When it comes to stock market tracking software, the word “free” is bandied about loosely. Often, there are extra fees preventing you from extracting any substantial functionality from a “free” program. Other times they are totally ad-ridden, and therefore too distracting to use effectively.
There are, however, a few “free” stock trading apps out there that stay mostly true to their description — mostly. They’ll allow you to research, track, and compare investments. Buying and selling stocks, however, will inevitably incur costs.
The most popular app billed as “free” is undeniably Robinhood. But is it the best option?
Launched in 2014, this no-fee stock market tracking software uses algorithms as opposed to human traders to outperform its brick-and-mortar counterparts.
Early supporters of the app included Snoop Dogg and Jared Leto, helping to generate interest for online stock trading from a younger demographic. Less financially well-off youth, or first-time investors, are able to net more profit by avoiding commission fees. MarketWatch reported that at least a quarter of Robinhood’s investors are investing for the first time, with many of the customers in their mid-20s.
The idea for Robinhood was sparked by the Occupy Wall Street protests in 2011, when co-founders Baiju Bhatt and Vladimir Tenev, who were both attending Stanford University at that time, realized that although many brokerage firms still charged an average of $10 per trade, the actual cost of executing a trade was only a fraction of a penny.
The app is available to U.S. citizens over 18 with a Social Security number, and can be downloaded as a mobile app for Apple and Android products. Once your identity is verified, a profile is created, and , once it’s linked to your bank account, you may start placing commission-free trades.
Few other apps can compare to Robinhood’s totally commission-free trading, but some are close. Although Bloomberg+ and Yahoo Finance don’t offer commission-free trades, they offer a cost-free way to analyze, strategize, and research the stock market.
NinjaTrader promotes itself as a “free” stock trading app—however, this is only true when it comes to their analytics, charting and trade simulation. Actually investing translates into commission fees ranging from $0.53-$0.95. Cheap? Yes. Free? No.
Although the founders of Robinhood contend that they’re “creating investors, not wild-eyed speculators,” a potential risk factor with commission-free trading is that it leaves traders more susceptible to compulsive buying and selling. Growing an investment portfolio requires patience and calculated choices, not frequent clicking because it’s cost-free.
The Robinhood app also fails to provide certain comprehensive information to its users, such as paid news service feeds and Level II quotes. Novice investors without these resources readily available are potentially at greater financial risk.
Despite its drawbacks, Robinhood is number-one in terms of cost-free stock market tracking software, and is currently planning to expand across more countries and tech platforms.
Featured Image: Depositphotos/© baranq
