The Robinhood app is one of the hottest investment apps in the United States right now.
In fact, the app added more than 3 million new users in the first quarter of 2020 and has been blamed by some* to be responsible for the significant rise in day trading and the market upswings we have seen in recent times.
Whatever the case is, it is easy to see why Robinhood has such a draw. The commission-free trading app means you do not have to shell out $$ in fees to buy and sell stocks, ETFs, options, and cryptocurrencies.
Is the app available for Canadians to trade? What are the alternative options to save on trading fees?
Is Robinhood Available in Canada?
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.– Robinhood
This does not stop US citizens and legal residents from using the app to trade outside of the United States.
Actually, the app is supported in all countries except Cuba, North Korea, Syria, Iran, and the Crimea region of Ukraine.
In 2015, Robinhood announced it was launching in Australia, and in 2019, it announced it was launching in the United Kingdom.
Both plans were later scrapped.
What is Robinhood?
Robinhood is a pioneer of commission-free investing in the United States and was founded by Vladmir Tenev and Baiju Bhatt.
The company offers a trading app and website where users can buy and sell stocks, Exchange-Traded Funds (ETFs), and options, and cryptocurrencies (Bitcoin, Ethereum, Dogecoin, etc.).
Robinhood is registered with the Securities and Exchange Commission, and is regulated by Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC).
Its user base currently exceeds 13 million customers.
One major reason for the exodus of retail investors to Robinhood is its no-commission trading offer.
Robinhood – Main Features
Some key features of Robinhood include:
User-Friendly Mobile App: The Robinhood app is available on iPhone, Android devices, and the Apple Watch. It has a streamlined interface that makes it easy for newbies to trade on the go using their smartphone and in just a few clicks.
Trading is also available through a web-based platform.
Commission-Free Trading: It offers access to free stock, ETF, options and cryptocurrency trades. This lack of trading fees or commissions is a significant saving for low-volume investors who are trading small amounts.
No-Minimum Balance: You can trade with whatever cash you have starting at $1. It also offers fractional shares so you can buy parts of a share.
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: Access to a high yield savings account that pays interest on your uninvested cash and comes with a debit card and Federal Deposit Insurance Corporation (FDIC) insurance.
Where Robinhood Falls Short
Robinhood only offers a taxable account so you can’t use it for your 401(k) or IRA.
While the platform is commission-free, you may come across a minimal regulatory or trading activity fee on “sell” transactions.
Lastly, the app does not offer trading in bonds, previous metals, or mutual funds.
Alternatives to Robinhood in Canada
There are some alternatives to Robinhood in Canada.
One option is Wealthsimple Trade, a zero-commission stock and ETF app launched by Canada’s most popular robo-advisor in 2019.
A second discount broker that Canadians can use to save on fees is Questrade.
Let’s dig in further to see how they compare.
1. Wealthsimple Trade
Wealthsimple Trade is an investing app for trading 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.
Some salient features of Wealthsimple Trade include:
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).
It’s clean and intuitive interface makes it easy for beginners to quickly learn how to place trades within minutes of joining.
Commission-Free Trades: You don’t pay a trading fee to buy or sell stocks and ETFs. This is easily a saving of $5 to $10 per trade compared to other brokerage platforms.
$0 Account Minimum: Open an account with as little as $1. There is no minimum deposit required to get started.
Security: Wealthsimple Trade accounts enjoy protection under the Canadian Investor Protection Fund (CIPF) up to $1 million in the even that their custodian becomes insolvent.
The app also uses bank-level encryption to protect your account.
Wealthsimple Crypto: You can sign-up to trade cryptocurrencies using Wealthsimple Crypto. Bitcoin and Ethereum are currently available to trade on a beta-basis.
Promotion: New Wealthsimple Trade clients get a $10 cash bonus after depositing and trading at least $100 in stocks within their first 45 days.
The company also offers a cash account that pays interest on your balance.
Where Wealthsimple Trade Falls Short
You can’t trade options, bonds, or mutual funds on the platform, and they don’t offer a margin account.
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.
Trading is only available using their mobile app, there’s no web interface for laptops.
A foreign currency exchange fee applies when you make USD-denominated trades, and the market data provided is delayed by 15 minutes.
Questrade is Canada’s largest independent discount broker platform. It offers commission-free trading when you purchase ETFs.
The key features of Questrade include:
Multiple Trading Platforms: It has a browser-based platform, a downloadable desktop platform, and a mobile app. Also, active traders can access advanced trading tools and market research.
Commission-Free ETFs: No trading commissions apply when you purchase ETFs. However, trading fees apply when you sell ETFs, and when you buy and sell stocks, mutual funds, options, and more.
Account Types: Questrade offers trading inside registered and non-registered accounts including RRSP, TFSA, RESP, LIRA, RRIF, LIF, corporate and margin accounts.
Available Securities: You can trade stocks, ETFs, options, mutual funds, bonds, GICs, foreign exchange, precious metals, CFDs, and IPOs.
Market Data: A basic Questrade account offers unlimited Level 1 snap quotes. For a fee, you can also access Level 1 and 2 streaming data.
Security: Questrade is a member of CIPF and the Investment Industry Regulatory Organization of Canada (IIROC). Customer accounts are protected with up to $10 million if the company goes bankrupt.
Promotion: New Questrade clients receive $50 in free trades when you open an account. To trade, you need a minimum account balance of $1,000.
Questrade also has a managed investment service, referred to as Questwealth Portfolios.
Where Questrade Falls Short
It 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. Stocks, mutual funds and options cost up to $9.95 per trade.
Questrade clients can only start trading when they have at least $1,000 deposited in their account.
Compared to Wealthsimple Trade, the Questrade app is poorly rated at 1.9/5 on the App Store.
An inactivity fee of $24.95 applies every quarter if you did not place a trade in the previous quarter and your account balance is less than $1,000.
Wealthsimple vs. Robinhood vs. Questrade
Below is a quick snapshot of how Wealthsimple, Robinhood and Questrade compare.
$0 when buying; up to $9.95/trade when selling
$4.95 to $9.95/trade
1.5%x currency exchange fee for USD trades
$0 for options; $5 monthly fee for access to Robinhood Gold and $1,000 of margin for 30 days
Can avoid the currency exchange by holding USD; streaming data costs $$; options cost $9.95/contract; precious metals are $19.95 USD/trade; ECN fees may apply to liquidity trades; $24.95 quarterly inactivity fee
Stocks, ETFs, cash account via Wealthsimple Cash; cryptocurrency via Wealthsimple Crypto
Stocks, ETFs, options; cryptocurrency via Robinhood Crypto
Stocks, ETFs, options, mutual funds, bonds, CFDs, IPOs, international equities, GICs, FX
RRSP, TFSA, and personal non-registered
Personal taxable accounts; margin accounts
RRSP, TFSA, RESP, LIRA, RIF, margin, corporate
Mobile trading platform
Yes, highly rated
Market research tools
Versatile; level II market data available via Gold account
Versatile; streaming data (level I&II) cost extra $$
CIPF protection up to $1 million; state-of-the art security; 2FA
SIPC protection up to $500,000; 2FA
CIPF protection; additional insurance up to $10 million, DIGICERT encryption
$10 cash bonus when you fund your account and trade at least $100 in stocks within 45 days of opening it
$50 in free trades when you open an account and deposit at least $1,000
Other accounts offered
Online wealth management service through Wealthsimple Invest; socially responsible investing, Halal investing, and VIP accounts
Cash management account
Managed investing service via Questwealth Portfolios; socially responsible investing
Robinhood Canada Alternatives FAQ
The app is only available to US citizens and legal residents who can use the app to trade even while outside of the U.S. in most countries. Here are the countries where it’s not available to US citizens.
Wealthsimple portfolios are available in Canada, the United States and the United Kingdom. Their commission-free trading app, Wealthsimple Trade, is only available in Canada.
To use Robinhood, you must have a valid U.S. Social Security Number, be a citizen or permanent resident, and have a legal U.S. residential address.
Day trading involves holding a stock or security for one day or less before selling it. Day trading is legal in Canada, but that doesn’t mean you should do it.
Day trading is a high-risk trading strategy that can cause you to lose a lot of money… including your shirt.
In Canada, you can use Wealthsimple Trade and Questrade. In the U.S., options include E*TRADE, Interactive Brokers and Webull.
Have you tried Wealthsimple Trade or Questrade? Tell us about your experiences in the comments.
Robinhood Canada: Investing Apps Like Robinhood in Canada
Is Robinhood available in Canada? Learn about commission-free trading app alternatives including Wealthsimple Trade and Questrade plus a Wealthsimple vs Robinhood comparison.