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Robinhood has lured young traders, sometimes with devastating results

113 points by prostoalex 6y ago

historyremade 6y ago
Scammers. Fuck you NY Times. Say it direct. Say it right. Say it Loud. Show balls.
deminature 6y ago
>After funding his account with $15,000 in credit card advances, he began spending more time on the app. Isn't there some element of personal responsibility here? Is Robinhood responsible for the disastrous financial decisions of an individual?
nchase 6y ago
Anyone have a link to the full article?
- deleted 6y ago
  [deleted]
- dred_prte_rbrts 6y ago
  I do not but I will bet money it's the NYT's take on https://www.cnn.com/2020/06/19/business/robinhood-suicide-alex-kearns/index.html https://www.cnn.com/2020/06/19/business/robinhood-suicide-al...
- vageli 6y ago
  https://web.archive.org/web/20200708175004/https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html https://web.archive.org/web/20200708175004/https://www.nytim...
  - nchase 6y ago
    Perfect, thank you!
- iampims 6y ago
  For once Google AMP is useful: https://www.google.com/amp/s/www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.amp.html https://www.google.com/amp/s/www.nytimes.com/2020/07/08/tech...
- Hamuko 6y ago
  Not really a direct answer to your question, but I'm using https://bitbucket.org/magnolia1234/bypass-paywalls-firefox-clean/src/master/ https://bitbucket.org/magnolia1234/bypass-paywalls-firefox-c... and having success with it.
  - deleted 6y ago
    [deleted]
- Miner49er 6y ago
  Disable JS on the page.
- Ansil849 6y ago
  https://github.com/iamadamdev/bypass-paywalls-chrome https://github.com/iamadamdev/bypass-paywalls-chrome (includes a Firefox extension as well)
deleted 6y ago
[deleted]
cameronperot 6y ago
The only thing Robinhood did good was pushing other brokerages to get rid of commissions. I would hope that most people left their platform after they had those major outages during volatile trading days a few months ago. Any place that has outages lasting that long without properly explaining what happened shouldn't be licensed to deal in securities. Now they're just preying on people that aren't knowledgeable in the financial markets by showing them how "easy" it is to trade. I have studied and worked in finance, and I'll be the first person to tell you, trading isn't the least bit "easy" and shouldn't be portrayed as such.
- devalgo 6y ago
  Well they sell your trade data to HFT firms before a trade is executed to let them arbitrage on you so you are probably net losing money vs fees from other brokerages.
  - tptacek 6y ago
    No. The opposite thing is true: HFTs want your retail trades because the cost basis of trading with you is lower than with trading with the broader market, and they can split the difference in savings with the brokerage. If anything, you're likely getting price improvement from the HFT. (None of this makes Robinhood good; it's just that PFOF doesn't explain why they're bad).
    - awinder 6y ago
      Ok now I’m re-heartened, it comes up every time but it gets good rebuttals now xD
    - edouard-harris 6y ago
      Yes, this is exactly right. The truth about HFT is that it has materially reduced the effective trading fees for retail investors across the board. > the cost basis of trading with you is lower than with trading with the broader market But this is exactly why Robinhood is bad. Trading with you (a retail investor) has a lower cost basis because retail investors are reliably less sophisticated than institutional investors. Therefore: an institution will pay to take the other side of a series of trades with you because it knows you aren't sophisticated, so it's likely to win in the long run. From there, follow the incentives: Robinhood is incentivized to sell more order flow; which it does by increasing its trading volume; which it does by making trades easier. Robinhood is also incentivized to increase its net revenue per trade; which it does by increasing the price at which it can sell a given volume of order flow to institutions; which it does by making its average trade less sophisticated. In summary: The most obvious way for Robinhood to optimize its revenue is to get its investors to make lots of bad trades.
mtgp1000 6y ago
This reads like a series of increasingly terrible decisions. I don't have access to the full article but if they are laying the case for having Robinhood regulated (as I suspect) then I'd say what's even more unfair is preventing responsible people from having nice things because irresponsible people can't be trusted not to hurt themselves, or understand the risks they're taking. Granted, that bit about gamefication does concern me, it's sort of dopamine abuse - I'd argue to an extent it's a dark pattern, just like frequent unsolicited attention grabbing notifications from other apps to encourage use.
- ericmcer 6y ago
  It’s not really gamification, Robinhood just literally adds smiley faces next to alerts like “:) your order to sell 20 contracts was completed.” I imagine it is nearly identical to any other brokerages notifications but with an emoji added.
bobblywobbles 6y ago
I can't really read the whole article, but from what it sounds like is a man put too much into the stock market, and lost. He took out even more to pay his debts, and lost that too. This has nothing to do with the app, but the risk tolerance of those involved.
- dannypgh 6y ago
  The worst cases of people losing their shirt tend to be people speculating with options, and it's definitely up to the broker what options trades (beyond those secured by cash or securities) they want to permit their customers to do. There are different levels of options trading for a reason. Giving level 3 options trading out to anyone is reckless; in the hands of many people these are tools that are pretty much being used for making leveraged speculative bets, not careful hedges of risk.
- tptacek 6y ago
  If your mitigation of Robinhood's culpability would apply just as straightforwardly to an actual casino, that's a damning statement about what Robinhood is.
  - pathseeker 6y ago
    But all of these trades are just as possible in etrade, TD Ameritrade, etc. In robinhood, your trades even have to be cash-secured so your downside is capped to your deposit amount. The futures account I have on TD Ameritrade is much riskier than RH...
    - tptacek 6y ago
      The whole article is about the distinction.
- tmpz22 6y ago
  The app makes it very easy (and promotes) leveraging beyond your means which encourages subcultures like /r/wallstreetbets and influences young professionals to dump irresponsible amounts of money into the app. Robinhood 100% knows about this and benefits from it, you can argue how complicit they are but there is no doubting that they are in fact complicit.
ericmcer 6y ago
Wait the dude on the cover page went from 70k to 1 million then back to 140k in a year? Why is that a sad story?
muhammadusman 6y ago
I'm in the typical customer base for Robinhood. I've been using their app since late 2015 and I've never ran into issues like these. This is bound to happen if you're treating trading like gambling and listening to strangers on the internet about which stock to buy to get rich quickly. Decades of historical data is helpful in figuring out that if you just spend time in the market (with decent ETFs or stocks), you'll gain money. Timing the market is way worse than just spending time in the market. The examples cited in this article are people who are at the extremes and very tragic but I hope it serves as a warning to other young investors that Robinhood is not a game and the money is real, so tread lightly. Disclaimer: I've put in around $10k into Robinhood and it's not my primary savings/long term investment brokerage.
- brewdad 6y ago
  Honest question: If you are using RH as a buy and hold investor and you have other brokerages that you consider your primary savings, why are you using RH at all?
KKKKkkkk1 6y ago
> That growth has kept the money flowing in from venture capitalists. Sequoia Capital and New Enterprise Associates are among those that have poured $1.3 billion into Robinhood. In May, the company received a fresh $280 million. What does a trading app do with $1.5 bn? Isn't trading a commodity technology?
- wmf 6y ago
  Marketing?
- pathseeker 6y ago
  >Isn't trading a commodity technology? The rapid consumption RH has of younger retail market seems to imply the answer is firmly "no". The backend of sending orders to exchanges without caring much about latency is surely simple, but the UI and UX clearly had plenty of room for improvement.
- omarchowdhury 6y ago
  At the minimum, capture market share.
deleted 6y ago
[deleted]
patrickm_ 6y ago
The line that stands out most to me concerns the driving force behind the obsession with Robinhood - the confetti and emoji-filled notifications that make it into a game. It reminds me of the stories of children spending hundreds of dollars on apps like "Clash of Clans" and "Smurfs' Village" only for their parents to find out when they see the bill. Only now it's the parents that are getting taken advantage of. As social media and TikTok-like products shorten our attention spans and continue providing instant gratification, it will become easier and easier to take advantage of people. These aspects, coupled with making the user feel smart (think "I'm a Wall Street trader"), and giving them the potential to make lots of money, may start getting applied to other spaces and could have drastic effects.
- gkoberger 6y ago
  Well, is the counter true? That investing should feel like a corporate sludge, overcomplicated to anyone who isn't lucky enough to have someone to show them how? Investing is scary for most people. I think a positive spin is that Robinhood makes it so groups of people underrepresented in stock trading can participate. The stock market already is a game, and it's being played by rich people making themselves richer. Isn't it cool that a 22 year old with $100 can get involved, and it's not just old rich people who benefit from the system? The stock market is soaring, despite millions being out of work in the US. The US has two different economies, and I'm all for anything that gives the latter group the same tools the former group has.
  - tripletao 6y ago
    Stock investing (i.e., owning stock for a long time, ideally with diversification, hoping to profit from new economic value created by the companies you own) is positive-sum, and I agree that it's beneficial to encourage that. Stock trading (i.e., buying and selling stocks over short periods, hoping to profit from short-term changes in price) is a zero-sum game of skill played against full-time professionals, with predictable results for an uninformed amateur. Do you really think that 22-year-old is going to buy $100 worth of SPY and watch excitedly for their quarterly fifty-cent dividend? Or will they make a bunch of emotional trades, each one transferring some fraction of their hard-earned money (not every time, but in an expected value sense) to a professional's algorithm? Robinhood's marketing and user interface are designed to encourage the latter, and I believe that's net harmful to their clients. I'd rather know nothing about the stock market than believe falsely that uninformed trading of single stocks was a good idea. Of course nothing stops you from using Robinhood to buy and hold an index fund; but to the extent their app is designed to encourage you not to, anyone who tries to use it that way is stealing cheese from mousetraps. New investors would be far better off going to Vanguard or similar, even if they have to save up a bit longer to meet the minimums.
cosmodisk 6y ago
Robinhood enabled cheap buying/selling,which means deals are made more frequently and that's what kills most newbies. Imagine looking at your screen and seeing your Google shares going down by 20 points. People panick,they sell only to say two days later that it went back up by 60 points.
- thephyber 6y ago
  I suppose it's more of an indictment of trading stocks in the hands of a newbie, but RH is customized for newbies (low cost trades, fractional ownership, gamification) without (anecdotally) all some of the guard rails that more mature brokerages have. Also, I've read that RH has/had "a bug" (as described on Reddit) where an inexperienced trader could overleverage. I can't see how this risk profile is profitable for RH, especially if they specifically aim to have a large portion of the newbie trader market.
1123581321 6y ago
I know a few investors who think Robinhood is amazing. While they haven’t lost the sums highlighted in the article, they trade often and tend to not realize they lose money. I’ve noticed they tend to exaggerate movements in individual stocks; my theory is the scale of the default stock chart views encourage this. They also don’t understand that Robinhood’s fractional shares and cryptocurrency are a degree more abstracted than traditional online brokerages and wallets.
- cosmodisk 6y ago
  Sounds like target audience for Robinhood.
understandablyW 6y ago
you've got to knooow when to hold 'em
cowmix 6y ago
What is the difference (pros and cons) of using Square to trade stocks over Robinhood?
andrewzah 6y ago
So robinhood's crime was... making it easier to trade? "After funding his account with $15,000 in credit card advances, he began spending more time on the app." "As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. " "with whom he has three children" Nothing Robinhood (or anything else) has will cure financial stupidity. Furthermore, anyone who -still- uses robinhood after their various crashes is asking for trouble. I've had zero issues with TD Ameritrade.
- lykr0n 6y ago
  Yeah. That's not Robinhood's fault. That's just a gambling addiction.
  - shkkmo 6y ago
    Which is part of why gambling is as regulated as it is. Robinhood has made trading so easy that it is effectively a gambling platform that doesn't have to adhere to gambling laws.
    - asdff 6y ago
      I wouldn't blame robin hood. It's not like the TD ameritrade app is any more difficult to blow your money with, yet they are getting a pass in this thread due to them being the institution and robinhood being a new and popular face.
    - vmception 6y ago
      gambling is regulated at the state level almost exclusively, which is almost impossible for the financial markets over the last century. and in the financial markets, the federal government already has classist gatekeeping regulations because "poor people are dumb, rich people are smart", which should all be abolished the finger pointing at Robinhood is based on ignorance of the entire sector.
      - 6y ago
hashbig 6y ago
It is the price of democracy. When voting was democratized it allowed people with all different backgrounds and varying level of education to contribute to the political body of a country. Same thing happened with the democratizing of information with the arrival of the internet and search engines. It allowed the flow and availability of information, all kinds of information, including flat earth conspiracy theories, guides on how to perform violent acts ...etc. One needs to look at the net sum. In my opinion, the net of the democratizing of stock trading, like other forms of democracies was a positive.
- balls187 6y ago
  I don't think the issue is democratizing stock trading. The issue, as I understand it, it's that Robinhood's UX has crossed the line from "easy, functional and usable" over to one that employs similar psychological tactics that social media, casinos, and lootboxes employ to keep users engaged with their product. I'm not passing judgement on their implementation, instead likening it to similar pleasure cycles that lead to addiction like behavior in the aforementioned products above.
  - kjksf 6y ago
    Maybe we shouldn't be throwing words like "addiction" willy nilly. Is it really your opinion that the guy wouldn't fund his investments via credit card debt and then followed it up by borrowing $30k against his mortgage if only he used ETrade and not Robinhod? Somehow, I really don't think so.
    - balls187 6y ago
      > Is it really your opinion that the guy wouldn't fund his investments via credit card debt and then followed it up by borrowing $30k against his mortgage if only he used ETrade and not Robinhod? Mechanically, ETrade does not allow you to fund your account via Credit Card. You could request a check from your credit card company I guess... But yes, most brokerage apps are focused on data, and less about engagement.
- 6y ago
Ansil849 6y ago
> As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. One really can't make an armchair diagnosis based off one observation, but this seems like a telltale sign of gambling addiction. The cycle of thinking that to make up for losses you need to dig the hole just a bit deeper to strike oil and float back out.
tinza123 6y ago
Most people are not trained to trade options with pressing a button. Many Robinhood users don't fully understand what the order they just placed mean, just look at r/wallstreetbets. Robinhood is pushing alcohol to minors in a sense.
- asdff 6y ago
  Isn't everything? This is pushing alcohol to adults, mind you. Adults are making these decisions. That being said, its not like TD ameritrade trains me to trade options when I press the buy button on their cute mobile app.
nickjj 6y ago
The article sounds more like a story on gambling. You could replace "trading stocks" with "playing poker" and it's basically the same story. In other words, someone played way outside of their bankroll and got crushed. For example if you have $200 and want to get better at poker, you don't sit down at a table and put $100 or $200 in chips. You'd likely want to sit down where the maximum buy-in is maybe $2 or $5 so you can actually get experience and ride a bunch of variance without losing everything immediately. Sure, you won't be getting rich any time soon but if your goal is to improve, you will slowly be able to move up as you get better. When in doubt, follow the Rounders quote of "you can't lose what you don't put in the middle".
- tripletao 6y ago
  This is a bad analogy. Lower-limit poker tables attract lower-skilled players for the reason you give, which means you're playing against lower-skilled opponents[1]. In the stock market, you're always playing against the world's top professionals and their computers. As in any game with a random element, unskilled players still sometimes win, but on average they lose. Investing isn't gambling, and Robinhood's conflation of the two is exactly the reason to criticize them. It's very likely that a share of SPY will be worth more in real terms thirty years from now than it is today, and that makes it a useful vehicle to save for retirement. What it does in the next day, month, year, or even decade is much harder to predict. By encouraging naive users to trade frequently, Robinhood is encouraging users to expose themselves to that short-term volatility, with no benefit except fulfillment of an urge to gamble. 1. Unless you're playing online against some guy with a bunch of fake identities and a bot. Is that still a thing?
  - nickjj 6y ago
    > This is a bad analogy. The analogy I was going for was this person took what sounds like his entire savings and then took loaned money against his house and put it all into trading super high variance options. I'm not an experienced trader but I occasionally talk to some. They all say options trading like that is a massive gamble. There's a big difference between long term investing into an ETF and doing what this person did. He could have chosen to put $500 into his account and hand picked some stocks or ETFs and then watched it grow or shrink over time as he learns how to trade but instead he chose to use 15k+ and then 2 big loans on high variance moves to either hit it big or go bust in a very short time frame. It just happened in this case he busted. I think he would have had the same outcome on another platform if Robinhood didn't exist.
fortran77 6y ago
It's not like a paycheck loan product where you may get a desperate person buying it as a "last resort". People have to make an effort to find out about it, select a stock to buy, do some "research" even if it's reading bad advice on subreddits. So it's hard for me to have too much sympathy for people who have lost money on this. (I don't trade stocks very often. Every few months I rebalance things. This has worked well for 35+ years. I'm 57 now.)
- saalweachter 6y ago
  I think there are few things more harmful than the idea that you can get rich fast.
twirlock 6y ago
I've made about 300% profit since last summer. I don't have any special knowledge of finance. It's not some hugely complicated thing. We don't actually need social media marketers doing a PR campaign to warn us. Get a better excuse.
m3kw9 6y ago
For most, Robinhood is a casino
gkoberger 6y ago
What a crappy framing. From a publicly traded company that benefits from the stock market, no less. The stock market is soaring, despite millions being out of work in the US. The US has two different economies, and I'm all for anything that gives the latter group the same tools the former group has. Why should only rich people who know how to navigate beige clunky 1990s websites, or whose parents give them the number to their investment guy, be the only ones who get to trade? And the frustrating part of this article is that they aren't saying trading is inherently risky, but rather that a certain group shouldn't be allowed to? It's a cliche that stock traders were jumping out of windows in 1929, but nobody said "we should shut down the stock market". Everything can be overdone... gambling, sugar, video games. Why focus on the few people who take it too far, rather than the millions who now have the same access to wealth building that rich old people do?
- alexandercrohde 6y ago
  I hate this framing too. I don't understand all the hand-wringing over people losing money in the stock market. If you want to be mad about people losing money, be mad about the ones where it's rigged against them -- lotto/casinos. Not the ones where they average positive. Hard for me to take this even remotely seriously.
  - ImprobableTruth 6y ago
    Options/futures (which I'd wager most of Robinhood's customers use) are zero sum games.
- TheCoelacanth 6y ago
  An index fund from Vanguard takes advantage of the market soaring just as well as anything Robinhood provides. Robinhood encourages active trading, which is almost always a bad bet for small traders. Robinhood also provides access to much riskier things like trading on margin.
  - kjksf 6y ago
    You can invest in Vanguard ETFs on Robinhood. Except, you know, easier and faster than via vanguard.com Literally every brokerage allows trading on margin because they all make more money that way (via interest fees). Banks flood people with credit card offers (instant, unsecured $10k loan) and allow you to irresponsibly borrow against your mortgage. How are those other companies any different than Robinhood?
amiga_500 6y ago
They are not "traders". They are kids speculating. Leveraged exposure to the stock market and the obsession with leveraged property are symptomatic of the fact that doing wealth creating jobs no longer pays enough to lead a decent life. It's given us Trump, it's also totally brought the UK to its knees. The rentier culture of wealth appropriation over wealth creation has destroyed the West.
ram_rar 6y ago
Robinhood (RH) cannot cure stupidity. The only thing, they did was to kill all brokerage fees to trade stocks. This has made it easy for value investors like myself who occasionally trades stocks. Having said that, I do believe there are lot of novice traders out there trading options without really understanding what they are getting into. Also, margin trading is another recipe for disaster if you dont know what you're doing. But none of these can be directly attributed to RH. My only major callout here is, they very easily got away for being down during Market hours. For any brokerage, this should not be allowed without any consequences.
keepshoutingsir 6y ago
It's really not gamified. It doesn't "nudge" you. There are no dark UX patterns that I've seen. They do not let you "go from training wheels to driving motorcycles" any more than the actual American driving test does (which, by the way, was less than three minutes long when I took it). This whole article suggests one thing: Adults can't be trusted with their own money. That's more than a little insulting, and while it's tragic that gamblers have clearly used Robinhood as a substitute for other forms of their addiction, it's no different to the many documentaries I've seen of people doing the same thing at Poker tables or slot machines. It's just "bad" because it's in an app. Meanwhile, I've been very happy with the things I learned using Robinhood. Not all of my investments have been successful. I've lost money on some. I've made money on others. I'm not particularly interested in shorting, and I follow the best advice: Don't invest what you can't afford to lose. Maybe they should make that their slogan, since that's really all anyone can complain about.
- hellomyguys 6y ago
  It definitely nudges you more than any other financial app. You get push notifications for stocks making big moves up or down. They show you popular lists which curates stocks in various ways (100 Most Popular, Upcoming Earnings, Top Movers), which makes it find stocks you might want to trade. They show you what analysts are staying about a stock (X% say Buy, Y% say Sell). They integrate news articles and autoplaying playing videos with finance news. The graph of you investing performance is animated the same as a game's high score screen. They also give you a free stock when you sign up or for inviting friends. These are all mechanics pulled from social media and games to drive engagement. Vanguard is definitely not doing any of these things. If I'm more engaged with the app, I feel like I have a better understanding of the market. If I have a better understanding of the market, I feel more confident day trading. At first glance its easy to view Robinhood as just a better UX for a finance app, but it's clear they've gone beyond just making it easy to buy stocks/options and are actively seeking to drive engagement. This combined with the rise of things like r/WallStreetBets has definitely inspired a new type of investor/trader.
  - kjksf 6y ago
Waterluvian 6y ago
I want to take $100 and go wild in this world of amateur investing, intending to experiment until I’ve lost it all. My concern is that I might not understand things and end up leveraging well past what I have injected into the system. Any good tutorials on “intro to investing” purely from an educational perspective? But not just theory. Actual practical instructions.
- javagram 6y ago
  Several brokerages offer a paper trading option so there’s no need to risk real money or fear accidentally leveraging yourself. Just google paper trading, I think thinkorswim has it along with others. If using an actual account just don’t use options and don’t apply for margin when you open the brokerage. It will be a cash only account and you won’t be able to lose more than you put in (assuming we’re talking stocks and bonds here, not Futures).
Uptrenda 6y ago
This article is written like grown-ass adult investors are babies who aren't responsible for their actions and need to be protected from themselves... >“They make it so easy for people that don’t know anything about stocks,” he said. “Then you go there and you start to lose money.” What a ridiculous appeal to emotion. "They" don't do anything. The guy made a bunch of shitty trades and lost some money. It's no ones fault but his own. I also think Robinhood tends to cop a disproportionate amount of crap for their down time. Maintaining 100% uptime is very difficult to provide. Even with the amazing code-as-infrastructure we have now its just not realistic to assume there will never be downtime. Their track record might not be perfect but if you compare it to the average crypto exchange they are practically exemplary...
- mrlala 6y ago
  >grown-ass adult investors You really consider most early 20s to be grown-ass adults? I sure don't.
  - CameronNemo 6y ago
    That seems quite paternalistic. Why should 20 somethings have their access to equity markets restricted? They can vote, go to war, use mind altering substances, and more.
    - mrlala 6y ago
      I didn't say they should have restrictions. But I'm also saying a 20 year old isn't (usually) an adult, in the mental sense.
  - kjksf 6y ago
    People can be immature at any age but this is not a discussion about that. As a society we decided that there is an age at which you become an adult, fully responsible for your actions. At 16 you can start driving cars (aka very effective killing machines). At 17 you can enlist in an army. At 18 you can become a cop. At 21 you can start drinking. So yes, by definition of our society, at 20 years of age you're considered an adult. At that point if you act stupid, don't expect sympathy.
asdff 6y ago
The 15 year olds asking about options on reddit is so concerning. Imagine in 3 years when these kids start thinking about that 30k in student loans they were just approved of.
peter303 6y ago
Internet daytrading in the 1990s was an early version of Robinhood. You no longer needed to place trades with a broker intermediary. Commissions dropped from 3% to $8 a trade. I know people who retired into daytrading, grad students who invested their living stipends In daytrading. Things calmed down during the 2002 recession.
Munam 6y ago
Shameless plug, but I've been working on the following site for a little while: https://options.fyi/ https://options.fyi/ STILL A WORK IN PROGRESS I wanted to hopefully arm people with some more knowledge about options before they started trading, and to try to protect them from themselves.
sys_64738 6y ago
You are ultimately responsible for your own actions so losing 15k$ is this individual's fault. This is no different than buying on credit and thinking you don't have to pay back what you buy. Or taking on student loans. Money isn't free.
Ghjklov 6y ago
They never cover the success stories of small time traders who have been enabled by Robinhood and such brokerages who require no minimums and no commission fees. To me, this just sounds like gatekeeping as usual. The boomer investors don't like the young blood coming in and ruining their game, and realizing how much money can be made by essentially shuffling money around on the stock market while doing nothing concretely valuable to society.
socrates1998 6y ago
Literally the exact same thing happened when people were allowed to day trade with better internet around 1998-2002. Everyone started day trading, especially during the tech bubble right up to 9/11. About 90% of retail traders lose money, so buyer beware. It's hard to trade and beat the market. Save most of your money and trade a small percent if you really enjoy it.
lmilcin 6y ago
I have worked in a brokerage house on trading systems and currently in large bank on risk calculations on complex financial products. I cannot understate how important is that people first get to know what they are dealing with when they start investing in anything. Whether you are investing in housing, collectibles or exotic financial products you absolutely have to understand how the thing works. Everybody knows you need to pay close attention when you buy a house because a small detail can make your entire investment a flop. Everybody knows to get expert advice to estimate value of collectibles or spot fakes when you buy for investment. For some unknown to me reason people think the only thing they need to do is to look at nice graphs and try to figure out if the line goes up or down without actually understanding what the product is, how every single option works exactly, and the in-depth situation of the product and its market environment. For you, people, who want to invest your money, please, do not invest in stuff you do not understand. Financial markets are very complex these days and it is unlikely you are going to get valuable insight without treating it as your full time job and even then it is pretty difficult. You are competing with huge corporations employing thousands of bright individuals trying to do the same but without risking their own money. Your fallible mind will get you hooked because it is likely you will get some early wins and it will likely cause you to stop being rational about your market decisions. It is very difficult to be rational when significant portion of your own capital is at stake.

113 points by prostoalex 6y ago

Scammers. Fuck you NY Times. Say it direct. Say it right. Say it Loud. Show balls.

>After funding his account with $15,000 in credit card advances, he began spending more time on the app. Isn't there some element of personal responsibility here? Is Robinhood responsible for the disastrous financial decisions of an individual?

nchase 6y ago

Anyone have a link to the full article?

deleted 6y ago
[deleted]
dred_prte_rbrts 6y ago
I do not but I will bet money it's the NYT's take on https://www.cnn.com/2020/06/19/business/robinhood-suicide-alex-kearns/index.html https://www.cnn.com/2020/06/19/business/robinhood-suicide-al...
vageli 6y ago
https://web.archive.org/web/20200708175004/https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html https://web.archive.org/web/20200708175004/https://www.nytim...
- nchase 6y ago
  Perfect, thank you!
iampims 6y ago
For once Google AMP is useful: https://www.google.com/amp/s/www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.amp.html https://www.google.com/amp/s/www.nytimes.com/2020/07/08/tech...
Hamuko 6y ago
Not really a direct answer to your question, but I'm using https://bitbucket.org/magnolia1234/bypass-paywalls-firefox-clean/src/master/ https://bitbucket.org/magnolia1234/bypass-paywalls-firefox-c... and having success with it.
- deleted 6y ago
  [deleted]
Miner49er 6y ago
Disable JS on the page.
Ansil849 6y ago
https://github.com/iamadamdev/bypass-paywalls-chrome https://github.com/iamadamdev/bypass-paywalls-chrome (includes a Firefox extension as well)

deleted 6y ago

[deleted]

cameronperot 6y ago

The only thing Robinhood did good was pushing other brokerages to get rid of commissions. I would hope that most people left their platform after they had those major outages during volatile trading days a few months ago. Any place that has outages lasting that long without properly explaining what happened shouldn't be licensed to deal in securities. Now they're just preying on people that aren't knowledgeable in the financial markets by showing them how "easy" it is to trade. I have studied and worked in finance, and I'll be the first person to tell you, trading isn't the least bit "easy" and shouldn't be portrayed as such.

devalgo 6y ago
Well they sell your trade data to HFT firms before a trade is executed to let them arbitrage on you so you are probably net losing money vs fees from other brokerages.
- tptacek 6y ago
  No. The opposite thing is true: HFTs want your retail trades because the cost basis of trading with you is lower than with trading with the broader market, and they can split the difference in savings with the brokerage. If anything, you're likely getting price improvement from the HFT. (None of this makes Robinhood good; it's just that PFOF doesn't explain why they're bad).
  - awinder 6y ago
    Ok now I’m re-heartened, it comes up every time but it gets good rebuttals now xD
  - edouard-harris 6y ago
    Yes, this is exactly right. The truth about HFT is that it has materially reduced the effective trading fees for retail investors across the board. > the cost basis of trading with you is lower than with trading with the broader market But this is exactly why Robinhood is bad. Trading with you (a retail investor) has a lower cost basis because retail investors are reliably less sophisticated than institutional investors. Therefore: an institution will pay to take the other side of a series of trades with you because it knows you aren't sophisticated, so it's likely to win in the long run. From there, follow the incentives: Robinhood is incentivized to sell more order flow; which it does by increasing its trading volume; which it does by making trades easier. Robinhood is also incentivized to increase its net revenue per trade; which it does by increasing the price at which it can sell a given volume of order flow to institutions; which it does by making its average trade less sophisticated. In summary: The most obvious way for Robinhood to optimize its revenue is to get its investors to make lots of bad trades.

mtgp1000 6y ago

This reads like a series of increasingly terrible decisions. I don't have access to the full article but if they are laying the case for having Robinhood regulated (as I suspect) then I'd say what's even more unfair is preventing responsible people from having nice things because irresponsible people can't be trusted not to hurt themselves, or understand the risks they're taking. Granted, that bit about gamefication does concern me, it's sort of dopamine abuse - I'd argue to an extent it's a dark pattern, just like frequent unsolicited attention grabbing notifications from other apps to encourage use.

ericmcer 6y ago
It’s not really gamification, Robinhood just literally adds smiley faces next to alerts like “:) your order to sell 20 contracts was completed.” I imagine it is nearly identical to any other brokerages notifications but with an emoji added.

bobblywobbles 6y ago

I can't really read the whole article, but from what it sounds like is a man put too much into the stock market, and lost. He took out even more to pay his debts, and lost that too. This has nothing to do with the app, but the risk tolerance of those involved.

dannypgh 6y ago
The worst cases of people losing their shirt tend to be people speculating with options, and it's definitely up to the broker what options trades (beyond those secured by cash or securities) they want to permit their customers to do. There are different levels of options trading for a reason. Giving level 3 options trading out to anyone is reckless; in the hands of many people these are tools that are pretty much being used for making leveraged speculative bets, not careful hedges of risk.
tptacek 6y ago
If your mitigation of Robinhood's culpability would apply just as straightforwardly to an actual casino, that's a damning statement about what Robinhood is.
- pathseeker 6y ago
  But all of these trades are just as possible in etrade, TD Ameritrade, etc. In robinhood, your trades even have to be cash-secured so your downside is capped to your deposit amount. The futures account I have on TD Ameritrade is much riskier than RH...
  - tptacek 6y ago
    The whole article is about the distinction.
tmpz22 6y ago
The app makes it very easy (and promotes) leveraging beyond your means which encourages subcultures like /r/wallstreetbets and influences young professionals to dump irresponsible amounts of money into the app. Robinhood 100% knows about this and benefits from it, you can argue how complicit they are but there is no doubting that they are in fact complicit.

ericmcer 6y ago

Wait the dude on the cover page went from 70k to 1 million then back to 140k in a year? Why is that a sad story?

muhammadusman 6y ago

I'm in the typical customer base for Robinhood. I've been using their app since late 2015 and I've never ran into issues like these. This is bound to happen if you're treating trading like gambling and listening to strangers on the internet about which stock to buy to get rich quickly. Decades of historical data is helpful in figuring out that if you just spend time in the market (with decent ETFs or stocks), you'll gain money. Timing the market is way worse than just spending time in the market. The examples cited in this article are people who are at the extremes and very tragic but I hope it serves as a warning to other young investors that Robinhood is not a game and the money is real, so tread lightly. Disclaimer: I've put in around $10k into Robinhood and it's not my primary savings/long term investment brokerage.

brewdad 6y ago
Honest question: If you are using RH as a buy and hold investor and you have other brokerages that you consider your primary savings, why are you using RH at all?

KKKKkkkk1 6y ago

> That growth has kept the money flowing in from venture capitalists. Sequoia Capital and New Enterprise Associates are among those that have poured $1.3 billion into Robinhood. In May, the company received a fresh $280 million. What does a trading app do with $1.5 bn? Isn't trading a commodity technology?

wmf 6y ago
Marketing?
pathseeker 6y ago
>Isn't trading a commodity technology? The rapid consumption RH has of younger retail market seems to imply the answer is firmly "no". The backend of sending orders to exchanges without caring much about latency is surely simple, but the UI and UX clearly had plenty of room for improvement.
omarchowdhury 6y ago
At the minimum, capture market share.

deleted 6y ago

[deleted]

patrickm_ 6y ago

The line that stands out most to me concerns the driving force behind the obsession with Robinhood - the confetti and emoji-filled notifications that make it into a game. It reminds me of the stories of children spending hundreds of dollars on apps like "Clash of Clans" and "Smurfs' Village" only for their parents to find out when they see the bill. Only now it's the parents that are getting taken advantage of. As social media and TikTok-like products shorten our attention spans and continue providing instant gratification, it will become easier and easier to take advantage of people. These aspects, coupled with making the user feel smart (think "I'm a Wall Street trader"), and giving them the potential to make lots of money, may start getting applied to other spaces and could have drastic effects.

gkoberger 6y ago
Well, is the counter true? That investing should feel like a corporate sludge, overcomplicated to anyone who isn't lucky enough to have someone to show them how? Investing is scary for most people. I think a positive spin is that Robinhood makes it so groups of people underrepresented in stock trading can participate. The stock market already is a game, and it's being played by rich people making themselves richer. Isn't it cool that a 22 year old with $100 can get involved, and it's not just old rich people who benefit from the system? The stock market is soaring, despite millions being out of work in the US. The US has two different economies, and I'm all for anything that gives the latter group the same tools the former group has.
- tripletao 6y ago
  Stock investing (i.e., owning stock for a long time, ideally with diversification, hoping to profit from new economic value created by the companies you own) is positive-sum, and I agree that it's beneficial to encourage that. Stock trading (i.e., buying and selling stocks over short periods, hoping to profit from short-term changes in price) is a zero-sum game of skill played against full-time professionals, with predictable results for an uninformed amateur. Do you really think that 22-year-old is going to buy $100 worth of SPY and watch excitedly for their quarterly fifty-cent dividend? Or will they make a bunch of emotional trades, each one transferring some fraction of their hard-earned money (not every time, but in an expected value sense) to a professional's algorithm? Robinhood's marketing and user interface are designed to encourage the latter, and I believe that's net harmful to their clients. I'd rather know nothing about the stock market than believe falsely that uninformed trading of single stocks was a good idea. Of course nothing stops you from using Robinhood to buy and hold an index fund; but to the extent their app is designed to encourage you not to, anyone who tries to use it that way is stealing cheese from mousetraps. New investors would be far better off going to Vanguard or similar, even if they have to save up a bit longer to meet the minimums.

cosmodisk 6y ago

Robinhood enabled cheap buying/selling,which means deals are made more frequently and that's what kills most newbies. Imagine looking at your screen and seeing your Google shares going down by 20 points. People panick,they sell only to say two days later that it went back up by 60 points.

thephyber 6y ago
I suppose it's more of an indictment of trading stocks in the hands of a newbie, but RH is customized for newbies (low cost trades, fractional ownership, gamification) without (anecdotally) all some of the guard rails that more mature brokerages have. Also, I've read that RH has/had "a bug" (as described on Reddit) where an inexperienced trader could overleverage. I can't see how this risk profile is profitable for RH, especially if they specifically aim to have a large portion of the newbie trader market.

1123581321 6y ago

I know a few investors who think Robinhood is amazing. While they haven’t lost the sums highlighted in the article, they trade often and tend to not realize they lose money. I’ve noticed they tend to exaggerate movements in individual stocks; my theory is the scale of the default stock chart views encourage this. They also don’t understand that Robinhood’s fractional shares and cryptocurrency are a degree more abstracted than traditional online brokerages and wallets.

cosmodisk 6y ago
Sounds like target audience for Robinhood.

understandablyW 6y ago

you've got to knooow when to hold 'em

cowmix 6y ago

What is the difference (pros and cons) of using Square to trade stocks over Robinhood?

andrewzah 6y ago

So robinhood's crime was... making it easier to trade? "After funding his account with $15,000 in credit card advances, he began spending more time on the app." "As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. " "with whom he has three children" Nothing Robinhood (or anything else) has will cure financial stupidity. Furthermore, anyone who -still- uses robinhood after their various crashes is asking for trouble. I've had zero issues with TD Ameritrade.

lykr0n 6y ago
Yeah. That's not Robinhood's fault. That's just a gambling addiction.
- shkkmo 6y ago
  Which is part of why gambling is as regulated as it is. Robinhood has made trading so easy that it is effectively a gambling platform that doesn't have to adhere to gambling laws.
  - asdff 6y ago
    I wouldn't blame robin hood. It's not like the TD ameritrade app is any more difficult to blow your money with, yet they are getting a pass in this thread due to them being the institution and robinhood being a new and popular face.
  - vmception 6y ago
    gambling is regulated at the state level almost exclusively, which is almost impossible for the financial markets over the last century. and in the financial markets, the federal government already has classist gatekeeping regulations because "poor people are dumb, rich people are smart", which should all be abolished the finger pointing at Robinhood is based on ignorance of the entire sector.
    - 6y ago

hashbig 6y ago

It is the price of democracy. When voting was democratized it allowed people with all different backgrounds and varying level of education to contribute to the political body of a country. Same thing happened with the democratizing of information with the arrival of the internet and search engines. It allowed the flow and availability of information, all kinds of information, including flat earth conspiracy theories, guides on how to perform violent acts ...etc. One needs to look at the net sum. In my opinion, the net of the democratizing of stock trading, like other forms of democracies was a positive.

balls187 6y ago
I don't think the issue is democratizing stock trading. The issue, as I understand it, it's that Robinhood's UX has crossed the line from "easy, functional and usable" over to one that employs similar psychological tactics that social media, casinos, and lootboxes employ to keep users engaged with their product. I'm not passing judgement on their implementation, instead likening it to similar pleasure cycles that lead to addiction like behavior in the aforementioned products above.
- kjksf 6y ago
  Maybe we shouldn't be throwing words like "addiction" willy nilly. Is it really your opinion that the guy wouldn't fund his investments via credit card debt and then followed it up by borrowing $30k against his mortgage if only he used ETrade and not Robinhod? Somehow, I really don't think so.
  - balls187 6y ago
    > Is it really your opinion that the guy wouldn't fund his investments via credit card debt and then followed it up by borrowing $30k against his mortgage if only he used ETrade and not Robinhod? Mechanically, ETrade does not allow you to fund your account via Credit Card. You could request a check from your credit card company I guess... But yes, most brokerage apps are focused on data, and less about engagement.
6y ago

Ansil849 6y ago

> As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. One really can't make an armchair diagnosis based off one observation, but this seems like a telltale sign of gambling addiction. The cycle of thinking that to make up for losses you need to dig the hole just a bit deeper to strike oil and float back out.

tinza123 6y ago

Most people are not trained to trade options with pressing a button. Many Robinhood users don't fully understand what the order they just placed mean, just look at r/wallstreetbets. Robinhood is pushing alcohol to minors in a sense.

asdff 6y ago
Isn't everything? This is pushing alcohol to adults, mind you. Adults are making these decisions. That being said, its not like TD ameritrade trains me to trade options when I press the buy button on their cute mobile app.

nickjj 6y ago

The article sounds more like a story on gambling. You could replace "trading stocks" with "playing poker" and it's basically the same story. In other words, someone played way outside of their bankroll and got crushed. For example if you have $200 and want to get better at poker, you don't sit down at a table and put $100 or $200 in chips. You'd likely want to sit down where the maximum buy-in is maybe $2 or $5 so you can actually get experience and ride a bunch of variance without losing everything immediately. Sure, you won't be getting rich any time soon but if your goal is to improve, you will slowly be able to move up as you get better. When in doubt, follow the Rounders quote of "you can't lose what you don't put in the middle".

tripletao 6y ago
This is a bad analogy. Lower-limit poker tables attract lower-skilled players for the reason you give, which means you're playing against lower-skilled opponents[1]. In the stock market, you're always playing against the world's top professionals and their computers. As in any game with a random element, unskilled players still sometimes win, but on average they lose. Investing isn't gambling, and Robinhood's conflation of the two is exactly the reason to criticize them. It's very likely that a share of SPY will be worth more in real terms thirty years from now than it is today, and that makes it a useful vehicle to save for retirement. What it does in the next day, month, year, or even decade is much harder to predict. By encouraging naive users to trade frequently, Robinhood is encouraging users to expose themselves to that short-term volatility, with no benefit except fulfillment of an urge to gamble. 1. Unless you're playing online against some guy with a bunch of fake identities and a bot. Is that still a thing?
- nickjj 6y ago
  > This is a bad analogy. The analogy I was going for was this person took what sounds like his entire savings and then took loaned money against his house and put it all into trading super high variance options. I'm not an experienced trader but I occasionally talk to some. They all say options trading like that is a massive gamble. There's a big difference between long term investing into an ETF and doing what this person did. He could have chosen to put $500 into his account and hand picked some stocks or ETFs and then watched it grow or shrink over time as he learns how to trade but instead he chose to use 15k+ and then 2 big loans on high variance moves to either hit it big or go bust in a very short time frame. It just happened in this case he busted. I think he would have had the same outcome on another platform if Robinhood didn't exist.

fortran77 6y ago

It's not like a paycheck loan product where you may get a desperate person buying it as a "last resort". People have to make an effort to find out about it, select a stock to buy, do some "research" even if it's reading bad advice on subreddits. So it's hard for me to have too much sympathy for people who have lost money on this. (I don't trade stocks very often. Every few months I rebalance things. This has worked well for 35+ years. I'm 57 now.)

saalweachter 6y ago
I think there are few things more harmful than the idea that you can get rich fast.

twirlock 6y ago

I've made about 300% profit since last summer. I don't have any special knowledge of finance. It's not some hugely complicated thing. We don't actually need social media marketers doing a PR campaign to warn us. Get a better excuse.

m3kw9 6y ago

For most, Robinhood is a casino

gkoberger 6y ago

What a crappy framing. From a publicly traded company that benefits from the stock market, no less. The stock market is soaring, despite millions being out of work in the US. The US has two different economies, and I'm all for anything that gives the latter group the same tools the former group has. Why should only rich people who know how to navigate beige clunky 1990s websites, or whose parents give them the number to their investment guy, be the only ones who get to trade? And the frustrating part of this article is that they aren't saying trading is inherently risky, but rather that a certain group shouldn't be allowed to? It's a cliche that stock traders were jumping out of windows in 1929, but nobody said "we should shut down the stock market". Everything can be overdone... gambling, sugar, video games. Why focus on the few people who take it too far, rather than the millions who now have the same access to wealth building that rich old people do?

alexandercrohde 6y ago
I hate this framing too. I don't understand all the hand-wringing over people losing money in the stock market. If you want to be mad about people losing money, be mad about the ones where it's rigged against them -- lotto/casinos. Not the ones where they average positive. Hard for me to take this even remotely seriously.
- ImprobableTruth 6y ago
  Options/futures (which I'd wager most of Robinhood's customers use) are zero sum games.
TheCoelacanth 6y ago
An index fund from Vanguard takes advantage of the market soaring just as well as anything Robinhood provides. Robinhood encourages active trading, which is almost always a bad bet for small traders. Robinhood also provides access to much riskier things like trading on margin.
- kjksf 6y ago
  You can invest in Vanguard ETFs on Robinhood. Except, you know, easier and faster than via vanguard.com Literally every brokerage allows trading on margin because they all make more money that way (via interest fees). Banks flood people with credit card offers (instant, unsecured $10k loan) and allow you to irresponsibly borrow against your mortgage. How are those other companies any different than Robinhood?

amiga_500 6y ago

They are not "traders". They are kids speculating. Leveraged exposure to the stock market and the obsession with leveraged property are symptomatic of the fact that doing wealth creating jobs no longer pays enough to lead a decent life. It's given us Trump, it's also totally brought the UK to its knees. The rentier culture of wealth appropriation over wealth creation has destroyed the West.

ram_rar 6y ago

Robinhood (RH) cannot cure stupidity. The only thing, they did was to kill all brokerage fees to trade stocks. This has made it easy for value investors like myself who occasionally trades stocks. Having said that, I do believe there are lot of novice traders out there trading options without really understanding what they are getting into. Also, margin trading is another recipe for disaster if you dont know what you're doing. But none of these can be directly attributed to RH. My only major callout here is, they very easily got away for being down during Market hours. For any brokerage, this should not be allowed without any consequences.

keepshoutingsir 6y ago

It's really not gamified. It doesn't "nudge" you. There are no dark UX patterns that I've seen. They do not let you "go from training wheels to driving motorcycles" any more than the actual American driving test does (which, by the way, was less than three minutes long when I took it). This whole article suggests one thing: Adults can't be trusted with their own money. That's more than a little insulting, and while it's tragic that gamblers have clearly used Robinhood as a substitute for other forms of their addiction, it's no different to the many documentaries I've seen of people doing the same thing at Poker tables or slot machines. It's just "bad" because it's in an app. Meanwhile, I've been very happy with the things I learned using Robinhood. Not all of my investments have been successful. I've lost money on some. I've made money on others. I'm not particularly interested in shorting, and I follow the best advice: Don't invest what you can't afford to lose. Maybe they should make that their slogan, since that's really all anyone can complain about.

hellomyguys 6y ago
It definitely nudges you more than any other financial app. You get push notifications for stocks making big moves up or down. They show you popular lists which curates stocks in various ways (100 Most Popular, Upcoming Earnings, Top Movers), which makes it find stocks you might want to trade. They show you what analysts are staying about a stock (X% say Buy, Y% say Sell). They integrate news articles and autoplaying playing videos with finance news. The graph of you investing performance is animated the same as a game's high score screen. They also give you a free stock when you sign up or for inviting friends. These are all mechanics pulled from social media and games to drive engagement. Vanguard is definitely not doing any of these things. If I'm more engaged with the app, I feel like I have a better understanding of the market. If I have a better understanding of the market, I feel more confident day trading. At first glance its easy to view Robinhood as just a better UX for a finance app, but it's clear they've gone beyond just making it easy to buy stocks/options and are actively seeking to drive engagement. This combined with the rise of things like r/WallStreetBets has definitely inspired a new type of investor/trader.
- kjksf 6y ago

Waterluvian 6y ago

I want to take $100 and go wild in this world of amateur investing, intending to experiment until I’ve lost it all. My concern is that I might not understand things and end up leveraging well past what I have injected into the system. Any good tutorials on “intro to investing” purely from an educational perspective? But not just theory. Actual practical instructions.

javagram 6y ago
Several brokerages offer a paper trading option so there’s no need to risk real money or fear accidentally leveraging yourself. Just google paper trading, I think thinkorswim has it along with others. If using an actual account just don’t use options and don’t apply for margin when you open the brokerage. It will be a cash only account and you won’t be able to lose more than you put in (assuming we’re talking stocks and bonds here, not Futures).

Uptrenda 6y ago

This article is written like grown-ass adult investors are babies who aren't responsible for their actions and need to be protected from themselves... >“They make it so easy for people that don’t know anything about stocks,” he said. “Then you go there and you start to lose money.” What a ridiculous appeal to emotion. "They" don't do anything. The guy made a bunch of shitty trades and lost some money. It's no ones fault but his own. I also think Robinhood tends to cop a disproportionate amount of crap for their down time. Maintaining 100% uptime is very difficult to provide. Even with the amazing code-as-infrastructure we have now its just not realistic to assume there will never be downtime. Their track record might not be perfect but if you compare it to the average crypto exchange they are practically exemplary...

mrlala 6y ago
>grown-ass adult investors You really consider most early 20s to be grown-ass adults? I sure don't.
- CameronNemo 6y ago
  That seems quite paternalistic. Why should 20 somethings have their access to equity markets restricted? They can vote, go to war, use mind altering substances, and more.
  - mrlala 6y ago
    I didn't say they should have restrictions. But I'm also saying a 20 year old isn't (usually) an adult, in the mental sense.
- kjksf 6y ago
  People can be immature at any age but this is not a discussion about that. As a society we decided that there is an age at which you become an adult, fully responsible for your actions. At 16 you can start driving cars (aka very effective killing machines). At 17 you can enlist in an army. At 18 you can become a cop. At 21 you can start drinking. So yes, by definition of our society, at 20 years of age you're considered an adult. At that point if you act stupid, don't expect sympathy.

asdff 6y ago

The 15 year olds asking about options on reddit is so concerning. Imagine in 3 years when these kids start thinking about that 30k in student loans they were just approved of.

peter303 6y ago

Internet daytrading in the 1990s was an early version of Robinhood. You no longer needed to place trades with a broker intermediary. Commissions dropped from 3% to $8 a trade. I know people who retired into daytrading, grad students who invested their living stipends In daytrading. Things calmed down during the 2002 recession.

Munam 6y ago

Shameless plug, but I've been working on the following site for a little while: https://options.fyi/ https://options.fyi/ STILL A WORK IN PROGRESS I wanted to hopefully arm people with some more knowledge about options before they started trading, and to try to protect them from themselves.

sys_64738 6y ago

You are ultimately responsible for your own actions so losing 15k$ is this individual's fault. This is no different than buying on credit and thinking you don't have to pay back what you buy. Or taking on student loans. Money isn't free.

Ghjklov 6y ago

They never cover the success stories of small time traders who have been enabled by Robinhood and such brokerages who require no minimums and no commission fees. To me, this just sounds like gatekeeping as usual. The boomer investors don't like the young blood coming in and ruining their game, and realizing how much money can be made by essentially shuffling money around on the stock market while doing nothing concretely valuable to society.

socrates1998 6y ago

Literally the exact same thing happened when people were allowed to day trade with better internet around 1998-2002. Everyone started day trading, especially during the tech bubble right up to 9/11. About 90% of retail traders lose money, so buyer beware. It's hard to trade and beat the market. Save most of your money and trade a small percent if you really enjoy it.

lmilcin 6y ago

I have worked in a brokerage house on trading systems and currently in large bank on risk calculations on complex financial products. I cannot understate how important is that people first get to know what they are dealing with when they start investing in anything. Whether you are investing in housing, collectibles or exotic financial products you absolutely have to understand how the thing works. Everybody knows you need to pay close attention when you buy a house because a small detail can make your entire investment a flop. Everybody knows to get expert advice to estimate value of collectibles or spot fakes when you buy for investment. For some unknown to me reason people think the only thing they need to do is to look at nice graphs and try to figure out if the line goes up or down without actually understanding what the product is, how every single option works exactly, and the in-depth situation of the product and its market environment. For you, people, who want to invest your money, please, do not invest in stuff you do not understand. Financial markets are very complex these days and it is unlikely you are going to get valuable insight without treating it as your full time job and even then it is pretty difficult. You are competing with huge corporations employing thousands of bright individuals trying to do the same but without risking their own money. Your fallible mind will get you hooked because it is likely you will get some early wins and it will likely cause you to stop being rational about your market decisions. It is very difficult to be rational when significant portion of your own capital is at stake.