You probably heard about the Robinhood app on Youtube and want to know if it’s available in China, am I right?
Robinhood is a modern and easy-to-use investment app from the US, which has introduced the concept of commission-free trading in financial products such as stocks and ETFs.
Do you want to know if the Robinhood app is available in China, its expansion plans, and the alternatives available in China? We’ve got you covered!
What is Robinhood?
Robinhood was founded in 2013. Since then, it has played a major role in disrupting the brokerage industry by allowing US retail investors to trade with no commissions, alongside its biggest rival, Webull. Robinhood is defined as a commission-free online broker that offers the possibility of trading stocks, ETFs, options, and cryptocurrencies.
The results are clear: over 18 million users! The competitors of Robinhood have been monitoring this exponential growth closely, and, in October 2019, some major well-established brokers in the US, such as E-Trade, TD Ameritrade, and Charles Schwab, announced in quick succession that they were eradicating trading fees.
Is Robinhood Available in China?
Unfortunately, Robinhood is not yet available in China, nor any other country outside the US. It had planned to open in the UK in 2020, but it was postponed indefinitely due to Covid-19 (more info: here). So their global expansion has taken no step further since then.
But do not lose hope! You will find some alternatives in China that have proven reliable (and perhaps even more reliable than Robinhood!).
The covid-19 stock crash during the first quarter of 2020 showed some vulnerabilities of the Robinhood platform. The app collapsed several times, and investors could not trade during the most volatile markets in history. The company is facing some lawsuits due to these outages (more info: here).
Besides, Robinhood has faced several security breaches in revealing sensitive information about its clients, and, at one point, it even allowed “infinite leverage” that was shortly corrected afterwards. Still, it did not avoid major losses for some clients.
Robinhood China Alternatives
To help us answer this question, we focused on low cost, reputable, US-based brokers available in China. Given that, here are our suggestions:
Targeted for more experienced investors, Interactive Brokers offers a wide range of products from many exchanges worldwide.
Online broker based in the US, founded in 1985, that offers commission-free stocks, ETFs, mutual funds, and options trading.
Commission-free stock and ETF trading (+10,000 global stocks and ETFs), 0.15% of foreign exchange fees, and presents fractional shares. Over 1.5 million customers.
Disclaimer: 76% of retail CFD accounts lose money.
1# Interactive Brokers
Interactive Brokers at a glance
If you’re looking for an online broker with a wide range of products from different markets, solid trade execution, and a sophisticated trading platform, then Interactive Brokers might be a good alternative to the Robinhood broker.
Founded in 1978 and publicly listed in NASDAQ since 2007, Interactive Brokers is a global online broker that offers access to dozens of markets worldwide, not only US-listed assets. Besides the low costs, this is one of their main differentiators.
They also offer an educational area with free resources for financial education.
Firstrade at a glance
Founded in 1985 and based in the US, Firstrade is a discount broker that offers commission-free stock, ETFs, options, and mutual funds trading.
Because of their commission-free trading offering, solid order execution, and long track record and reputation from the firm, Firstrade has become one of the leading discount brokers worldwide, with millions of customers, targeting both beginners and more professional investors.
While they accept clients from worldwide, their product portfolio includes only US-listed financial products. Also, Firstrade misses some highly-valued features for investors: fractional shares trading and other asset classes such as cryptocurrencies, forex, futures, and CFDs.
Finally, Firstrade’s base currency is USD. This means that if you deposit your money in another currency, you will be charged currency conversion fees upon deposit and withdrawal. An alternative is to use a low-cost currency conversion service such as Wise or Revolut.
3# Trading 212
Trading 212 at a glance
Founded in 2006, Trading 212 is a fintech based in London that aims to democratize the entire investment process through a simple mobile application by allowing anyone to invest in more than 10,000 stocks and ETFs, Forex, commodities, CFDs, and cryptocurrencies. More than 15 million people have already downloaded the app. In 2017, it was the trading app with the most downloads in Germany, and, since 2016, it remains in 1st place in the United Kingdom.
In Trading 212, you will find commission-free stock and ETF trading, fractional shares, and even an automatic investment system (Robo-advisor), if you wish. On the downside, it has a currency conversion fee of 0.15% and shows some limitations in terms of products available, such as the lack of bonds and options. Opening an account is extremely quick and easy.
Within the app, you will notice two distinct sub-platforms: Trading 212 Invest, where you can trade a range of assets free of charge, and Trading 212 CFD, where you may trade leveraged financial products (CFDs).
76% of retail investor accounts lose money when trading CFDs with this broker. It is important to understand how CFDs work and the risks involved in trading, such as losing all invested capital.
Which platform should you choose?
Some factors you should know when choosing an online broker are the fees charged if it is regulated by top-tier institutions such as the SEC in the US, the range of products it allows you to trade (not all platforms allow you to trade cryptocurrencies or Chinese-listed companies), among others.
The best online broker in your specific case will depend on your profile, preference, and objectives. Explore the websites above and decide for yourself!
A reminder that the above should not be seen as investment advice and should be considered information only. Investors should do their own research and due diligence about the services and opportunities best suited for their risk, returns, and impact strategy.
Hope we helped, and leave your comments below.
Is Webull available in China? Can I use Webull in China?
No, Webull (Robinhood’s biggest competitor in the US) is also not available in China. Due to compliance rules, Webull is not able to do trading besides the USA and Hong Kong.
Does Etrade work in China? Can foreigners use Etrade?
No, Etrade is not available in China either. Only US citizens/Green Card holders can open an account on this platform (some exceptions apply).
What about other US-based investment platforms? Are Acorns or M1 Finance available in China?
No, Acorns and M1 Finance are not available in China either. Only US citizens/Green Card holders are eligible to open an account on these platforms.
How exactly does Robinhood make money?
The online broker earns money from interest earned on customers’ cash balances (money in your account not invested) by selling order information to third parties (high-frequency traders, for instance) and margin lending.
Regarding selling orders, the US Securities and Exchange Commission (SEC) is still investigating Robinhood for not fully disclosing its practice of selling clients’ orders to high-speed trading firms.
Until October 2018, Robinhood would not clearly state that it was receiving payments for order flows. By law, any financial company must reveal all the material facts an investor would want to know before making any investment decision.