Robinhood Your Account Is Restricted From Purchasing Crypto – If you’re an active stock or cryptocurrency trader, waking up to a restricted brokerage account can be frustrating, if not frustrating. This can deprive you of a lucrative earning opportunity. However, this happens all the time for Robinhood users. Why is your Robinhood account limited and what can you do about it?
Robinhood is popular among retail investors for its commission-free trading, access to margin, and the ability to trade stocks, ETFs, options, and cryptocurrencies from the same account. Its fractional share purchase service and the ability to pre-order shares before the IPO are Robinhood’s other big draws. More than 13 million investors use the service. You should know about the risks of account restriction and how to avoid them.
Robinhood Your Account Is Restricted From Purchasing Crypto
No investor likes to have their brokerage account restricted or blocked. So it helps to know why your Robinhood account might be limited and how to fix it if it happens.
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A broker may limit your account for various reasons. Restrictions can be applied only to a specific stock or affect all trades in the account. Most Robinhood account restrictions prohibit buying but not selling. Here are the common reasons that can lead to your Robinhood account being restricted.
If you have declared yourself as a controller in a company, the broker will prohibit you from trading in that company’s shares. It does this to meet regulatory requirements. Such restriction only affects certain shares. You can get access to trading shares when you are not a controller in the company.
For investors using Robinhood margin accounts, Instant and Gold, they may be restricted if you exceed the broker’s daily trading limits or do not meet margin requirements.
Robinhood may limit your account after canceling multiple transfers. Your account must be funded to trade with it. You fund your brokerage account by transferring money to it from your bank account. The transfer may fail if you do not have enough cash in your bank account. In this case, pending payment of the transfer deposit, the broker will withdraw the advanced funds it offered you. If you have too many failed transfers, your account is at risk of being restricted.
Robinhood Is Still Severely Limiting Trading, Customers Can Only Buy One Share Of Gamestop
Sometimes Robinhood prevents customers from buying stocks that are in the process of a spin-off or merger. This is usually a temporary restriction that affects all investors who are brokers in specific stocks. A broker may also restrict trading of delisted stocks or stocks that have been suspended from trading by the stock exchange for various reasons.
The broker may limit trading on an account with incorrect or outdated information. Also, accounts subject to fraud inquiries may be restricted. Remember that the broker also does not allow investors to run duplicate accounts. Therefore, if you break the rule, you may be subject to restrictions.
Robinhood also restricted accounts on the platform from trading certain volatile stocks. A good example was during the GameStop short squeeze that was sparked by retail investors on Reddit’s WallStreetBets community. The broker has limited purchases to certain stocks, including GameStop itself, AMC Theaters, BlackBerry and Nokia. The restriction caused a huge outcry among Robinhood investors.
Depending on the reason for the restriction, it may take several days to several months to remove it. For example, exceeding the daily trading limits can lead to account restriction for 90 days.
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If Robinhood restricts your account due to stock issues, you may also lose access to the cryptocurrency trading service. If the limit is due to the value of the account balance being below the required limit, for example in the case of daily trading limits or a margin requirement, you can correct it by adding money to the account. To resolve the issue, you should contact the broker after adding money to the account.