How Does Robinhood Work? Complete Guide

Quick Answer: Robinhood is a commission-free trading and investing platform that lets you buy and sell stocks, ETFs, options, futures, cryptocurrency, and prediction market event contracts — all in one app. It makes money primarily through payment for order flow (PFOF), interest on uninvested cash and margin loans, and a premium subscription called Robinhood Gold ($5/month). In 2026, Robinhood has expanded significantly beyond its original stock-trading roots, adding AI-powered investing tools (Cortex), agentic trading, prediction markets, a Gold credit card, retirement accounts with IRA matching, and banking services with $2B+ in deposits. Assets under custody have crossed $143.6 billion.

Key Takeaways

• Robinhood offers zero-commission trading for US stocks, ETFs, options, and cryptocurrency — it earns revenue through spreads, PFOF, margin interest, and Gold subscriptions
• In 2026, Robinhood has launched Agentic Trading (AI-powered automated execution), Cortex Assistant (real-time AI insights), and an Agentic Credit Card
• Prediction Markets — launched in 2024 and expanded aggressively in 2026 — let users trade event contracts on elections, sports, and economic data
• Robinhood Gold ($5/month) adds 3.35% APY on uninvested cash, 3% IRA contribution match, Morningstar research, Level II Nasdaq data, and margin investing
• The platform supports ~30 cryptocurrencies for US users including BTC, ETH, and SOL staking; European users can access perpetual futures with up to 7x leverage
• 24/5 trading — Robinhood allows trading certain stocks 24 hours a day, 5 days a week
• New March 2026 features include custodial accounts, trust accounts, the Robinhood Platinum Card, and Early Dividends (credits stock dividends up to one month early)

What Is Robinhood?

Robinhood Markets, Inc. (NASDAQ: HOOD) is a US-based financial technology company founded in 2013 by Vlad Tenev and Baiju Bhatt, launched publicly in 2015. It pioneered commission-free stock trading at a time when traditional brokerages charged $5–$10 per trade, democratizing market access for millions of first-time investors.

Blockchainreporter has covered Robinhood’s global expansion in depth, including Robinhood’s $200M Bitstamp acquisition which added 50+ regulatory licenses and global crypto infrastructure

By 2026, Robinhood has grown from a simple stock trading app into a comprehensive financial superapp serving tens of millions of users with assets under custody exceeding $143.6 billion. The platform now spans investing, retirement, banking, credit, crypto, and prediction markets — all in a single mobile-first interface.

Robinhood is primarily a US product (100% of its 2.2K monthly “how does Robinhood work” searches originate from the US) but has been expanding internationally. In December 2025, it announced acquisitions of Indonesian brokerage PT Buana Capital Sekuritas and digital asset trader PT Pedagang Aset Kripto, signaling emerging market expansion.

How Robinhood Works: The Basics

Step 1: Create an Account

• Download the Robinhood app (iOS or Android) or visit robinhood.com
• Sign up with your email address, Social Security Number, and basic identity information
• Must be 18+, a US resident with a valid SSN, and have a US bank account
• Account approval typically takes minutes to a few hours; some accounts require additional verification

Step 2: Fund Your Account

• Link your bank account via ACH transfer (free; 3–5 business days to settle)
• Instant deposits available up to certain limits ($1,000 for standard users; higher for Gold subscribers)
• Debit card funding also supported
• Crypto deposits accepted from external wallets

Step 3: Trade

• Browse stocks, ETFs, crypto, options, futures, and event contracts
• Select an asset, choose buy or sell, enter the amount in dollars (fractional shares from $1) or shares
• Choose order type: market (immediate execution) or limit (executes at your target price)
• Confirm the trade — most execute in milliseconds during market hours

Step 4: Monitor and Manage

• Track your portfolio value, individual positions, and performance in the app
• Set price alerts, review research, and access AI insights via Cortex
• Withdraw funds to your bank at any time (standard 3–5 days; instant withdrawal available for a fee)

What Can You Trade on Robinhood in 2026?

Stocks and ETFs

Robinhood offers commission-free trading for thousands of US-listed stocks and ETFs. Fractional shares allow you to buy as little as $1 worth of any stock, regardless of share price — critical for high-priced stocks like Amazon or Alphabet.

24/5 trading — Robinhood allows trading on certain stocks 24 hours a day, 5 days a week, enabling reaction to pre-market news and after-hours earnings releases.

Stock Tokens — European users can access ~2,000 tokenized versions of US stocks on blockchain rails, with settlement advantages over traditional equity markets.

Options

Options trading is available commission-free on Robinhood. Standard users pay no per-contract fees; Gold subscribers get discounted options commissions. The platform supports basic options strategies and is expanding to more complex multi-leg structures.

Index options — Robinhood added overnight index options in late 2025, expanding access to S&P 500 and Nasdaq index exposure beyond standard market hours.

Futures

Robinhood launched futures trading for US users, allowing exposure to commodity, financial, and index futures contracts. In late May 2026, Robinhood received approval to offer US perpetual futures — a major expansion previously available only to European users (with up to 7x leverage).

Cryptocurrency

Robinhood supports approximately 30 cryptocurrencies for US users, including:

• Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Dogecoin (DOGE), Litecoin (LTC)
• ETH and SOL staking available directly in the app
• Robinhood Crypto app — a separate app for users who want a crypto-focused experience with self-custody options
• Robinhood Chain — a Layer-2 blockchain launched by Robinhood for lower-fee crypto transfers

No explicit crypto commissions; Robinhood earns revenue through spread markups of approximately 0.5%–2.5% depending on asset liquidity and market conditions. Following the 2025 CLARITY Act, spreads on major coins have become more transparent and slightly narrower.

Robinhood EU has been selectively adding new tokens to its platform. In April 2025, Floki Inu was listed on Robinhood EU, marking a significant milestone for the meme coin’s retail distribution. On the custody side, blockchainreporter also reported that Robinhood significantly increased its Shiba Inu holdings while reducing its own Bitcoin assets — an unusual portfolio shift that drew attention from market analysts.

Note: Crypto-to-crypto trading is not available; all trades are in USD pairs. Crypto is non-marginable for US users.

Prediction Markets

One of Robinhood’s fastest-growing segments in 2026. Event contracts trade at $0.01–$1.00 increments and let users take positions on the outcomes of:

• US and international elections
• Economic data releases (CPI, jobs reports, Fed rate decisions)
• Sports outcomes (major professional sports leagues)
• Custom player contracts and combination bets

In January 2026, Robinhood closed its acquisition of MIAXdx through a joint venture with Susquehanna, creating a CFTC-licensed exchange and clearinghouse for futures and prediction market products. Q1 2026 saw record prediction market trading volumes.

blockchainreporter covered the original launch in detail: Robinhood unveiled its Prediction Markets platform in March 2025, initially offering contracts on Federal funds rate decisions and NCAA basketball tournaments before expanding to a broad range of events.

Robinhood Gold: Is It Worth It?

Robinhood Gold is a $5/month ($50/year) premium subscription that unlocks a suite of high-value features:

Break-even analysis: For a user with $10,000 in uninvested cash, the 3.35% APY alone generates ~$335/year — well above the $60/year cost. The 3% IRA match adds further value for retirement savers contributing $6,500/year (~$195 in free contributions). Most active users find Robinhood Gold cost-effective.

New 2026 Features

Agentic Trading (May 2026) — Robinhood’s most significant product launch of the year. Agentic Trading uses AI to automatically execute investment strategies on behalf of users based on goals, risk tolerance, and market conditions. This moves Robinhood from a “self-directed” platform toward automated wealth management — directly competing with robo-advisors like Betterment and Wealthfront while being embedded in the same app users already use for active trading.

Cortex Assistant — An evolution of the original Cortex Digests (used by ~1 million customers as of Q1 2026). The Cortex Assistant provides real-time AI-powered insights, custom indicators and scanners on Robinhood Legend, and personalized portfolio analysis. Available to Gold subscribers.

Agentic Credit Card — Announced alongside Agentic Trading. An AI-powered credit card that automatically manages rewards optimization and spending categories.

Robinhood Platinum Card (announced March 4, 2026) — A premium credit card tier above the Gold Card, with enhanced benefits for high-usage customers.

Custodial and Trust Accounts (March 2026) — Robinhood now offers custodial accounts (for minors/children’s investing, including “Trump Accounts”) and trust accounts, enabling estate and generational wealth planning.

Early Dividends (March 2026) — Credits eligible US stock dividends to your account up to one month before the official payment date. Available to Gold subscribers.

Robinhood Social — A trading community feature rolling out in 2026 that shows live, verified trades and authentic investor profiles, allowing users to follow real trade activity.

Robinhood Banking — Cash management accounts with $2B+ in deposits from 125,000+ funded customers as of Q1 2026.

How Robinhood Makes Money

Despite zero-commission trading, Robinhood is a profitable public company. Its revenue sources include:

1. Payment for Order Flow (PFOF) Robinhood routes customer orders to market makers (like Citadel Securities, Virtu) who pay Robinhood for the order flow. The market makers profit from the bid-ask spread on each trade. Regulators have scrutinized PFOF, and the 2025 CLARITY Act increased transparency requirements.

2. Crypto Spread Markups On crypto trades, Robinhood earns the difference between the best available market price and the price at which the user executes. Spreads range from 0.5% to 2.5% depending on asset liquidity.

3. Net Interest Revenue

• Interest on margin loans extended to Gold subscribers
• Interest earned on uninvested customer cash balances
• Net interest income is Robinhood’s largest revenue category in high-rate environments

4. Robinhood Gold Subscriptions $5/month × millions of Gold subscribers = significant recurring revenue. Gold adoption has grown steadily as more premium features launch.

5. Other Revenue

• Options and futures transaction-based revenue (regulatory fees passed through)
• Robinhood Gold Card interchange fees
• Prediction Markets trading commissions

Robinhood IRAs and Retirement Accounts

Robinhood offers Traditional IRA and Roth IRA accounts with a distinctive feature: contribution matching.

• 3% match on all new IRA contributions for Gold subscribers
• 1% match on IRA and 401(k) rollovers/transfers for Gold subscribers
• 1% match for standard (non-Gold) subscribers on new contributions

For a user maxing out the 2026 Roth IRA contribution limit of $7,000: 3% match = $210 in free money annually. This makes Robinhood one of the most competitive IRA platforms for younger investors.

IRA accounts support the same assets as regular brokerage accounts — stocks, ETFs, options, and now expanded alternative investments through Robinhood Ventures (access to private company equity).

Robinhood vs. Traditional Brokerages (2026)

Competition in the commission-free space is intensifying: Public, one of Robinhood’s closest US competitors, expanded internationally into the UK market in 2025 with plans to add ETFs, crypto, and alternative assets for European users.

Robinhood Fees Summary (2026)

The 2025 CLARITY Act forced Robinhood to make spread costs more transparent, resulting in slightly narrower spreads on major cryptocurrencies versus prior years.

Is Robinhood Safe?

SIPC Protection: Robinhood is a FINRA-registered broker-dealer. Cash and securities are protected by SIPC up to $500,000 ($250,000 for cash).

FDIC Insurance: Robinhood Cash Management and Banking deposits are FDIC-insured up to $2.25 million through a network of program banks.

Two-Factor Authentication (2FA): Supported and recommended for all accounts.

Crypto safety: Robinhood holds the majority of customer cryptocurrency in cold storage. Self-custody options are available through the Robinhood Crypto app and Robinhood Chain.

Regulatory history: Robinhood faced a $65M SEC fine in 2020 and a $70M FINRA fine in 2021 related to outages and misleading communications during the 2021 meme stock frenzy. The platform has significantly upgraded its infrastructure and compliance functions since then.