Tornado vs. Robinhood: Comparison of Trading Platforms

Investing in the stock market is no longer solely the domain of those with lots of disposable income. There are lots of online investing platforms and apps that offer low or no commissions, no account minimums, and make it easy to get started.

Two of the leading platforms are Tornado and Robinhood. Both of these allow users to trade stocks and ETFs, but there are some key differences that may determine which is best suited to your specific requirements. So, here we’ll make a Tornado vs Robinhood comparison to help you to make an informed decision. Both offer free stock bonuses, so it’s worth trying each.

Currently, Tornado is offering a bonus of up to $1,000 cash to invest when you create and fund a new account (terms and conditions listed at Tornado.com). Additionally, all Tornado users with an active account can get up to $50 to invest by completing simple Learn and Earn lessons that teach basic fundamentals of investing. Lessons are tailored to your skill level and only take a few minutes to complete.

Robinhood is currently offering a free stock worth up to $225 for new users. Terms and conditions can be found at Robinhood.com.

The Tornado Basics

Although there are lots of platforms that facilitate placing online stock trades, Tornado takes a slightly different approach from the pack. It has a focus on personalized educational content and connecting users with others to provide learning opportunities. The overall goal of Tornado is to help its users become better investors rather than just providing access to a trading platform.

Tornado has an impressive set of social features. You can connect with friends, other investors, and even industry experts to discuss strategies and see what others are buying and selling (unless they’ve set those details to be private). You can view stocks that are popular with other users, discuss pros and cons, and even have your questions directly answered by experienced professionals, known as Community Thought Leaders on the platform.

While this may seem more involved compared to other online trading platforms, it’s a great resource for newbies or moderately-experienced investors to gain insights.

Tornado also has the functionality to optimize your portfolio with a single click. This is a unique feature and one of the true standouts of the platform. It’s not a robo advisor or automated platform, but rather provides invaluable assistance to the self-directed investor, and can essentially serve as an alternative to a more costly robo advisor.

When you open an account, Tornado asks several questions to establish your financial goals, your investment strategies, and your risk tolerance. It then uses this data, along with your investing “ideas” and your account settings to generate allocations to optimize your portfolio. If you like all the allocations, you can implement them all with a single click, or go through them one by one to approve or dismiss each trade.

The Robinhood Basics

Robinhood started out as a major disruptive force within the brokerage industry. It was one of the first commission-free stock trading platforms, providing a massive competitive edge over other brokerages, with no commission for trading stocks, ETFs, and options.

Since then, Robinhood’s competitive edge has been neutralized somewhat, as many brokerages and trading platforms joined in to eliminate commissions (Public and Webull are direct competitors).

However, despite the increased competition in the low-cost niche, Robinhood has established a strong brand, creating a niche market for the tech-savvy investor who appreciates a user experience focused on the basics and a clean, intuitive design.

Robinhood has also added support for popular cryptocurrencies, a recurring investment feature, and cash management services to attract new customers and strengthen its financial relationships with its existing customer base.

In fact, its exponential growth in recent years has brought Robinhood into the spotlight. In recent years, the platform was criticized for intentional trade restrictions and untimely outages in periods of market volatility. This led to the suspicion that Robinhood had a conflict of interest, which spurred class-action lawsuits and brought the platform to the attention of politicians.

In 2021, Robinhood agreed to a $70 million settlement for regulatory investigations that were related to approving risky strategies for ineligible traders, misleading customers, and repeated outages that affected its users’ ability to access the platform.

However, Robinhood is still a popular go-to for many traders and it has maintained its low-cost strategy that appeals to many retail investors.

Investment Options

The first area to cover in our Tornado vs Robinhood comparison has to be the investment offerings. Tornado has a fairly basic list, but you can use the platform to buy and sell ETFs, stocks, and ADRs listed on the major US exchanges. While you can’t invest in some foreign companies, most tickers traded on the NYSE and Nasdaq are accessible.   Tornado offers fractional share trading as well.

Robinhood also has a fairly limited variety of offerings. While you can invest in stocks, there’s no short selling. You can also access options, ETFs, and a few cryptocurrencies. This includes Bitcoin, Ethereum, Litecoin, and Dogecoin.

Another plus point for Robinhood is that it does facilitate fractional share orders. For stocks worth over $1 per share with a market capitalization of $25,000,000+, you can place fractional share orders. This is a tremendous feature, particularly for those with a limited investment fund who want to diversify or access high-end stocks such as Google, Amazon, or Disney.

Fees

One of the attractive features of both of these platforms is the low fee structure. Tornado has few fees, and they’re quite reasonable given the capabilities of the platform. There’s a monthly $7.99 subscription fee, but this also provides 40 free trades each month. This works out at a very reasonable $0.20 per trade. However, after the first 40 trades, each trade will cost you $4.50. You can pay your monthly subscription cost via your credit or debit card, through a linked checking or savings account, or directly from your Tornado balance.

The other less common fees that you may encounter include:

• Paper statements: $5
• Paper trade confirmations: $2
• Tax statement: $5
• ACH notice of correction/change: $5
• Returned payment (ACH/wire/check): $30
• Margin sell out: $25
• Short forced buy-in: $25
• ACAT outgoing $75 per security or entire account

Robinhood is a little more typical of a low-cost brokerage in its fee structure. There are no subscription or trading fees. All equity and options trades are free of commission. Additionally, there are no account maintenance, account inactivity, or wire fees.

If you trade on margin, you will need to upgrade to a Robinhood Gold subscription at a cost of $5 per month. However, this includes a $1,000 margin. Above this level, margin use is charged at a relatively low 2.5% interest.

The other fees you may encounter are:

• Paper statements: $5
• Paper confirmations: $2
• Domestic overnight mail: $20
• International overnight mail: $50
• Transferring your account to another broker: $75

Which One is Best for You? Tornado vs Robinhood

These platforms do have their similarities and differences, which means that they’re likely to appeal to different types of users.

Tornado is a good option for anyone looking to learn more about investing. If that’s you, you’re likely to appreciate the learning resources and insights available on this platform.

Additionally, the social aspect of the platform can help you to feel like you’re not going alone in your investment journey. You can call on the input of other investors and experts to provide you with guidance if you’re unsure of your next step. Robinhood offers no social features and very little help for learning about investing.

Tornado may also appeal to investors who would prefer the portfolio optimization function as an alternative to a robo advisor. You don’t need to continually watch your portfolio, but you can have a final say to approve or dismiss trades to optimize your portfolio. Depending on the size of your portfolio, you could easily justify the $7.99 monthly subscription fee.

Robinhood is likely to be a good fit for those looking to keep trading costs to an absolute minimum, and to high volume traders. This platform has some of the lowest costs in the industry and you can even trade in cryptocurrencies with no fees.

While there may not be the community support of Tornado, the Robinhood platform has a streamlined interface that’s easy to use. In fact, some users have commented that Robinhood’s platform has made complex trading strategies accessible for inexperienced traders.

If you’ll make more than 40 trades per month, Robinhood is likely to be the better platform for you because of Tornado’s fee structure.

However, Robinhood is a little limited in its customer support. While the platform has been making improvements, it’s still lacking compared to Tornado and other brokerage platforms. Additionally, Robinhood has been criticized for trade restrictions and outages, which may suggest it lacks reliability for very serious traders.

Conclusion

While on the surface, Tornado and Robinhood may appear similar, there are important differences that will determine which is the best option for you. When you’re looking at Tornado vs Robinhood, you’ll need to think about what you need from your online trading program.

If you are anticipating doing fewer than 40 trades per month and want the support of a trading community, you’re likely to find Tornado a good fit. However, if you want greater flexibility and don’t want to be tied to a monthly fee, Robinhood has very few fees and charges, so you can maximize the profitability of your trades.

Just bear in mind that if you want to get into trading on margin, you will need to upgrade to a Robinhood Gold subscription, which will cost you $5 per month.

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