Robinhood: Is the Famous Trading App Available in Canada?

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Searching about update on Robinhood Canada?

Robinhood is one of the most popular investment apps in America right now. Its ease of usage and zero commission model has made it extremely attractive among millennial investors. Robinhood added as much as three million new users during the first quarter of 2020. Its customer onboarding was so high that a lot of people have blamed them for the significant rise in day trading and the market upswings we have seen in recent times.

Robinhood’s massive appeal is easy to figure out. The no commission trading model ensures that you don’t have to pay any money as fees when you buy and sell stocks, ETFs, options, and cryptocurrencies. While Robinhood is a major draw in America, it’s not available everywhere else in the world. If you are wondering if Robinhood is available in Canada, this post has the answer for you. We will also take a look at some alternatives to Robinhood which can help you save up on trading fees. Let’s get started.

Robinhood: Is it available in Canada? What are its alternatives?

Is Robinhood available in Canada?

As great as Robinhood is, it isn’t available in Canada. Here’s what the terms of use of Robinhood say: “Robinhood is only licensed to sell securities in the United States (US), to US citizens and residents, and will not permit anyone who is not a legal US resident to purchase or sell securities through its application until such time as it is approved to engage in the securities and investment business by the appropriate regulator(s) of a foreign jurisdiction.”

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However, American citizens and legal residents are allowed to use Robinhood for trading in case they are outside US borders. In fact, American citizens and legal residents can use Robinhood all across the globe except Cuba, North Korea, Syria, Iran, and the Crimea region of Ukraine. Robinhood had plans to start in Australia in 2015 and in the United Kingdom in 2019. Both the plans were eventually scrapped or indefinitely postponed at best.

What is Robinhood?

Robinhood is one of the world’s most popular online trading and investment apps. It was launched in 2013 and its commission free model helps keep investor costs low and encourages them to invest more in the stocks. Investors can trade stocks, ETFs, options and even cryptocurrency without paying commissions. The app was originally developed for Apple (AAPL) – Get Report phones and tablets but has since launched an Android version as well. 

Robinhood was born in the wake of the 2008 Recession. The product was created to fulfil a desire to “democratize America’s financial system”. The brains behind Robinhood also wanted to provide a more modern platform for young but jaded investors. 

The app was named after the legendary outlaw Robinhood who stole from the rich and gave it to the poor”. The aim of the app was to involve the next generation into the act of investing at an earlier age. Because of its unique approach to investing, a lot of millennials have started using the low-to-no-fee app, especially the high-frequency traders.  

What are some key features of Robinhood?

Some key features of Robinhood include:

User-Friendly Mobile App: The wonderfully designed and easy to use Robinhood app is available on iPhone, Android devices and the Apple Watch as well. The clear and easy to use interface makes it very convenient for new users to get a hang of it. With just a few taps here and there, you will be all set up and ready to go. You can also trade using the web platform of Robinhood.

Commission-Free Trading: It offers access to free stock, ETF, options and cryptocurrency trades. The zero commission and trading fees model is especially fantastic for low volume investors who are not investing copious amounts of money.

No-Minimum Balance: When you use Robinhood, you can start trading with as little as $1. Robinhood also provides the option to buy parts of a share using fractional shares.

Robinhood Gold: This service offers access to research reports, analysis, margin trades, and more starting at a low monthly fee of $5. Users get Level II market data and instant deposits.

High-Yield Savings: Robinhood also provides access to a high yield savings account that pays interest on your uninvested cash. It also comes with its own debit card and is covered under  Federal Deposit Insurance Corporation (FDIC) insurance.

What are some drawbacks of Robinhood?

One of the major drawbacks of Robinhood is that it only provides a taxable account so it can’t be used for your 401(k) or IRA.

The platform does come with zero commissions, but it does charge minimal regulatory or trading activity fee on “sell” transactions.

Lastly, the app does not offer trading in bonds, previous metals, or mutual funds.

What are some Robinhood alternatives in Canada?

Here are two of the best alternatives for Robinhood in Canada:

Wealthsimple trade

Wealthsimple Trade is a wonderful investing app which allows for trading of thousands of stocks and ETFs listed on Canadian and U.S. exchanges.

Similar to Robinhood, the app does not charge a commission and has no minimum balance requirements.

Wealthsimple Trade: Salient features

User-Friendly Mobile App: The app is available on the App Store and Google Play where it’s highly rated by users (4.7/5 rating on iOS).

The interface of Wealthsimple trade is very clean and intuitive. New users can get a hang of it very easily and quickly,

Commission-Free Trades: Similar to Robinhood, you won’t have to pay any trading fees when you buy/sell stocks using Wealthsimple Trade. This is easily a saving of $5 to $10 per trade compared to other brokerage platforms.

Account Options: You have the option to open a taxable account. You can also trade with your RRSP or TFSA accounts.

$0 Account Minimum: Wealthsimple Trade doesn’t require a minimum amount to get started. You can start trading with as little as $1, same as Robinhood.

Security: Wealthsimple Trade accounts are insured under the Canadian Investor Protection Fund (CIPF) for up to $1 million if the custodial becomes bankrupt or insolvent. Wealthsimple Trade also provides high security bank level account encryption.

Wealthsimple Crypto: Wealthsimple also allows you to trade in cryptocurrency in the same way as Robinhood. The service is called Wealthsimple Crypto. The beta version of the platform currently offers Bitcoin and Ethereum for trade.

Promotion: New Wealthsimple Trade clients are rewarded with a $10 cash bonus if they deposit and trade at least $100 in stocks in the first 45 days.

Wealthsimple offers an automated investing service through its robo-advisor platform. When customers open an account with Wealthsimple, they get a $50 cash bonus. Wealthsimple also comes with a cash account that pays interests based on your balance.

Wealthsimple Trade: Drawbacks

One of the biggest drawbacks of Wealthsimple Trade is that it doesn’t allow you to trade in options, bonds, or mutual funds. The firm also doesn’t offer a margin account for its customers.

While you can open registered investment accounts (RRSP and TFSA), joint accounts, LIF, RRIF, RESP, and RDSP accounts are not available. It offers these other accounts through Wealthsimple Invest.

Another problem with Wealthsimple trade is that the trading option is only available on the mobile app and can’t be accessed from the web version. 

If you make trades that are denominated with American Dollars, you will also be charged a foreign currency exchange fee. Another problem is that the market data is delayed by 15 minutes.

Questrade

The largest independent discount broker platform of canada is Questrade. When you buy ETFs through Questrade, you aren’t charged any commission.

Questrade: Salient features

Multiple Trading Platforms: Questrade is available as a browser-based platform, a downloadable desktop platform, and a mobile app. Active traders also have the option to access advanced trading tools and market research.

Commission-Free ETFs: When you purchase ETFs on Questrade, you aren’t charged any commission. However, in case you sell ETFs, you will be charged trading fees. You will also be charged trading fees when you buy/sell stocks, mutual funds, options, and more.

Account Types: Questrade also offers trading within registered and non-registered accounts including RRSP, TFSA, RESP, LIRA, RRIF, LIF, corporate and margin accounts.

Available Securities: With Questrade, the world is your oyster and you can trade in ETFs, options, mutual funds, bonds, GICs, foreign exchange, precious metals, CFDs, and IPOs.

Market Data: A basic Questrade account will come with unlimited Level 1 snap quotes. Level 2 streaming data can be accessed for a small fee.

Security: Questrade holds membership of the CIPF and the Investment Industry Regulatory Organization of Canada (IIROC). In the case of the company’s bankruptcy/insolvency, customer accounts are protected by $10 million.

Promotion: New Questrade clients are also rewarded with $50 in free trades when they open an account. However, you can’t just trade with $1 like Wealthsimple and Robinhood, you need to have at least $1,000 in your account.

Questrade also has a managed investment service, referred to as Questwealth Portfolios.

Questrade: Drawbacks

Questrade only offers commission-free trading when you buy ETFs. If you are selling ETFs, there is a $4.95 to $9.95 fee per transaction. Mutual funds, stocks and options can cost as much as a whopping $9.95.

Questrade clients can only start trading when they have at least $1,000 deposited in their account.

Compared to Wealthsimple Trade, the Questrade app has a dreadful rating of 1.9/5 on the App Store.

Another problem with Questrade is that it also charges you to not trade. An inactivity fee of $24.95 applies every quarter if you did not place a trade in the previous quarter and your account balance falls below $1,000.

Robinhood Canada: FAQs

In which countries is Robinhood available?

Robinhood is only available for use for American citizens and legal residents. These users can also trade with Robinhood in most countries across the globe. However, citizens/legal residents of any other country can’t use Robinhood.

Is Wealthsimple available in Canada?

Wealthsimple is available in more countries than Robinhood. Its portfolios are available in Canada, the United States and the United Kingdom. However, their commission-free trading app, Wealthsimple Trade, is only available in Canada for Canadian citizens/permanent residents.

Can foreigners use Robinhood?

No, it’s only available for American citizens and legal residents of America. In order to use Robinhood, users need to valid U.S. Social Security Number, be a citizen or permanent resident, and have a legal U.S. residential address.

Is day trading legal in Canada?

Day trading is the practice of holding on to a stock for a day or less before selling it. While it is completely legal in Canada, it isn’t recommended for everyone. It’s a high risk strategy that should only be practiced by experienced and savvy traders who have cultivated a lot of experience in the stock market over the years.

What are some of the best Robinhood alternatives in Canada?

Sadly, you can’t use Robinhood in Canada. But there are a lot of great alternatives such as Wealthsimple Trade and Questrade. If you are an American and don’t want to use Robinhood, you can also use Webull, Interactive Brokers and E*TRADE.

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