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They don't call margin "margin" because they market their app to people who don't know what they're doing. People who know what margin is will understand what t
by artursapek 10y ago
They don't call margin "margin" because they market their app to people who don't know what they're doing. People who know what margin is will understand what they mean by "extra buying power", but an investing novice with $500 will have no idea what "margin" is.
That said, it's scary to think they're giving margin to people who don't know what margin is - I hope they try to properly educate them on the risks involved.
- nodesocket 10y agoI think even novice traders know what margin is. I'd prefer they just use the correct nomenclature. I have an account with Robinhood and have much more than $500 in it. I don't think the assumption that most of their users only put small amounts is entirely accurate. I like Robinhood because I can lower my dollar cost average buy buying small little chunks on the way down commission free.
- artursapek 10y agoRH's headline feature is "free trading," a feature that mostly appeals to people who are investing smaller amounts (for whom an $8 commission is significant). Their oversimplified interface is consistent with this targeting of novices. I'm saying it as a generality - of course it's not completely black and white. That said, RH does have several problems - notably their unreliability on days of high volatility and their poor customer support - that generally deter bigger investors from using them over a traditional broker.
- HaloZero 10y agoThey call it margin accounts in their FAQ about how they make money though https://support.robinhood.com/hc/en-us/articles/202853769-How-does-Robinhood-make-money- https://support.robinhood.com/hc/en-us/articles/202853769-Ho...