Introduction
Robinhood is a popular trading platform that offers commission-free trades to its users. This has made it a popular choice for many traders who are looking to save on fees. However, Robinhood does charge fees for some transactions, including day trading. In this article, we will take a closer look at Robinhood day trading fees and how they work.
What is Day Trading?
Day trading is a trading strategy in which a trader buys and sells a stock within the same day. The goal of day trading is to take advantage of short-term price movements and make a profit. Day trading can be risky, especially for inexperienced traders.
Robinhood Day Trading Fees
Robinhood charges a $5 fee for each day trade made on its platform. A day trade is defined as buying and selling the same stock on the same day. If you make more than three day trades within a five-day period, Robinhood will label you as a pattern day trader.
Pattern Day Trading
If you are labeled as a pattern day trader, Robinhood will require you to maintain a minimum account balance of $25,000. If you do not meet this requirement, you will not be able to make any day trades until your account balance reaches $25,000.
Other Fees
In addition to day trading fees, Robinhood charges other fees for certain transactions. For example, if you trade options on Robinhood, you will be charged a $0.50 fee per contract. There are also fees for wire transfers, returned checks, and other transactions.
Tips for Avoiding Day Trading Fees
If you want to avoid day trading fees on Robinhood, there are a few strategies you can use. One strategy is to limit your day trading activity to no more than three trades within a five-day period. This will prevent you from being labeled as a pattern day trader. Another strategy is to use a different trading platform that does not charge day trading fees. There are several other platforms that offer commission-free trades, including Webull and TD Ameritrade.
Conclusion
In conclusion, Robinhood charges a $5 fee for each day trade made on its platform. If you make more than three day trades within a five-day period, you will be labeled as a pattern day trader and will be required to maintain a minimum account balance of $25,000. To avoid day trading fees, you can limit your day trading activity or use a different trading platform.
