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That's why the $0 commission is such a key feature. They know people enjoy the emotional high of seeing the green numbers in their account when they open the ap

That's why the $0 commission is such a key feature. They know people enjoy the emotional high of seeing the green numbers in their account when they open the app. This isn't a tool for high net-worth individuals, people that want "traditional" (Vanguard, Wealthfront, Schwab) wealth management investing with long-term planning, or advanced traders looking for Bloomberg terminal-esque features. This is designed to allow the average person to play with their money and see if they can "beat the market". It's like a fintech online casino. It's not gambling per se, but it definitely has a lot of psychological overlap with it for many of its users. With the addition of crypto trading, they've basically just opened up their new slot machines to the public. I played with the Robinhood app before as well, but stopped using it after a couple weeks because it's just more of a novelty than a dedicated investment platform with all the features I want. I can see how some people that don't want all the complicated financial markets stuff would enjoy it though. If people think $0 trading is a short-cut to becoming a millionaire day trader though, they are in for a very bad time.

bigtunacan 9y ago
I’m probably not the average Robinhood user, but I was already putting about $50k/year into index funds for retirement. So rather than putting even more in these I wanted to research and invest directly in a handful of stocks long term. I used to use Scottrade for this. That’s not too bad $7/trade ($14/round-trip). If I’m making a sizable enough investment that won’t matter too much. But what if I only had $24 this week? I could buy one share of Ford on Scott-trade, but then I’m upside down until the price doubles (e.g. forever upside down). With Robinhood I can make buys no matter how small the purchase.
- what_ever 9y ago
  Thanks. I think so many people here don't understand how people use RH and quickly jump to conclusion thinking it's only "low net-worth individuals" using it. Before RH, people still invested in individual stocks and it wasn't only "low net-worth" individuals attracted by the greens and reds in the UI doing those.
  - bigtunacan 9y ago
    I’m sure for some users the notifications can be alarming or induce bad/impulsive behavior. I have on occasion though found them useful where I get a notification that X stock is down Y% today. Most of these have been bad market days and I’ve said, “Nice, I’m long on X and it’s on sale today so I’ll pick up a few more shares.” So on the one hand I understand how these could lead to a rash decision from some I don’t think Robinhood is trying to get people to buy high and sell low.
kelnos 9y ago
> They know people enjoy the emotional high of seeing the green numbers in their account when they open the app. This isn't a tool for high net-worth individuals, people that want "traditional" (Vanguard, Wealthfront, Schwab) wealth management investing with long-term planning, or advanced traders looking for Bloomberg terminal-esque features. This is designed to allow the average person to play with their money and see if they can "beat the market". And this is exactly why these sorts of people will continue to remain low-net-worth individuals. Far be it for me to tell anyone what to do with their money to have fun, but these are exactly the sort of people who should be targeted for an easy to use solution that just auto deposits some amount of money into an index fund or target retirement date fund every pay period. It might not be "fun", but they'll be pretty happy later in life when they actually have retirement savings.
retube 9y ago
what does $0 commission mean? unless they're sourcing assets at mid then it's not 0 commission. and they can't be giving trades at mid to customers unless they're taking a loss on every transaction. they must be charging bid-offer - so how much?
- what_ever 9y ago
  I think it's pretty clear in the industry what commission means when it comes to trading stocks. It's on top of the spread. Go to any other broker and they have the same spread. It's not going to be much better at brokers for individual investors like us. And if you are worried about getting worse spread, use limit orders.
  - whoisit_itsme 9y ago
    "Go to any other broker and they have the same spread." Wrong. This is precisely how they operate their business model: they receive payment for the order flow, and don't compete with traditional brokers on execution price for marketable orders. I suggest you look at the public 605 reports for execution quality statistics. "And if you are worried about getting worse spread, use limit orders." This has nothing to do with it really.

bigtunacan 9y ago

I’m probably not the average Robinhood user, but I was already putting about $50k/year into index funds for retirement. So rather than putting even more in these I wanted to research and invest directly in a handful of stocks long term. I used to use Scottrade for this. That’s not too bad $7/trade ($14/round-trip). If I’m making a sizable enough investment that won’t matter too much. But what if I only had $24 this week? I could buy one share of Ford on Scott-trade, but then I’m upside down until the price doubles (e.g. forever upside down). With Robinhood I can make buys no matter how small the purchase.

what_ever 9y ago
Thanks. I think so many people here don't understand how people use RH and quickly jump to conclusion thinking it's only "low net-worth individuals" using it. Before RH, people still invested in individual stocks and it wasn't only "low net-worth" individuals attracted by the greens and reds in the UI doing those.
- bigtunacan 9y ago
  I’m sure for some users the notifications can be alarming or induce bad/impulsive behavior. I have on occasion though found them useful where I get a notification that X stock is down Y% today. Most of these have been bad market days and I’ve said, “Nice, I’m long on X and it’s on sale today so I’ll pick up a few more shares.” So on the one hand I understand how these could lead to a rash decision from some I don’t think Robinhood is trying to get people to buy high and sell low.

kelnos 9y ago

> They know people enjoy the emotional high of seeing the green numbers in their account when they open the app. This isn't a tool for high net-worth individuals, people that want "traditional" (Vanguard, Wealthfront, Schwab) wealth management investing with long-term planning, or advanced traders looking for Bloomberg terminal-esque features. This is designed to allow the average person to play with their money and see if they can "beat the market". And this is exactly why these sorts of people will continue to remain low-net-worth individuals. Far be it for me to tell anyone what to do with their money to have fun, but these are exactly the sort of people who should be targeted for an easy to use solution that just auto deposits some amount of money into an index fund or target retirement date fund every pay period. It might not be "fun", but they'll be pretty happy later in life when they actually have retirement savings.

retube 9y ago

what does $0 commission mean? unless they're sourcing assets at mid then it's not 0 commission. and they can't be giving trades at mid to customers unless they're taking a loss on every transaction. they must be charging bid-offer - so how much?

what_ever 9y ago
I think it's pretty clear in the industry what commission means when it comes to trading stocks. It's on top of the spread. Go to any other broker and they have the same spread. It's not going to be much better at brokers for individual investors like us. And if you are worried about getting worse spread, use limit orders.
- whoisit_itsme 9y ago
  "Go to any other broker and they have the same spread." Wrong. This is precisely how they operate their business model: they receive payment for the order flow, and don't compete with traditional brokers on execution price for marketable orders. I suggest you look at the public 605 reports for execution quality statistics. "And if you are worried about getting worse spread, use limit orders." This has nothing to do with it really.