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Something about Robinhood just makes me uneasy - clearly their main target market is the small retail investor who is sensitive to a $7/trade fee, but the low f

Something about Robinhood just makes me uneasy - clearly their main target market is the small retail investor who is sensitive to a $7/trade fee, but the low friction, mobile-first no fee stock trading experience they've created mostly serves to encourage bad investor behavior i.e. emotional, irrational day trading among people who can least afford it. Now they are "democratizing" margin trading (Robinhood Gold), options trading, and crypto...no professional investor who actually knows what he/she is doing is going to be served well by a mobile trading app - this is a play for the mostly uneducated retail investor (and small minority of knowledgable retail traders) who has no idea what they're getting into when they buy a call option in X or trade btc on margin. I remember seeing on their social a now deleted tweet that read "Trade fast, die young." Ugh.

foobaw 9y ago
I think Robinhood's purpose is exactly to promote "emotional, irrational day trading." Isn't that part of what impacts the market anyway? There are tons of bad traders in any given platform, and you're right that Robinhood increases that likelihood but you can't exactly blame an app for poor trading motivations. That's a due diligence.
- buttcoinslol 9y ago
  It's a very good app for buying up small (50-500 dollar) blocks of ETFs to hold, which is what I do. Thanks for the free trades, VC guys.
  - rocketpastsix 9y ago
    Thats pretty smart.
  - parasj 9y ago
    Robinhood makes money on execution (through exchange maker-taker fees [1] and reselling order flow to hedge funds or market makers). It's in their best interest to promote more volume to increase revenue. They're making money of each and every trade. [1] for example https://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing https://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing
    - deleted 9y ago
      [deleted]
    - buttcoinslol 9y ago
      Ah, I didn't know they made money off that part of it. I suppose you give up some privacy/data when they resell your order, similar to using Facebook or Google. It's a slick business model, I didn't even realize it.
      - 2trill2spill 9y ago
        > Ah, I didn't know they made money off that part of it. I suppose you give up some privacy/data when they resell your order, similar to using Facebook or Google. It's a slick business model, I didn't even realize it. Your also giving up better trade execution ie paying more for shares. Robinhood is good for getting your feet wet but people should switch brokers as soon as possible.
        buttcoinslol 9y ago
        Yeah, I plan on moving my shares to a broker with the nice features like DRIP/partial share purchases and so on once I accumulate enough capital to make the $5 trade fees worth it.
        2trill2spill 9y ago
        If you can handle the minimum amount to open an account(10K) Interactive Brokers is awesome, Commissions are usually just a $1 in and out. If your under 25 then it's 3K to open an account.
        dragontamer 9y ago
        IB is good if you trade enough to make the monthly fee worth it. But I execute maybe, 4 trades per year. E-Trade / Ameritrade / Scottrade are good enough, and offer me Options trading and other useful features. Like a website, so I can trade on a computer properly damn it.
- dawhizkid 9y ago
  Everything from the marketing to branding/design to distribution channel is designed to encourage higher frequency active trading among retail investors. When you're using Facebook-like product design tactics to encourage "engagement" (in this case, more trades), then you're not a neutral fee-free brokerage but an active contributor to irrational behavior. I would be less critical if they had a library of investor education materials, or required investors to go through a training course to understand the risks of riskier trades (i.e. margin or options trading), but as far as I know they don't have anything like that.
hiram112 9y ago
Bingo. This sort of investing works well in bull market, and after an almost 9 run-up, I'm guessing we have a lot of younger traders who have not seen a bear market. This is not going to end well for a lot of folks...
searine 9y ago
I learned a long time ago that the solution to a problem is never a blanket ban on a product or tech. All that does is punish well-intentioned or needy people. Trade fees are a relic, and deserve to die. They do nothing but skim money from smalltime players. Yes that also increases risk of gambling behaviors, but the solution is better education and treatment, not depriving everyone of a fair and low friction system.
willart4food 9y ago
Bad behavior? RH's market is the Millennials who see it as a fancy gambling, check out Reddit's r/RobinHood or - even better - r/wallstreetbets. I can see RH becoming a dominant player in the Tech Fin Millennials space.
- lightbyte 9y ago
  >or - even better - r/wallstreetbets. This is not a serious sub, it is satire/trolling/shitposting.
  - willart4food 9y ago
    4chan for stocks.
nlowell 9y ago
I think Robinhood does a great job of giving young traders the experience and knowledge of what actual trading is like before they're managing really meaningful amounts of money. College kids trading $500 on Robinhood are going to become 30 year olds who have a much better sense of how markets work and how emotion affects their own trading than college kids who are just instructed to give all their savings to mutual funds. I think RH has a niche and potential to really change things provided they don't do too much to incentivize dangerous behavior (like the deleted tweet).
- 52-6F-62 9y ago
  I agree probably 90%. If this had existed when I was in my first year of university and had a little money in the bank still, I probably would have thrown some at GOOGL when the Gmail beta came out....... On the other hand, it could have got ugly. Hindsight is often 20/20 and young people can get competitive, over-aggressive, and dumb. It took me until far more recently to even start to pay any attention to things like financial markets and trading.
  - skellera 9y ago
    We’re going to see a massive loss in money in the next crash. With low interest rates, everyone is in the market in some way. Mostly in index funds, bot traders, or things like RH. The next crash is going to destroy those funds as they try to sell off their massively overvalued stocks. We’re setting up for a rough time. The baby boomer’s retirements and the millenial’s savings(in the market, not savings accounts) are going to get hit really hard.
- abrahamepton 9y ago
  Maybe, except the college kids who just give all their money to mutual funds will make more money. The day-traders won't "learn how markets work," they'll learn how to lose money by making dumb trades based on less information than their counterparties. They won't learn anything, aaaannnnyyyyything, of actual value.
  - 9y ago
United857 9y ago
Learning to invest well is like learning to drive. You can read up on it or try it out in a simulated environment but there's ultimately no substitute for doing it for real. Developing a investor mindset free of emotional responses is fundamental and hard to do if there's not real money at stake. If Robinhood gives young people easy access to learn by doing then all the better to then.
notyourday 9y ago
There's no such thing as a no-fee stock trading. It does not exist: every company that has "no fee" stock trading sells order flow to market makers.
- jpalmer 9y ago
  Every single retail brokerage including all the companies that charge "fees" also sell order flows to market makers. All of them.
  - 2trill2spill 9y ago
    > Every single retail brokerage including all the companies that charge "fees" also sell order flows to market makers. All of them. Not true, Interactive Brokers doesn't sell your order flow.
    - vasilipupkin 9y ago
      that may very well be really bad for consumers. If Robinhood sells to Citadel and Citadel has better execution than IB, you are getting worse prices on IB.
      - notyourday 9y ago
        It does not work like this. You will always be crossed on NBB or NBA. The concept of "bad" vs a national best bid or a national best ask can only come via order delay. Better execution via order delay as seen by a customer is always a lie as none of retail brokerages look at the order, look at the 100@101 x 100@101.1 market and say "ok, i'm buying 380K @ 101.09 from you" followed by posting the trade followed by trying to unwind position. Oh no, they simply present your order by adding it to the book.
        vasilipupkin 9y ago
        No, that's incorrect. They can fill you better than NBBO if they have an internal prediction that NBBO is moving. Or they can fill your sell order at better than bid price, to be more precise.
justboxing 9y ago
> I remember seeing on their social a now deleted tweet Naw. It's still there. https://twitter.com/robinhoodapp/status/756262680537759744 https://twitter.com/robinhoodapp/status/756262680537759744 The reply meme to this tweet tho. "First time day trading with 2K.... AAAAND IT'S GONE".
fullshark 9y ago
I agree somewhat but there's no better way to learn how to invest than to try outsmarting the market for a few years. Frankly the demand is ALWAYS going to be there for these types of services. And there are people that are actually smarter than the market. Robinhood is so much better than a lot of companies that try to attract those investors (like a site that makes you pay for day trading classes for example) I'd rather have Robinhood than an app that charges fees, seems like a win for the consumer to me.
- almost_usual 9y ago
  The demand will ALWAYS be there because Robinhood targets emotionally driven investments. This bullish market has also contributed to inflated egos around investing. Robinhood is now a fashionable trading application. If anything that should be a sign that we’ve entered a near speculative craze market wise.
smallnamespace 9y ago
> emotional, irrational day trading among people who can least afford it This is completely untrue on the face of it: "Unless you have an equity balance of at least $25,000 in your account, your Robinhood Instant or Robinhood Gold account is limited to no more than three day trades in a sliding five trading day window [emphasis mine]. Exceeding the three day trade limit will restrict your account from placing further day trades for 90 days." [1] As someone who actually day trades, being able to do 3 trades every 5 days is completely useless. As an aside, sort of disappointed this is the top-rated comment when the evidence against this claim could be found using ~1 minute of Googling. [1] https://support.robinhood.com/hc/en-us/articles/217072366-Pattern-Day-Trading https://support.robinhood.com/hc/en-us/articles/217072366-Pa...
- dawhizkid 9y ago
  Did you read the last sentence of that article? "This limit applies to margin accounts (Robinhood Instant and Robinhood Gold), but not to cash accounts." Also day trading is not a limit on total buys/sells - they're specifically saying it's a limit on buying/selling the same security repeatedly when they are lending you money in a margin account.
  - wc- 9y ago
    Per FINRA rules: Cash accounts are effectively limited to a settlement schedule (at least a day) in which the unsettled funds from one trade cannot be used for another trade. If the unsettled funds are used for another trade, it begins to count toward pattern day trading. Attempting to bypass the pattern day trading limitation with a cash account can also be subject to good faith violations. So to follow FINRA's rules, Robinhood will limit cash accounts from pattern day trading as well as margin accounts. The rules applied to margin accounts are stricter, but truly day trading in a cash account won't work for long.
  - smallnamespace 9y ago
    You absolutely need to trade on the same security intraday many times in order to generate a profit as a day trader. Buying a security, then buying a different security, then selling a third security tomorrow -- that's not day trading, that is just the normal flow of equity investing. Unless you have a lot of money so you can be invested into many different names, you won't be able to do this very many times before you run into the limit, at which point, the rational person will open an account at a different brokerage instead. The utility of 'zero commission trades' rapidly declines as you have more capital. If you have >$25k to put into a brokerage, paying $1-2 commission per trade (e.g. Interactive Brokers commissions), or even $5-7 per trade (most other retail brokers) is definitely worth the flexibility of being able to change your mind and reversing that trade without the risk of being locked for 90 days. As for the addendum, sales in cash accounts are settled over several business days and you can't trade on those funds, so again there is no day trading there unless you're very significantly overcapitalized.
chatmasta 9y ago
So do you think the “small retail investor” (Wall St. PC speak for “poor person”) should not be able to take the same risks as those of “accredited investors”? Accredited investor status is a very non-libertarian idea. By forbidding a class of risks to the lower and middle classes, it excludes them from the corresponding class of rewards. When the lower/middle-class investor can only take a subset of the risks another investor can take, it means his money is worth less. The accredited status works as a gatekeeper against class mobility. In some ways it seems similar to disenfranchisement (“pass a test to vote,” “pass a test to take this risk”).
- simonh 9y ago
  It’s not just to protect the investor, but also to protect those selling the investment. Generally these are non SEC regulated securities, so the disclosure and registration rules largely don’t apply. Investors are expected to do their own due dilligence. It provides a degree of protection to the vendor from accusations of miss-selling, or missleading or not fully informing the investor of risks. SEC regulations are there to protect investors. If the rules for trading my nn regulated securities were dropped, then there would be much less reason for securities to go through the registration process, undermine my the whole regulatory system, but ncreasing risk for everyone including the country. After all these rules came out of the aftermath of the Great Depression. Think of it on the same way as retail goods quality control standards. If you buy goods in a store they must comply with strict safety and quality controls, but if you’re a business or dealer those rules don’t apply, for extample if you’re buying the goods to scrap them, or bring them up to standard and then sell on. Different rules apply to retail purchasers and trade purchasers.
- nopriorarrests 9y ago
  >should not be able to take the same risks as those of “accredited investors”? I would say yes. Well, he should be able, if he wants, but is it good for him, really? For example, options trading is useful for hedging large positions in stocks, so you can pay small amount to, um, hedge against corrections in a bull market. By hedging correctly, you can make some money in during correction while avoiding fees associated with selling your sizeable position and buying it back. But options trading without having large positions in stocks? It's not trading, it's lottery. 1% chance of making 10x return and 99% chance of losing the whole bet. I don't mind, but let's not pretend that options trading is opportunity in itself. Having ability to trade large sums is opportunity, access to options market is not.
Theodores 9y ago
It is that queue of 150000+ that have signed up for a place in the queue for this that scares me. More people could sign their money away on this to make the Tesla queue look like a lemonade stand. This has not happened before, we really are in new territory as people en-masse think they can get rich on this. Plenty actually are and all of them are telling everyone else to follow their example. This is a bubble but everyone is getting everyone to pump it up with a view to hold... Oh dear.
product50 9y ago
Do you have any data to back your claims that small uneducated retail investors are struggling with Robinhood or are you just making these blue sky claims. Do you really think retail investors will look at Coinbase's 1.5% fee and be like nope, I don't want to invest there. I for one totally welcome this move. Coinbase is making billions on their product with high fees (because of low competition) and this should even the playing field.
oil7abibi 9y ago
They also make money by selling orders to high frequency traders. The User accepts at potential 5% markup on orders in exchange for “zero-fee trades.” https://startupsventurecapital.com/robinhoods-exceptionally-clever-business-model-arbitraging-privacy-776663d4d855 https://startupsventurecapital.com/robinhoods-exceptionally-...
rdlecler1 9y ago
They have a system in place to deter day trading.
- oil7abibi 9y ago
  > The government has a system in place.
Bromskloss 9y ago
> and small minority of knowledgable retail traders "What if there are fifty righteous (knowledgeable) people in the city? Will you really sweep it away and not spare the place for the sake of the fifty righteous (knowledgeable) people in it?" :-) > "Trade fast, die young." That's hilarious! I mean, until someone actually tries it, but for now, it's hilarious! Edit: It's still there: https://twitter.com/robinhoodapp/status/756262680537759744 https://twitter.com/robinhoodapp/status/756262680537759744

foobaw 9y ago

I think Robinhood's purpose is exactly to promote "emotional, irrational day trading." Isn't that part of what impacts the market anyway? There are tons of bad traders in any given platform, and you're right that Robinhood increases that likelihood but you can't exactly blame an app for poor trading motivations. That's a due diligence.

buttcoinslol 9y ago
It's a very good app for buying up small (50-500 dollar) blocks of ETFs to hold, which is what I do. Thanks for the free trades, VC guys.
- rocketpastsix 9y ago
  Thats pretty smart.
- parasj 9y ago
  Robinhood makes money on execution (through exchange maker-taker fees [1] and reselling order flow to hedge funds or market makers). It's in their best interest to promote more volume to increase revenue. They're making money of each and every trade. [1] for example https://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing https://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing
  - deleted 9y ago
    [deleted]
  - buttcoinslol 9y ago
    Ah, I didn't know they made money off that part of it. I suppose you give up some privacy/data when they resell your order, similar to using Facebook or Google. It's a slick business model, I didn't even realize it.
    - 2trill2spill 9y ago
      > Ah, I didn't know they made money off that part of it. I suppose you give up some privacy/data when they resell your order, similar to using Facebook or Google. It's a slick business model, I didn't even realize it. Your also giving up better trade execution ie paying more for shares. Robinhood is good for getting your feet wet but people should switch brokers as soon as possible.
      - buttcoinslol 9y ago
        Yeah, I plan on moving my shares to a broker with the nice features like DRIP/partial share purchases and so on once I accumulate enough capital to make the $5 trade fees worth it.
        2trill2spill 9y ago
        If you can handle the minimum amount to open an account(10K) Interactive Brokers is awesome, Commissions are usually just a $1 in and out. If your under 25 then it's 3K to open an account.
        dragontamer 9y ago
        IB is good if you trade enough to make the monthly fee worth it. But I execute maybe, 4 trades per year. E-Trade / Ameritrade / Scottrade are good enough, and offer me Options trading and other useful features. Like a website, so I can trade on a computer properly damn it.
dawhizkid 9y ago
Everything from the marketing to branding/design to distribution channel is designed to encourage higher frequency active trading among retail investors. When you're using Facebook-like product design tactics to encourage "engagement" (in this case, more trades), then you're not a neutral fee-free brokerage but an active contributor to irrational behavior. I would be less critical if they had a library of investor education materials, or required investors to go through a training course to understand the risks of riskier trades (i.e. margin or options trading), but as far as I know they don't have anything like that.

hiram112 9y ago

Bingo. This sort of investing works well in bull market, and after an almost 9 run-up, I'm guessing we have a lot of younger traders who have not seen a bear market. This is not going to end well for a lot of folks...

searine 9y ago

I learned a long time ago that the solution to a problem is never a blanket ban on a product or tech. All that does is punish well-intentioned or needy people. Trade fees are a relic, and deserve to die. They do nothing but skim money from smalltime players. Yes that also increases risk of gambling behaviors, but the solution is better education and treatment, not depriving everyone of a fair and low friction system.

willart4food 9y ago

Bad behavior? RH's market is the Millennials who see it as a fancy gambling, check out Reddit's r/RobinHood or - even better - r/wallstreetbets. I can see RH becoming a dominant player in the Tech Fin Millennials space.

lightbyte 9y ago
>or - even better - r/wallstreetbets. This is not a serious sub, it is satire/trolling/shitposting.
- willart4food 9y ago
  4chan for stocks.

nlowell 9y ago

I think Robinhood does a great job of giving young traders the experience and knowledge of what actual trading is like before they're managing really meaningful amounts of money. College kids trading $500 on Robinhood are going to become 30 year olds who have a much better sense of how markets work and how emotion affects their own trading than college kids who are just instructed to give all their savings to mutual funds. I think RH has a niche and potential to really change things provided they don't do too much to incentivize dangerous behavior (like the deleted tweet).

52-6F-62 9y ago
I agree probably 90%. If this had existed when I was in my first year of university and had a little money in the bank still, I probably would have thrown some at GOOGL when the Gmail beta came out....... On the other hand, it could have got ugly. Hindsight is often 20/20 and young people can get competitive, over-aggressive, and dumb. It took me until far more recently to even start to pay any attention to things like financial markets and trading.
- skellera 9y ago
  We’re going to see a massive loss in money in the next crash. With low interest rates, everyone is in the market in some way. Mostly in index funds, bot traders, or things like RH. The next crash is going to destroy those funds as they try to sell off their massively overvalued stocks. We’re setting up for a rough time. The baby boomer’s retirements and the millenial’s savings(in the market, not savings accounts) are going to get hit really hard.
abrahamepton 9y ago
Maybe, except the college kids who just give all their money to mutual funds will make more money. The day-traders won't "learn how markets work," they'll learn how to lose money by making dumb trades based on less information than their counterparties. They won't learn anything, aaaannnnyyyyything, of actual value.
- 9y ago

United857 9y ago

Learning to invest well is like learning to drive. You can read up on it or try it out in a simulated environment but there's ultimately no substitute for doing it for real. Developing a investor mindset free of emotional responses is fundamental and hard to do if there's not real money at stake. If Robinhood gives young people easy access to learn by doing then all the better to then.

notyourday 9y ago

There's no such thing as a no-fee stock trading. It does not exist: every company that has "no fee" stock trading sells order flow to market makers.

jpalmer 9y ago
Every single retail brokerage including all the companies that charge "fees" also sell order flows to market makers. All of them.
- 2trill2spill 9y ago
  > Every single retail brokerage including all the companies that charge "fees" also sell order flows to market makers. All of them. Not true, Interactive Brokers doesn't sell your order flow.
  - vasilipupkin 9y ago
    that may very well be really bad for consumers. If Robinhood sells to Citadel and Citadel has better execution than IB, you are getting worse prices on IB.
    - notyourday 9y ago
      It does not work like this. You will always be crossed on NBB or NBA. The concept of "bad" vs a national best bid or a national best ask can only come via order delay. Better execution via order delay as seen by a customer is always a lie as none of retail brokerages look at the order, look at the 100@101 x 100@101.1 market and say "ok, i'm buying 380K @ 101.09 from you" followed by posting the trade followed by trying to unwind position. Oh no, they simply present your order by adding it to the book.
      - vasilipupkin 9y ago
        No, that's incorrect. They can fill you better than NBBO if they have an internal prediction that NBBO is moving. Or they can fill your sell order at better than bid price, to be more precise.

justboxing 9y ago

> I remember seeing on their social a now deleted tweet Naw. It's still there. https://twitter.com/robinhoodapp/status/756262680537759744 https://twitter.com/robinhoodapp/status/756262680537759744 The reply meme to this tweet tho. "First time day trading with 2K.... AAAAND IT'S GONE".

fullshark 9y ago

I agree somewhat but there's no better way to learn how to invest than to try outsmarting the market for a few years. Frankly the demand is ALWAYS going to be there for these types of services. And there are people that are actually smarter than the market. Robinhood is so much better than a lot of companies that try to attract those investors (like a site that makes you pay for day trading classes for example) I'd rather have Robinhood than an app that charges fees, seems like a win for the consumer to me.

almost_usual 9y ago
The demand will ALWAYS be there because Robinhood targets emotionally driven investments. This bullish market has also contributed to inflated egos around investing. Robinhood is now a fashionable trading application. If anything that should be a sign that we’ve entered a near speculative craze market wise.

smallnamespace 9y ago

> emotional, irrational day trading among people who can least afford it This is completely untrue on the face of it: "Unless you have an equity balance of at least $25,000 in your account, your Robinhood Instant or Robinhood Gold account is limited to no more than three day trades in a sliding five trading day window [emphasis mine]. Exceeding the three day trade limit will restrict your account from placing further day trades for 90 days." [1] As someone who actually day trades, being able to do 3 trades every 5 days is completely useless. As an aside, sort of disappointed this is the top-rated comment when the evidence against this claim could be found using ~1 minute of Googling. [1] https://support.robinhood.com/hc/en-us/articles/217072366-Pattern-Day-Trading https://support.robinhood.com/hc/en-us/articles/217072366-Pa...

dawhizkid 9y ago
Did you read the last sentence of that article? "This limit applies to margin accounts (Robinhood Instant and Robinhood Gold), but not to cash accounts." Also day trading is not a limit on total buys/sells - they're specifically saying it's a limit on buying/selling the same security repeatedly when they are lending you money in a margin account.
- wc- 9y ago
  Per FINRA rules: Cash accounts are effectively limited to a settlement schedule (at least a day) in which the unsettled funds from one trade cannot be used for another trade. If the unsettled funds are used for another trade, it begins to count toward pattern day trading. Attempting to bypass the pattern day trading limitation with a cash account can also be subject to good faith violations. So to follow FINRA's rules, Robinhood will limit cash accounts from pattern day trading as well as margin accounts. The rules applied to margin accounts are stricter, but truly day trading in a cash account won't work for long.
- smallnamespace 9y ago
  You absolutely need to trade on the same security intraday many times in order to generate a profit as a day trader. Buying a security, then buying a different security, then selling a third security tomorrow -- that's not day trading, that is just the normal flow of equity investing. Unless you have a lot of money so you can be invested into many different names, you won't be able to do this very many times before you run into the limit, at which point, the rational person will open an account at a different brokerage instead. The utility of 'zero commission trades' rapidly declines as you have more capital. If you have >$25k to put into a brokerage, paying $1-2 commission per trade (e.g. Interactive Brokers commissions), or even $5-7 per trade (most other retail brokers) is definitely worth the flexibility of being able to change your mind and reversing that trade without the risk of being locked for 90 days. As for the addendum, sales in cash accounts are settled over several business days and you can't trade on those funds, so again there is no day trading there unless you're very significantly overcapitalized.

chatmasta 9y ago

So do you think the “small retail investor” (Wall St. PC speak for “poor person”) should not be able to take the same risks as those of “accredited investors”? Accredited investor status is a very non-libertarian idea. By forbidding a class of risks to the lower and middle classes, it excludes them from the corresponding class of rewards. When the lower/middle-class investor can only take a subset of the risks another investor can take, it means his money is worth less. The accredited status works as a gatekeeper against class mobility. In some ways it seems similar to disenfranchisement (“pass a test to vote,” “pass a test to take this risk”).

simonh 9y ago
It’s not just to protect the investor, but also to protect those selling the investment. Generally these are non SEC regulated securities, so the disclosure and registration rules largely don’t apply. Investors are expected to do their own due dilligence. It provides a degree of protection to the vendor from accusations of miss-selling, or missleading or not fully informing the investor of risks. SEC regulations are there to protect investors. If the rules for trading my nn regulated securities were dropped, then there would be much less reason for securities to go through the registration process, undermine my the whole regulatory system, but ncreasing risk for everyone including the country. After all these rules came out of the aftermath of the Great Depression. Think of it on the same way as retail goods quality control standards. If you buy goods in a store they must comply with strict safety and quality controls, but if you’re a business or dealer those rules don’t apply, for extample if you’re buying the goods to scrap them, or bring them up to standard and then sell on. Different rules apply to retail purchasers and trade purchasers.
nopriorarrests 9y ago
>should not be able to take the same risks as those of “accredited investors”? I would say yes. Well, he should be able, if he wants, but is it good for him, really? For example, options trading is useful for hedging large positions in stocks, so you can pay small amount to, um, hedge against corrections in a bull market. By hedging correctly, you can make some money in during correction while avoiding fees associated with selling your sizeable position and buying it back. But options trading without having large positions in stocks? It's not trading, it's lottery. 1% chance of making 10x return and 99% chance of losing the whole bet. I don't mind, but let's not pretend that options trading is opportunity in itself. Having ability to trade large sums is opportunity, access to options market is not.

Theodores 9y ago

It is that queue of 150000+ that have signed up for a place in the queue for this that scares me. More people could sign their money away on this to make the Tesla queue look like a lemonade stand. This has not happened before, we really are in new territory as people en-masse think they can get rich on this. Plenty actually are and all of them are telling everyone else to follow their example. This is a bubble but everyone is getting everyone to pump it up with a view to hold... Oh dear.

product50 9y ago

Do you have any data to back your claims that small uneducated retail investors are struggling with Robinhood or are you just making these blue sky claims. Do you really think retail investors will look at Coinbase's 1.5% fee and be like nope, I don't want to invest there. I for one totally welcome this move. Coinbase is making billions on their product with high fees (because of low competition) and this should even the playing field.

oil7abibi 9y ago

They also make money by selling orders to high frequency traders. The User accepts at potential 5% markup on orders in exchange for “zero-fee trades.” https://startupsventurecapital.com/robinhoods-exceptionally-clever-business-model-arbitraging-privacy-776663d4d855 https://startupsventurecapital.com/robinhoods-exceptionally-...

rdlecler1 9y ago

They have a system in place to deter day trading.

oil7abibi 9y ago
> The government has a system in place.

Bromskloss 9y ago

> and small minority of knowledgable retail traders "What if there are fifty righteous (knowledgeable) people in the city? Will you really sweep it away and not spare the place for the sake of the fifty righteous (knowledgeable) people in it?" :-) > "Trade fast, die young." That's hilarious! I mean, until someone actually tries it, but for now, it's hilarious! Edit: It's still there: https://twitter.com/robinhoodapp/status/756262680537759744 https://twitter.com/robinhoodapp/status/756262680537759744