Robinhood is one of the leading trading platforms in the US and around the world. For many people, it is the first service to introduce them to the concept of trading, essentially lowering the technical and intellectual barrier for this type of financial activity. For this reason, it has gained a significant level of popularity and intrigue, both in the world of crypto and in the traditional markets, leading people to wonder about how to withdraw buying power from Robinhood.
However, the economic landscape is ever-changing and constantly morphing, meaning that people's desires and aims constantly alter along with it. This is especially true when it comes to trading. For this reason, there are many people out there who are looking for how to withdraw buying power from Robinhood, and even how to transfer buying power from Robinhood to their bank.
This is a relatively simple concept, and process, which takes minimal effort and knowledge. However, even with this in mind, it makes sense to gain as much insight about the topic as possible and to learn about some potential pitfalls and confusing elements that you may stumble into during this process. For instance, some people face an issue where Robinhood says you have no buying power, without understanding why.
Why Choose Robinhood?
Before we jump into how to withdraw buying power from Robinhood, or how to transfer buying power from Robinhood to a bank, it is worth giving a quick run-through of what makes people turn to Robinhood in the first place. For starters, Robinhood has positioned itself in a fascinating place in the financial world, acting as essentially the primary onboarder for those who are looking to trade.
When the company started, it was functioning almost exclusively in the US, filling a space in the market for individuals who were interested in trading without having to jump through a swath of hoops. At the time, when it was released, there were few simple and streamlined methods for the everyday person to get involved in this part of the financial arena.
By everyday person, we mean somebody who does not have a formal education in economics, and who does not trade on behalf of a company or organization. These are referred to as retail investors, and they are a huge part of the trading landscape nowadays. Some could argue that their major involvement in the industry is largely due to Robinhood successfully onboarding and introducing them to the space.
One aspect of Robinhood that is so appealing is its zero-fee commission trading, meaning that people can invest in the stock market without being charged any costs. The platform even allows for fractional shares to be bought, meaning that high-priced stocks can still be accessible to the general public by buying percentages of them instead of whole shares. This is perfect for people who do not want to spend much straight away.
Not only this, but Robinhood supports cryptocurrency trades, which is something that not every stock trading platform offers, as many brokerage sites view crypto as a separate beast that does not require their involvement. Despite crypto and stock both being lucrative asset classes, some platforms see them as having wildly different user bases. As such, it can be hard to find both being supported in one place.
Nowadays, the trading world has opened up to a tremendous degree, and so there is much more variety for the consumer. As a result, this has led to people wanting to learn how to withdraw buying power from Robinhood so that they can try some other competing platforms and services. This may sound like a bad thing, but in truth, market diversity is a healthy part of the financial space as it can create good competition.
And, to be fair, there are quite a few different modern exchange platforms that have huge advantages to the average enthusiast when compared to Robinhood. Take the aforementioned Binance, Kraken, or Coinbase - all of these exchanges come equipped with a myriad of features that both beginners, as well as veteran traders are bound to appreciate.
Not only that, but these platforms are crypto exchanges, exclusively - in other words, while Robinhood only has crypto as a small part of its business model, these mentioned platforms are oriented around the asset class, and thus, have much more to offer to your average crypto fan.
Understanding Buying Power
Buying power is a common phrase used in the financial markets, but it is not one that often gets defined in discourse. In basic terms, buying power is simply the amount of money you have to purchase something. But what does buying power mean in Robinhood? Essentially, it refers to the amount of money that an investor has available to make trades.
It is the amount of capital that is in a user's account after considering any unsettled funds or margin requirements. Robinhood's buying power is determined by the user's cash balance, the amount of money that is currently settled in their account, and any unsettled funds that may be available for trading. Additionally, if a user has a margin account, their buying power may be increased by the amount of margin they have available to trade.
You might be reading this and wondering, what is margin? This is the act of borrowing money from a broker to purchase investments, such as stocks or crypto. When an investor uses margin, they are essentially borrowing money to increase their buying power and potentially gain higher returns on successful trades. Margin activity on Robinhood allows investors to borrow money from them for future actions.
Another major factor that can affect your buying power is whether you have any pending orders or trades. This is an order to buy or sell an asset that has not yet been executed. This means that the order has been submitted to the market but has not been filled yet. It could take the form of a limit order, which is an order to buy or sell an asset at a specific price, or a stop order, which is an order to buy or sell a security once it reaches a specified price.
This is not unique to Robinhood, or the world of retail trading. Rather, buying power is an ever-present aspect of the whole trading landscape, from the lone individual up to the institutional investor. In a nutshell, it is simply how much money you have available to make purchases. At its core, this is what buying power means in Robinhood.
Getting Buying Power on Robinhood
If you're new to the platform, then it is likely that Robinhood will say you have no buying power. Naturally, you'll probably be interested to know how you can get some. Similar to other platforms, you'll need to complete identity verification and link a bank account or a credit card as a source for your funding.
If you want to know how to withdraw buying power from Robinhood to your cryptocurrency wallet of choice, then this can also be done. In the past, this was not possible, but since early 2022, Robinhood made this available. The process is similar to learning how to transfer buying power from Robinhood to a bank, but there are some key differences. Once you have sold all your assets to fiat, you will then want to buy your coin or token of choice with that fiat through the platform. After that, you can then withdraw the crypto by sending it to a wallet of your choice that operates off the platform.
This is a free process, although you will incur standard transaction fees that would be applied to any crypto transaction, mostly regardless of what platform you use. Once you have done this, you then simply wait for the funds to arrive in your wallet. The speed at which this happens depends on how congested the cryptocurrency you chose is, and can also be slowed down by errors on Robinhood's part as they are a centralized project, and so humans manage it.