consider Fractional Shares: With limited funds, leverage the option to buy fractional shares. This allows you to invest in high-priced stocks with your $100.
- Long-Term Perspective: Think of your investment as a long-term commitment. Avoid making impulsive decisions based on short-term market fluctuations.
- Utilize Limit Orders: Set limit orders to control the price at which you buy or sell stocks. This helps prevent unexpected losses due to sudden market movements.
- Explore ETFs: Exchange-traded funds (ETFs) offer diversified exposure to a basket of stocks. They can be a cost-effective way to invest in various assets with a small budget.
- Take Advantage of Robinhood Features: Leverage tools like Robinhood’s news feed and analytical resources to enhance your understanding of the market and make informed choices.
- Reinvest Profits: As your investments grow, consider reinvesting any profits to compound your returns over time.
- Stay Disciplined: Define your investment goals and risk tolerance. Stick to your plan and avoid emotional decision-making, especially during market volatility.
Remember, investing always carries risks, and it’s crucial to approach it with careful consideration and a realistic mindset. These tips can serve as a starting point for making the most of your $100 on Robinhood.
How Much Money Can You Make on Robinhood?
It’s possible to earn life-changing money on Robinhood if you know what you are doing. For beginners, you can make between $10 to $1,000 per day with a small Robinhood account.
How Long Does It Take to Make Money on Robinhood?
You can start making money once your account is verified and your initial deposit is settled. Robinhood offers 24/7 trading on popular stocks & crypto so it’s easy to start making money right away.