Have you ever wanted to get into day trading cryptocurrencies but been unsure of where and how to start? You may be wondering if you can day trade crypto on Robinhood. Well, if you’re familiar with the trading app Robinhood, you’re in luck!
Robinhood now allows users to buy and sell crypto on their platform. But is it really worth it to use Robinhood for day trading crypto? This guide will provide all the answers to decide if this is an avenue you want to pursue.
We’ll delve into everything from the types of cryptocurrencies that can be traded on Robinhood to the fees associated with day trading on their platform. By the end, you’ll be armed with enough information to decide whether this path is legitimate for your investing endeavors. Let’s dive in!
What Is Robinhood?
So what is Robinhood? It’s an investing app that lets you buy and sell stocks and cryptocurrency with zero commissions or fees—making it a great tool for day traders. It also provides a range of other features, like virtual trading, news and analysis, research, real-time market data, etc., that can help you make decisions and get the most out of your investments.
Robinhood supports over 7,500 equities and ETFs to trade in the U.S. market. It also supports crypto, with 16 popular cryptocurrencies available to trade now (with more on the way). The company is planning to launch options trading sometime in 2023 as well.
Importantly, Robinhood does not charge commissions for trades or other fees (apart from the fee-per-contract for options). So it’s a great option for traders who want to save on commissions—especially when day trading high volumes of shares or cryptos. Plus, it’s easy to use and has a slick mobile interface, making trading on the go a breeze!
Can You Day Trade Crypto on Robinhood?
The simple answer to this question is yes: you can day trade crypto on Robinhood. That being said, it’s important to understand the guidelines around trading crypto on Robinhood, as the platform has certain rules and restrictions you need to know.
The most important thing to know is that you can only trade cryptocurrencies with settled funds—meaning you need to wait a few days after buying or selling stocks before you can make another trade. This is due to regulations by the SEC and FINRA, which are designed to protect investors from taking on too much risk.
Additionally, there are limits on how much you can buy and sell daily. For example, if your account value is below $25,000, your total weekly crypto purchases cannot exceed $2,000 or 20% of the total account value (whichever is greater). On the other hand, if your account value is at or above $25,000, you can purchase up to $50,000 of cryptocurrency in any week.
Ultimately, trading crypto on Robinhood will require both knowledge and discipline. If you want to successfully day trade cryptocurrency on Robinhood in 2023, then make sure that you understand these rules and restrictions before getting started.
Crypto Trading on Robinhood
Yes, you can day trade crypto on Robinhood, but it’s important to understand how exactly this works and what features and tools Robinhood offers.
First, you can trade crypto on Robinhood: through crypto trading, which lets you buy and sell supported crypto assets.
Crypto trading on Robinhood
Crypto trading is offered on the Robinhood broker platform; the app lets you buy and sell cryptocurrency with a few clicks. You can make purchases using cash account funds. Trading fees are kept to a minimum to let you keep as much as possible of your gains (or losses).
Robinhood also has a lot of great tools for crypto traders. You can track prices in real time with its price alerts feature or use its Market Insights section to view market sentiment data from other users. The app also makes viewing your portfolio performance history easy over time.
If you’re interested in buying altcoins—not just Bitcoin or Ethereum—you’ll be glad to know that Robinhood supports a wide variety of coins so that you can diversify your investments even further.
What Are the Cryptocurrencies Available for Trading?
Cryptocurrencies have become a hot commodity, and if you’re looking to get in on the action, you may be wondering what cryptocurrencies are available for trading on Robinhood.
Well, luckily, Robinhood has made it easy for you. Currently, the platform supports 6 cryptos for trading—Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Dogecoin, and Ethereum Classic.
As of March 2023, Robinhood Crypto supports additional coins in selected states if you meet certain criteria. Additionally, if you live in these approved states and meet the criteria, you have access to more than 12 coins and tokens, including Bitcoin SV (BSV), Cardano (ADA), EOS (EOS), and Zcash (ZEC).
Here’s a quick overview of six of the most popular cryptos supported by Robinhood:
- Bitcoin: The first decentralized cryptocurrency was created in 2008. It is currently the world’s most valuable cryptocurrency by market cap.
- Ethereum: Launched in 2015 as an open-source platform that enables developers to build smart contracts using blockchain technology.
- Bitcoin Cash: Created due to a hard fork from Bitcoin in 2017 due to disagreements over how to scale the network.
- Litecoin: Launched in 2011 as an alternative to Bitcoin, offering faster transaction speeds than its predecessor.
- Dogecoin: Created as a ‘fun’ cryptocurrency with no real purpose aside from being used as a currency unit like other digital assets.
- Ethereum Classic: Created following another hard fork from Ethereum after the majority of its users voted against the reversal of malicious transactions on its blockchain network
What Are the Fees Involved?
Regarding day trading crypto on Robinhood, what are the fees involved? Well, one of the great things about Robinhood is that there are no commissions or fees for buying and selling stocks or ETFs. That said, you should know a few fees when day trading crypto.
Cryptocurrency Conversion Fee
First, when you buy or sell a cryptocurrency on Robinhood Crypto, you may be charged a fractional fee based on the size of the transaction. This fee ranges from 0.5% to 1.0%. It’s important to note that these fees only apply if you’re converting one currency into another—the conversion fee is waived if you’re trading one cryptocurrency for another.
Fortunately, at the time of this article, Robinhood charges no conversion fee on crypto trades.
Tips & Tricks for Successful Crypto Trading on Robinhood
Ready to get serious about crypto day trading on Robinhood? Before you dive into this exciting new way to trade digital currency, here are a few tips to help you get started:
- Do your research. Like any financial venture, crypto trading on Robinhood requires deep insights into the crypto markets, understanding trends, and conducting due diligence on your interest in tokens. Take time to learn the ins and outs of the platform before you start putting your money into it.
- Set realistic expectations. The bloom may be off the rose for Bitcoin and other popular digital currencies, but that doesn’t mean there aren’t opportunities for making profits with cryptocurrency day trading on Robinhood — but don’t expect to strike it rich overnight. Be mindful of risk versus reward and manage your expectations accordingly.
- Consider diversifying your portfolio. Remember that the crypto markets are extremely volatile, so mitigating your risk through diversification is key. Consider diversifying across different types of digital resources instead of just one or two coins/tokens, as well as across coins that fall within different market caps — from penny stocks all the way up to blue chips!
- Track performance & fees. Getting caught up in the day trading is easy without keeping track of costs. However, ensure you’re aware of any fees associated with your trades — especially given the volatile nature of cryptocurrency markets. Do your due diligence by crunching the numbers and tracking your performance over time to ensure you’re making money in the long run!
Crypto Day Trading Risks
Crypto-day trading isn’t always easy money. While you can profit if you know the market and time your trades perfectly, some risks are involved. Here are just a few things to consider when day trading crypto:
Volatility
Crypto is known for its volatility—prices can swing dramatically in a short amount of time. That’s why staying on top of the news, tech developments, and the industry is important to prepare for sudden fluctuations.
Risk Management
Managing your risk is essential for successful day trading. It’s a good idea to set stop-losses on each of your positions as soon as you open them so that if prices move against you, your losses will be limited – this will help to keep your portfolio balanced.
Lack of Regulation
The crypto market is largely unregulated, meaning there could be hidden risks with certain exchanges and tokens you may not know about. Intensive research is needed before investing in any crypto project – read through white papers and double-check facts with trusted sources to ensure the investment is secure.
Best Robinhood Cryptocurrency Alternatives
You may have heard of Robinhood, a commission-free stock and cryptocurrency trading app. But what about day trading crypto? Can you actually do that on Robinhood?
The short answer is that you can’t day trade crypto on the Robinhood platform. Rather than allowing users to trade in and out of assets multiple times within a day, Robinhood only allows you to buy, hold, and sell crypto assets. Some alternatives exist if you seek a platform that meets your day trading needs.
1. Binance
Binance is the world’s largest crypto exchange with many features, such as margin trading, spot trading, and leveraged tokens and derivatives. It also supports multiple languages, including English, Chinese, Korean, Spanish, Russian, and Turkish. One downside is that it does charge transaction fees for all trades, so it may not be ideal for day traders on a tight budget.
2. Kraken
Kraken is another popular cryptocurrency exchange that offers advanced features like margin trading, futures contracts, and dark pools for experienced traders. This alternative has low fees compared to other platforms ($5 per trade) and supports fiat currencies like USD/EUR/GBP. The downside is that it doesn’t offer a mobile app, so if you want to use Kraken while mobile, you can use their website in your mobile browser instead.
Suppose day trading cryptocurrency is something you’re interested in. In that case, these two exchanges should definitely be on your radar – both offer the ability to enter quickly and exit trades multiple times daily while reasonably affordable.
Can You Withdraw Crypto From Robinhood?
Yes, you can withdraw crypto from Robinhood. Withdrawing your crypto is easy and can be done in just a few steps. First, log into your Robinhood account and select ‘Transfer’ from the main menu. From there, you can select the ‘Withdraw Funds’ option and specify which type of withdrawal you want to make. If you want to withdraw crypto, select ‘Cryptocurrency Withdrawal.’
The next step is to specify which cryptocurrency you want to withdraw, including Bitcoin (BTC), Ethereum (Eth), Dogecoin (Doge), or any other that Robinhood may support at the time of your withdrawal. Then enter the wallet address where you want the cryptocurrency sent once it leaves Robinhood. You should also include a transaction fee when withdrawing—this fee goes directly to the miners responsible for processing each transaction. Once everything has been entered correctly, hit ‘Confirm’, and your withdrawal will be processed within 24 hours.
Remember that once they have been withdrawn, any cryptos cannot be deposited back into Robinhood—they must be sent from one external wallet address to another to move between wallets or exchanges.
Crypto vs. Stock Day Trading
You might wonder if the same rules apply to day-trading crypto as they apply to day-trading stocks. The short answer is yes and no. While the principles are generally the same, there are some differences in regulations, fees, and strategies.
Cryptocurrency Regulations
Crypto is not subject to the same regulations as stocks and options, so protecting yourself from market manipulation is more difficult. Additionally, you need to understand that there may be restrictions in some countries that prohibit trading cryptocurrencies like Bitcoin.
Accessibility and Fees
Robinhood Crypto has made it easier for individuals to trade cryptocurrencies with low transaction fees than other platforms. They also offer tools to help you make informed decisions about your trades, like candlestick charts and market data filters.
Strategies for Day Trading Crypto
Suppose you’re looking for an edge when day trading crypto on Robinhood; there are certain strategies you can use. For example, you should always look for market patterns before making trades – this can help you identify potential trends and make better decisions about when to buy or sell cryptocurrency. Additionally, familiarizing yourself with technical indicators and data analysis can give you an added edge when making trades on Robinhood Crypto.
Should You Day Trade on Robinhood Crypto?
Day trading on Robinhood Crypto has become increasingly popular due to its user-friendly platform and low fees. However, traders should be aware of the risks involved in trading crypto and the limitations imposed by the brokerage. Robinhood Financial LLC, the broker-dealer behind the Robinhood app, is regulated by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, ensuring the security of the trading platform.
One way to trade crypto on Robinhood without being flagged as a pattern day trader is to use limit orders. This allows traders to set a limit price at which they are willing to buy or sell a particular cryptocurrency. Robinhood does not offer a dedicated crypto account, so traders must use their brokerage account to trade crypto. Traders should also be aware of the limits on crypto trading, such as the $5,000 per day limit on deposits and the $50,000 per day limit on withdrawals.
Recap
While Robinhood is a decent platform for trading stocks, its offerings for crypto investors are limited. Traders can buy and sell a handful of cryptocurrencies, but the selection is not as robust as that offered by platforms like Coinbase. Robinhood recently announced that it would be adding more cryptocurrencies to its platform, but traders should be aware of the fees and limitations associated with trading on the platform.
Starting to trade crypto on Robinhood can be a great way to make informed financial decisions, but traders should always be aware of the risks involved. The always-open crypto market might be tempting, but traders should take the time to research the coins they are interested in and use limit orders instead of a market order to control their risk. The website’s editorial team recommends that traders read the reviews written by experts specializing in trading before using any trading platform or website without verification.
FAQ
You may have questions about day trading crypto on Robinhood, so let’s look at the FAQs that come up most often.
Can I trade crypto on Robinhood?
Yes, you can day trade crypto on Robinhood. The platform offers cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
What is the minimum deposit to get started?
The minimum deposit to get started day trading crypto on Robinhood is $1.00, but if you want to make larger trades, it’s recommended that you have more funds available.
Does Robinhood charge fees or commissions for cryptocurrency trades?
No, there are no fees or commissions for trading cryptocurrencies on Robinhood. This makes it a great option for those looking to get into day trading without being charged extra fees or commissions.
How long do my deposits take to show up in my account?
Most deposits appear in your account within minutes after being made, but it can occasionally take up to 24 hours for the funds to appear. It’s important to remember this when you’re making trades so that your funds will be available when needed.
Conclusion
Day trading crypto on Robinhood is a viable option for those who understand the risks and have the financial means to undertake such an endeavor. Trading crypto on Robinhood isn’t for everyone, but if you’re up for the challenge and have the capital to do it responsibly, you could see some impressive returns.
Do your homework and research the market thoroughly before taking on any new investments. Monitor your positions closely and know the fees for trading and transferring your funds. Remember that pattern day trading isn’t the only way to invest and buy crypto; you don’t have to risk your entire savings account.
Regardless of the route you take, having an understanding of the crypto market is essential to achieving success in this space.