4 ms·

Thank you for sharing. It is amazing to me how so many people in social media are assuming that Robinhood or others are teaming up with institutional traders to

Thank you for sharing. It is amazing to me how so many people in social media are assuming that Robinhood or others are teaming up with institutional traders to crush retail investors. It's not wrong to speculate about such possibility, but what I am seeing is people believing this theory with near-certainty, without understanding the underlying mechanics of trades, the regulations that govern it, and the kind of financial complexities firms like Robinhood can encounter.

alistairSH 6y ago
I'm seeing some of that, but also a whole lot of "the rules are vastly in favor of the big guys - they can just stop trading when shit goes south, but us retail traders don't get to turn around and say 'nah bro, losing money, let's hit pause.'" While that's not 100% accurate, it's in the general ballpark. And frustration with big financial players is high, and has been since 2008, for good reason.
- bilbo0s 6y ago
  I believe throwawaysea's point is that the one thing has nothing to do with the other. Essentially, the bank weighing in saying "We don't believe your customers are good for this amount of money you claim they are good for." is, at heart, just financial prudence on the part of a trade's 3rd party backer. The other is criminal collusion on the part of people on the other side of a trade. But the 3rd party backer doesn't care about any of that as horrible as it may sound. They just want to be sure they can get their money from both sides, and they're not at all sure about that with these GME/BBY/AMC et al trades.
  - alistairSH 6y ago
    I get that, but the financial links between the players here doesn't look good, even if it's all legal. Citadel bailed out Melvin. Citadel is RH's biggest customer. RH chops off the retail traders, but only in the direction that favors Citadel (and Melvin). Was RH just ensuring they comply with regulations? Probably. Does it look like RH is doing Citadel a solid at the expense of their users? Absolutely.
- dcolkitt 6y ago
  A broker is just a service. As it turns out a low-cost/free service provides an inferior service to high-cost prime brokers. You get what you pay for. That’s not a scandal. It’s common sense. It’d be like me complaining that it’s no fair that Google can afford better infrastructure than my startup search engine. Day trading is not a human right. Anybody who wants trading infrastructure like Citadel is free to go out and spend the same hundreds of millions it took Citadel to build that infrastructure.
  - alistairSH 6y ago
    I don't think that's quite accurate either. It's not that RH's service is terrible, it's they had to cut trades to meet regulatory obligations. But, by only cutting trades in one direction. And that happened to be in the direction that favors their largest customer. And that customer also happens to be on the hook for much of the short squeeze... The optics are TERRIBLE.
    - dcolkitt 6y ago
      They didn’t cut trades in one direction. They closed new positions in both directions. Buys were still allowed to close short positions, just the same as sells were allowed to close long positions.
      - alistairSH 6y ago
        Thanks for the clarification, I saw similar comments and assumed they were true. Regardless, that doesn't change the optics to an outsider - the rich guys (hedge funds) get to stop their losses, potentially screwing the little guy.
  - recursive 6y ago
    > Anybody who wants trading infrastructure like Citadel is free to go out and spend the same hundreds of millions it took Citadel to build that infrastructure. Well, no. Most people don't have that. "The rich get richer".
  - 6y ago
stefan_ 6y ago
Nobody cares for the forest, they care about outcomes, as do regulators.
- bilbo0s 6y ago
  Not quite. Policymakers care about outcomes. Regulators care that you followed the rules to the letter. You can't say, "Oh hi Mr SEC and Ms DOJ! I know I broke laws a,d, and j, but we had a good outcome so no worries!" You'll go to prison for that.
  - deleted 6y ago
    [deleted]

alistairSH 6y ago

I'm seeing some of that, but also a whole lot of "the rules are vastly in favor of the big guys - they can just stop trading when shit goes south, but us retail traders don't get to turn around and say 'nah bro, losing money, let's hit pause.'" While that's not 100% accurate, it's in the general ballpark. And frustration with big financial players is high, and has been since 2008, for good reason.

bilbo0s 6y ago
I believe throwawaysea's point is that the one thing has nothing to do with the other. Essentially, the bank weighing in saying "We don't believe your customers are good for this amount of money you claim they are good for." is, at heart, just financial prudence on the part of a trade's 3rd party backer. The other is criminal collusion on the part of people on the other side of a trade. But the 3rd party backer doesn't care about any of that as horrible as it may sound. They just want to be sure they can get their money from both sides, and they're not at all sure about that with these GME/BBY/AMC et al trades.
- alistairSH 6y ago
  I get that, but the financial links between the players here doesn't look good, even if it's all legal. Citadel bailed out Melvin. Citadel is RH's biggest customer. RH chops off the retail traders, but only in the direction that favors Citadel (and Melvin). Was RH just ensuring they comply with regulations? Probably. Does it look like RH is doing Citadel a solid at the expense of their users? Absolutely.
dcolkitt 6y ago
A broker is just a service. As it turns out a low-cost/free service provides an inferior service to high-cost prime brokers. You get what you pay for. That’s not a scandal. It’s common sense. It’d be like me complaining that it’s no fair that Google can afford better infrastructure than my startup search engine. Day trading is not a human right. Anybody who wants trading infrastructure like Citadel is free to go out and spend the same hundreds of millions it took Citadel to build that infrastructure.
- alistairSH 6y ago
  I don't think that's quite accurate either. It's not that RH's service is terrible, it's they had to cut trades to meet regulatory obligations. But, by only cutting trades in one direction. And that happened to be in the direction that favors their largest customer. And that customer also happens to be on the hook for much of the short squeeze... The optics are TERRIBLE.
  - dcolkitt 6y ago
    They didn’t cut trades in one direction. They closed new positions in both directions. Buys were still allowed to close short positions, just the same as sells were allowed to close long positions.
    - alistairSH 6y ago
      Thanks for the clarification, I saw similar comments and assumed they were true. Regardless, that doesn't change the optics to an outsider - the rich guys (hedge funds) get to stop their losses, potentially screwing the little guy.
- recursive 6y ago
  > Anybody who wants trading infrastructure like Citadel is free to go out and spend the same hundreds of millions it took Citadel to build that infrastructure. Well, no. Most people don't have that. "The rich get richer".
- 6y ago

stefan_ 6y ago

Nobody cares for the forest, they care about outcomes, as do regulators.

bilbo0s 6y ago
Not quite. Policymakers care about outcomes. Regulators care that you followed the rules to the letter. You can't say, "Oh hi Mr SEC and Ms DOJ! I know I broke laws a,d, and j, but we had a good outcome so no worries!" You'll go to prison for that.
- deleted 6y ago
  [deleted]