Can You Day Trade Crypto on Robinhood: Yes You Can

Published: 19th December, 2023 | Last Updated: 18th April, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

Robinhood is an online brokerage that allows you to day trade your crypto assets. In this article, I will walk you through all there is to know about day trading crypto on their platform. 

can you day trade crypto on robinhood

Can I really day-trade crypto on Robinhood?

Yes, cryptocurrencies live on a digital ledger without a central intermediary. Unlike traditional financial markets, where trading is limited to specific hours, cryptocurrency markets operate 24/7.

This means you can trade crypto 24/7 on Robinhood.

The only times you may not be able to trade crypto is when Robinhood performs scheduled maintenance on their site. 

Do I need to deposit a minimum of $25, 0000 to day trade crypto on Robinhood?

No, that is for stocks and other financial assets provided by brokers and exchanges that are regulated by the Financial Industry Regulatory Authority (FINRA) or the Securities and Exchange Commission (SEC).

In the US there is a regulatory designation for pattern day traders. These are traders who execute more than four-day trades over a five-business-day period in a margin account.

However, neither FINRA nor the SEC regulates crypto assets which means there is no minimum amount of capital that you are required to have to be able to trade crypto and you can be a pattern day trader for crypto without any limitations.

This means you can trade any amount of crypto you want throughout the day on Robinhood. However be aware that Robinhood reports crypto to the IRS.

Which cryptocurrencies can I day trade on Robinhood? 

You can trade the following cryptos

* not available in New York

** Not available in Texas or New York

Can day traders short crypto on Robinhood?

No, short trading crypto is not an option on Robinhood.

See How to Short Crypto on Robinhood? a Step-by-Step Guide for more. 

Can I trade day trade crypto on margin on Robinhood? 

Nope. Robinhood only offers margin brokerage accounts for non-crypto financial products.

What restrictions should I be aware of if I plan to day-trade crypto on Robinhood?

  1. You can’t use leverage
  2. You can’t bet on the price dropping i.e. short crypto
  3. Crypto does not have SIPC protection which means that if Robinhood goes bankrupt you don’t get your crypto back. Also even though Robinhood is a member of FINRA their crypto assets are not FDIC insured. 
  4. Robinhood has placed restrictions on meme stocks and cryptos in the past such as when it restricted Gamestop trading and Doegecoin trading. But these are exceptions rather than the norm. 
  5. While Robinhood is commission-free you are still paying something indirectly in terms of the clearing price that you receive. Fees like this can add up cutting into any winning you make and could result in a possible loss.
  6.  The crypto market is extremely volatile. Make sure you account for this additional risk if you plan to day trade. 
  7. The platform offers a limited range of order types, which may hinder day traders’ ability to implement complex trading strategies. 
  8. Additionally, Robinhood may experience occasional outages during periods of high market volatility, potentially impacting the execution of time-sensitive trades.

Also check what the colors mean on Robinhood for crypto.

Order types available for crypto day trading on Robinhood

  • Market order
  • Limit order
  • Stop orders
  • Stop limit orders

Should I day-trade crypto on Robinhood

If you are not experienced in cryptocurrency trading and using technical analysis then day trading is a surefire way to lose your entire investment. 

People with trading experience usually avoid day trading altogether as frequent trades end up eating into any profits you might make.

New investors who wish to dabble in day trading should make sure they understand how to interpret technical indicators.

In addition, because Robinhood prevents you from taking up short positions when crypto trading you are better off using a crypto exchange. 

Day trading requires a disciplined approach and a well-defined trading strategy.

Here are some tips and strategies to consider when day trading crypto on Robinhood:

1. Educate yourself:

Learn different technical analysis indicators and chart patterns to identify potential entry and exit points. Technical analysis can help assess market trends and make informed trading decisions.

Day traders often use candlestick charts, trend lines, moving averages, and other indicators to assist in determining market direction.

2. Practice risk management:

Consider employing risk management techniques such as position sizing, stop-loss orders, and taking profits at predetermined levels.

Failing to use stop-loss orders can lead to significant losses.

3. Impulsive trading:

Avoid making impulsive trading decisions based on emotions or short-term market fluctuations.

Stick to your trading plan and avoid chasing fast gains without proper analysis.

4. Overtrading:

Trading excessively or entering trades without proper justification can lead to unnecessary losses.

Restrict your trades to opportunities that align with your trading strategy and are supported by sound analysis.

About Robinhood

Robinhood is an online brokerage services provider that offers commission-free trading of stocks, ETFs, and cryptocurrencies.

The platform also offers options trading for non-crypto assets.

You can start trading crypto by making an ACH transfer from your bank account or using a prepaid card, credit card, or debit card.

If you use any of those options Robinhood offers instant deposits so you can start trading crypto immediately.

Otherwise, you need to wait 2-5 business days for a wire transfer to go through.

Robinhood is only available in the United States.

See Is Robinhood Bad for Crypto for more.

Trading fees

Robinhood offers commission-free trading to all its customers.

It can do this because it gets paid by market makers for providing them with order flow.

However, some critics point out that Robinhood users may not always receive the best price this way.

You should be aware that there is no such thing as a free lunch in this world. 

Setting up a Robinhood account is extremely easy but it does require that you go through a verification process. 

Alternative day trading platforms to Robinhood

In terms of brokerages, your best options are 

  • eToro
  • WeBull 

However, if you want to be able to trade a wide range of crypto using leverage and both long and short positions for day trading then you should consider a cryptocurrency exchange.

Here is a list of the most popular crypto exchanges that allow day trading

What is Day Trading?

Day trading involves buying and selling financial instruments, such as stocks, cryptocurrencies, or commodities, within a single trading day.

Day traders aim to leverage short-term price fluctuations to make quick profits.

This type of trading requires active monitoring of the market and executing trades promptly.

Day trading is known for its high potential returns but also carries significant risks.

Successful day trading requires a solid understanding of technical analysis, market trends, risk management, and the ability to make quick decisions.

Pros and Cons of Day Trading Crypto on Robinhood

Pros:

  • No trading fees: Robinhood’s commission-free model can save traders significant costs, especially for frequent trades.
  • User-friendly interface: The platform offers an intuitive interface that simplifies the trading process for beginners.
  • Access to popular cryptocurrencies: Robinhood provides access to well-known cryptocurrencies, allowing traders to participate in the crypto market’s potential gains.
  • Real-time market data: Users can access real-time price quotes and charts, enabling informed decision-making.

Cons:

  • Limitations on order types: Robinhood offers only basic order types, limiting advanced trading strategies.
  • Outages during high volatility: The platform has experienced occasional outages during periods of increased market volatility, potentially causing trade execution issues.
  • Lack of advanced features: Robinhood’s simplicity may deter more experienced traders who require advanced features and analysis tools.

How to Get Started with Day Trading on Robinhood

If you decide to explore day trading crypto on Robinhood, here are the steps to get started:

  1. Create a Robinhood account: Visit Robinhood’s website or download the mobile app and complete the registration process.
  2. Verify your identity: Provide the necessary identification documents to comply with regulatory requirements.
  3. Fund your account: Deposit funds into your Robinhood account to have capital available for trading.
  4. Explore the crypto markets: Familiarize yourself with the available cryptocurrencies and their price movements.
  5. Develop a trading strategy: Define your trading goals, risk tolerance, and preferred trading strategies.
  6. Start trading: Execute trades based on your analysis and strategy, always monitoring the market closely.

FAQs

How many times a day can you trade cryptocurrency on Robinhood?

There are no restrictions on the number of trades you can make trading cryptocurrency.

Has Robinhood ever restricted day trading crypto in the past?

Yes Robinhood got a bad rap for restricting the trading of Dogecoin in 2021 when people went Dogecoin crazy buying DOGE.

What happens if I make 4-day trades on Robinhood?

If you trade crypto nothing happens. There is no pattern day trader restrictions for crypto. This only applies to stock market trading.

Up Next

Is Robinhood Bad for Crypto? Pros and Cons (2024)

is robinhood bad for crypto

Are you wondering whether Robinhood is bad for storing and buying crypto? Robinhood got a bad rap at some point for offering a small selection of coins and not allowing you to move your crypto off its exchange other than cashing out. However, things have changed and since March 2023 Robinhood is the only broker to offer a non-custodial crypto wallet to its users. Right now, if you intend to use a broker instead of a crypto exchange Robinhood is your best choice. In this article, I will explore the pros and cons of using Robinhood to buy and store crypto. Read more.

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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