"Investing" and "Stock Trading" are incompatible in the same sentence, unless combined with a phrase like "does not involve".
You can buy and hold, or "Invest", on any platform which, in my opinion, has to meet three minimum requirements: It should offer commission-free trading on a variety of low-cost index funds, it should offer a variety of investment account types (at minimum, taxed accounts, Traditional IRAs, and Roth IRAs), and it should be stable.
Robinhood only meets one of these three criteria. There are dozens of other brokerages out there which do meet all of these criteria: TDAmeritrade, Schwab, Vanguard, and Chase are four great ones.
Robinhood is on the same level as a betting app for sports; so, fine; use it if that's what you want. But do not even mention the word "Invest" in the same sentence as Robinhood; its grossly irresponsible.
Sure, I'm defending starting with less than $1,000, not doing so on Robinhood specifically. Your suggestions are good, I use Schwab and Vanguard myself.
I wouldn't advocate anyone trying to build wealth to pick individual stocks, but I do think if someone were investing $1,000 to get their feet wet I'd recommend they put a bit in individual stocks. The financial system is complex and I think it's worth stripping away one level of the complexity for educational purposes. (It's typically also a humbling experience.)
I agree, this is how I started. It was well worth a couple hundred dollars in losses 2 years ago to learn the fundamentals. I considered it the cost of learning that I've more than recovered.
Now I have a much larger account, and I'm trading / investing with a much lower risk profile, because of what I learned on my >$1000 account. I consider that the exact opposite of wasting time.
> Investing under $1000, especially with commission-free trades, is a good way to learn the basics mechanics of stock trading
Individual investors are at a huge disadvantage when it comes to intraday trading.
For everything other than a child's hobby account, intended to teach emotional stability through gains and losses, a <$1,000 stock-trading account is value destroying.
you want me to risk > $1000 when I don't know what I'm doing with a real brokerage that I don't know what their benefit is over something like Robinhood because.... ?
I'm willing to loose a couple hundred to learn and understand something vs giving someone I don't know thousands and "trusting" their opinion.
More so - testing the waters myself may not make me as good as someone who does this for a living - but maybe after a few hundred and a few months, at least I have a better understanding of what a real brokerage tells me to buy than to just blindly say take my money and quadruple it.
Brokers should never be telling individual investors what individual stocks to buy, at least not anyone with less than ~$500,000 in assets. If a brokerage is giving you buy/sell lines for individual securities, that's a red flag.
A good investment platform (or adviser) guides you in portfolio management. In encourages long-term strategic thinking over short-term trading highs. The former builds wealth. The latter lines professional traders' pockets.
Why would you play with real money to learn instead of doing simulated trades? You can set up a paper trading account with Interactive Brokers for free. If simulated trading doesn't feel "real enough" because there are no stakes, then I don't think it's about learning.
That education, for a child or an adult, is primarily what one gains from a <$1k trading account. That, alone, is worth more than $1k.
Also, one need not trade a small account intraday. I make small trades, but they are always with a multi-year perspective. Give me limit orders and small commissions, and I am happy.
(N.B. I use a different broker/don't have a first-hand perspective on Robinhood.)
Unrelated but usually you should place a market order usually, not limit. Limit orders take longer to fill, your idea of limits is probably wrong and will lose money compared to a fair market match, it's not worth taking the risk that your order won't be filled, etc.
If an order isn't filled at a price at which I find reasonable, that is okay with me. A market order will fill at any price. I learned that lesson the day that a market order of mine filled at a price I deemed unreasonable.
The key to avoiding faffing around with limit orders not filling when you want immediate execution is to place a reasonable limit that accounts for the day's volatility. At other times, I'll place a limit order and let it stand for weeks. When it fills, the counterparty and I are both happy.
Different strokes I guess. Getting into/out of the position is my top priority and I see more downside in failing to fill the order than in failing to shave a penny or two.