What is Robinhood?

Robinhood is a brokerage offering commission free trading. This is a big deal. Average online brokers charge between $4 and $12 per trade. These fees can really eat into your profits — especially for new investors with smaller portfolios.

In addition to the usual equity trades, Robinhood also offers services for options and crypto currencies with plans to continue expanding. Limited after hours trading is included, too! The zero-fee structure and multitude of offerings make Robinhood an attractive investment platform indeed.

Is it really free?

Yes, all trades are really commission free. You will pay no fees whatsoever to Robinhood.

Then how does Robinhood make money?

Well, several ways actually. That little bit of cash lying around while you wait for the right stock to buy? Similar to a bank, Robinhood will invest that cash for their own profit. This is the most widely reported tactic.

But… the above method is likely no more than a drop in the bucket for Robinhood. The real money is made through a process called Payment for Order Flow. This is when a brokerage sells transaction information in real time to high frequency trading firms. There is a lot of controversy around the issue as a whole. Interestingly, it was none other than Bernie Madoff that came up with the idea in the first place. Few liked the idea in principal, but none could resist the profitable temptation for long. Today, most brokerages all partake in the practice.

I was speaking with a professor just the other day who declared, “Robinhood is ripping all the millennials off.” After a short discourse, his real problem was not with Robinhood specifically, but with brokerages receiving payment for order flow. TD Ameritrade, Charles Schwab, and Vanguard all participate in this practice, just to name a few. If, like my professor, this is a deal breaker for you Interactive Brokers could be an alternative. In my opinion, order flow agreements should only enter the equation if you regularly buy thousands of shares at a time.

The final way Robinhood generates cash is with paid margin accounts. For a flat monthly fee, investors can receive up to 2x their normal buying power.

$2000 in margin for $10/month

Is Robinhood safe?

I’m going to consider “safe” in this context as the likelihood Robinhood is engaging in illegal activity. Obviously, all investments come with an amount of market risk.

I have no special insight, but I do believe Robinhood to be safe. I have had money invested with them since 2016 and have successfully sold, bought, deposited, and withdrawn cash with no surprises. Robinhood is also a member of FINRA, insured under SIPC. What’s that alphabet soup mean for you? Essentially, the Securities Investor Protection Corporation, a non-profit, has your back (up to $500,000). It’s very similar to the FDIC insurance from banks that people are more acquainted with. If Robinhood goes bankrupt for any reason, SIPC will kick in and ensure you receive your shares. There is one important difference, however. SIPC does not protect against illegal activity. If Robinhood knowingly defrauds investors, SIPC insurance is not applicable. While I believe the risk for this is near-zero, it’s a fact worth knowing.

Robinhood’s investors include Kleiner Perkins, Google Ventures, and even Snoop Dogg. So, if the executives take the money and run off to a non-extradition country, at least you’ll be in good company.

User Experience

Robinhood’s interface, while beautiful, lacks the more thorough information veteran investors are likely accustomed to. This can be easily remedied by researching on another platform and trading with Robinhood.

Don’t expect to be able to fine tune the graph either. Only the presets are available and it’s impossible to overlay multiple stocks, or other indicators to identify fundamentals like death crosses.

Customer support is also lacking. There is no phone number to call, no online chatroom to help. Support is restricted solely to email and can reportedly be a little on the slow side (Reddit link to unhappy customer). I have not had the need to contact them yet, so have no first hand experience to report.

What’s this buzz around cash management?

Recently, RH announced that a Cash Management service will be coming soon. They expect to offer 3% interest on the cash balance in your trading account and let you spend it via a debit card just like a regular checking account.

There is a pretty significant catch, however. Unlike a regular bank, these cash management accounts are not going to be FDIC insured. Originally, Robinhood claimed SIPC protection would apply, but SIPC President Stephen Harbeck quickly refuted their claim.

Until more information is released, it’s impossible to do more than speculate. For now, I’d recommend sticking with a high interest online savings account for collecting risk-free returns and using Robinhood for equities.

Time to take the plunge!

Overall, it’s a great platform for beginning investors or smaller balances that would otherwise be eaten away by trading fees. The compounding nature of investments means the best time to start was yesterday, but the second best time is today.

If you’ve decided to pull the trigger and invest with Robinhood, please consider using this referral link. We’ll both receive a free stock. I would never recommend a product I don’t use myself. I rely on Robinhood for the majority of my stock and options trading.

Still have questions? What’s your favorite brokerage? Let me know in the comments!

What is QuantConnect? A review.

Anyone with a strong interest in finance will eventually hear of “quants” — the mystical math prodigies behind many of the trades on Wall Street today. While Quantitative Analysts come in a few varieties, I find algorithmic traders the most exciting. They’re responsible for crafting sophisticated computer programs to automatically trade equities, currencies, futures, and really anything and everything else that can turn a profit. Traditionally, having the resources to trade live — with real money — has been restricted to multi-million (or billion) dollar hedge funds. QuantConnect is a platform that allows anyone to create live trading algorithms.

This means you can connect your Interactive Brokers/E-Trade/Gdax/whatever account to QuantConnect and build a simple program to trade on your behalf. Hell, you might create the next cutting-edge innovation, license it to a company for millions, and retire in the Caribbean.

So, without further ado: a hands on review on QuantConnect.


Three languages are available: C#, Python, and F#

The online IDE is intuitive. Upon starting an algorithm, three programming options are available: C#, Python, and F#. Initially, I felt the abundance of language options to be frivolous, but now I can’t imagine any other way. Find a great library in C# you’d like to add? Want to code some ML with SKLearn in Python? No problem. What really stands out is the ability to add multiple files. This is an enormous help when developing complex algorithms or importing third party libraries. It replicates a more natural coding environment without the usual limitations of an online interface.

Must-haves such as syntax highlighting and auto complete work brilliantly. Most of the time the prompt is automatic. Just like other IDEs, it can be manually invoked with Ctrl + Space.

Autocomplete works as expected

Still not a fan of developing in a web browser? Since the framework that runs QC is open source, it’s a breeze to get it running locally so you can use visual studio (or vim) — which is a good thing, because you’ll probably need it. As capable as the system is, it falls short on debugging. There is no interactive debugger, so you’ll be stuck relying on error messages that look like this:

BacktestingRealTimeHandler.Run(): There was an error in a
scheduled event EveryDay: SPY: 10 min after MarketOpen. The error was
Python.Runtime.PythonException: NameError : global name 'foobar' is not

Notice something missing? There’s no line number! Leaving you stuck guessing exactly where the flaw lies. I should mention, this is only a problem with runtime errors. Any problems during compilation will be flagged and the line number identified.

Algorithms can be shared with email or account name

Collaborating with a friend? QC makes this a breeze. Simply hit share and you can work in tandem. Want to rename, move, or delete a project? All actions are as expected.

Overall, the interface does it’s job very well.


There’s two important aspects to “speed” during algorithm development. The time a backtest takes to complete, and the delay before receiving live data.

Backtesting speed is comparable to any other platform. You might expect to see large differences between an algorithm programmed in C# and an algorithm in Python. Empirical evidence suggests this is not the case. Runtimes were nearly identical across languages.

Language Average Time
C# 6.183333333
Python 6.76666666

Occasionally, there has been a wait time before starting a backtest; indicated in the results chart. This can be very annoying when trying to meet a deadline — but in my experience it’s a rare enough occurrence to not be a concern.

Results tab displays a wait time of 12

QuantConnect advertises co-located servers with minimal delay. A post from the founder on Reddit suggests speeds between 20 and 100ms. This may not be directly competitive with Wall Street firms, but it far exceeds any competition available for personal accounts. The delay is enough to be prohibitive for very high frequency trades, but is still impressive. Note that we took QuantConnect on their word here. These times were not tested.


Small but mighty! In my experience, searching alone will seldom solve your problem — but people are happy to help. Posting a specific question on the forum typically yields a quick response. The QuantConnect team is also very active and helpful. They go as far as to offer free code reviews to interested users.


If you’re only looking for a research platform, the price can be free. However, if you have absolutely no interest in live trading, there are plenty of alternatives. To take advantage of where QC really excels, the price starts at $20/month. Depending on the size of your portfolio, that may sound too good to be true, or a little steep. However, I’m confident even rather small portfolios will more than make up for the price with a good algorithm.

The real expense happens if you want to run multiple algorithms simultaneously. Each algorithm runs on its own, isolated VPS. This creates large reliability and performance benefits, but comes at a cost. Every additional algorithm is an added $10.

Bonus features

One unique feature QC has to offer is version control. Every time an algorithm is backtested, a snapshot is created. This allows for development without worry — knowing you can revert to a previous version at any time.


Quantopian, once a fierce competitor, has suspended all live trading. It is still a capable research platform, if you’re willing to forgo trading with real money.

IBridgePy is a self-hosted solution compatible with Interactive Brokers.

Most other alternatives are inaccessible to the average investor and targeted towards hedge funds. AlgoTrader is a prime example.

Bottom Line

QuantConnect is not without its problems — no platform is. However, it far exceeds anything offered by the competition and is improving everyday. At a competitive price with a tremendous staff, no one else comes close.

Oh, and if you do end up retired under 30, sipping Piña Colladas by the beach — don’t forget about the blogger that helped get you there. 🙂