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Robinhood stock trading app valued at $1.3B with big raise from DST

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Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#131
post #106

Earlier quoted context omitted.

I got it from this seller and at the time it was $99. http://www.ebay.com/usr/artinvest389 I did test random samples from the data against other data providers and I am using it every day an yet to find errors or mistakes...

" Stock Symbol, Date, Open, High, Low, Close, Volume " Sounds like fun for those that like technical analysis.

Why limit yourself to technical analysts only?

Use your imagination, with data like this you can test value investing, arbitrage, trend following...

For any type of investing test you'll need to know the price of the security on any given date in the last 20 years...

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#132
post #56
post #17

Earlier quoted context omitted.

What are the risks? Apart from a margin call? Meaning they sell your stocks.. Is there any risk related to avoiding the 3 day settlement? Many amateurs using robinhood do so knowing they could loose their investment. So long as they don't loose more they'll hopefully be fine.

Would they not try to collect like any other loan?

No.

The broker first contacts the investor to allow them to deposit more money to bring up their equity percentage; if thet doesn't work, they sell the borrowed assets to get the percentage up.

One feature of margin loans is that you are required to have assets to cover them. A relic of the great depression, IIRC.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#133
post #102

Here are my 2cents: Robinhood is irrelevant and border line dangerous. Irrelevant, because for someone who knows what they are doing in the stock market paying $10 or $0 per trade is not going to save them any money. Dangerous, because it promotes more trades for the “unsophisticated” investor and encourages leverage = very dangerous situation. Bottom line, if you do not know what you are doing, don’t do it, buy and…

You're right, Buy and Hold is a terrible strategy. Look how poor Warren Buffet is as a result of holding. /sarcasm Not having capital isn't the same as being unsophisticated. I could do all the right research on which stock I want to buy, but if I only have $100 to invest at the end of every month $10 fees would dig into my earnings very quickly. Assuming that people without large amounts to invest are stupid says mo…

That's not entirely fair. It is disingenuous to characterize Warren Buffett's methodology as "buy and hold." Berkshire Hathaway takes far more active participation in the companies it's long on than any individual retail investor could hope to imitate (or even fathom, logistically speaking). It's not just a matter of being long on a company and buying the stock - the amount of capital they invest provides Buffett et al with involvement and corporate direction that few other institutions can command, let alone individuals.

I agree with your point that buy and hold can be a valid strategy, I just don't think that example is fair and Buffett it basically a meme in these threads now.

I think you may have misinterpreted the OP's point about sophistication - I don't think he was trying to be condescending to those with comparatively little to trade with. His actual point is valid - if you are optimizing for commissions first and foremost, you're probably doing something wrong (as an active trader). Robinhood is a platform that, by design and mission, differentiates itself on the lack of commissions, not on superlative features or strategy availability. This means that if you choose Robinhood as your platform for trading (as opposed to, say, Interactive Brokers), you're likely optimizing on commission/fee avoidance, because that's all they're really got to offer that's unique.

Commission and fee avoidance is great, sure, but optimize for that within the context of a larger strategy. It's very important to reduce fees because it can make an otherwise unprofitable strategy profitable, I agree! But you should really start by getting to the actual strategy first, and Robinhood's business directive might encourage potential investors to prematurely optimize on fees, when that is honestly not the thing that typically prevents people from being successful in the market. The thing that typically prevents people from doing well is the lack of real alpha.

If you do have a viable trading strategy with a good Sharpe ratio, the commissions will not stop you from being successful. Conversely (as one example), if you are using the commission-free trading as a way to explore strategies that you think are viable, but which are actually just risk-overloaded returns attributable to chance in disguise, then yes the commissions will eat you alive - but that's because you don't really have a working strategy in place.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#134
post #109

Earlier quoted context omitted.

Your 4th paragraph contains a rather bold claim. You give one counter example to buy and hold strategy being good. I imagine no one really thinks buy and hold means to never sell under any circumstance. It seems to me to be more of a philosophy that buying/selling on emotion can be dangerous. The second to last paragraph seems to me to be quite dangerous. I'd wager it is quite likely a person would see a pattern that…

As in anything in life you need to have a strategy, even if you invest only in SPY ETF you still have to have a plan when to buy and when to sell. One interesting idea to start is to look into different trend following strategies. Get the data and back test different scenarios and see what is going to work for you according to your risk management, what draw downs you can tolerate, etc...

If you are committing to buy-and-hold you are committing to buying a diversified portfolio.

No one advocating buy-and-hold recommends buying one thing.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#135
post #118

Earlier quoted context omitted.

Nobody asked about your income or whether the data was worth $100 or not. OP said he couldn't find good data on eBay and asked for clarity Your comment is very perplexing in content and tone.

Sorry if I came out this way, but this is my honest answer - the data is cheap... being a lazy person, for me everything is a risk/reward... $100 to back test any trading strategy I can imagine up to 20 years back is the best risk / reward, much much, better than to go and start trading "for free" on a fancy app on a $500 phone with a "small account" I can "afford" to loose...

dsacco, the reason why eBay of all places is simple, I like to buy cheap stuff on eBay, especially books, so I am always searching for books on the investing subject, so I can get ideas to back test and this is how I first stumble on the data and since the price was so cheap I got it and I tested it to make sure it was OK.

If it was not, I would have notify the seller, eBay and PayPal and get my money back...

Before this data, I was using Quntopian, but the huge limitation there is that you cannot test on the whole market, you cannot download their data, etc...

Anyway, I am trying to give an honest advice here and to prevent people of losing money because they don't know what they are doing...

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#136
post #108
post #100

Earlier quoted context omitted.

> You can't get filled at a worse price than the lit exchanges are showing. Can you be more specific? I believe you are talking about a market order. Unless you have full access to all order books you can't really know whether you were filled at the best price of all lit exchanges. AFAIK brokers have a duty for best execution - still I'm pretty sure that you get poorer execution on Robinhood than on other brokers: Th…

> Can you be more specific? I believe you are talking about a market order. No, I am not talking about both limit orders and market orders. I am talking about nearly all orders that a retail trader would use. As an institutional trader, you would sometimes use orders that will be filled at worse prices than the lit market. Retail traders do not typically have a need for those orders. > Unless you have full access to…

> This is true, but the person filling your order does have a responsibility to ensure that your order is filled at the lit exchange price or better. If you find contrary evidence,the regulators would possibly be willing to pay you a lot of money for it.

I'm still struggling with your definition of a lit exchange price. Are you referring to the NBBO? The price you get largely depends on the order size, so the NBBO only applies up to a certain order size. Also the NBBO might not even be up-to-date.

Regarding regulation: "In deciding how to execute orders, your broker has a duty to seek the best execution that is reasonably available for its customers' orders" - usually this means you should have a better or same price as the NBBO - up to a certain order size. If you are happy with the NBBO then you are right and I wouldn't worry too much - however if I recall correctly the NBBO is usually pretty wide and has plenty of other caveats (eg: http://www.nanex.net/Research/IsNBBOIgnored.html).

> According to your Schwab link, if there is no fill improvement on Robinhood then you are better off using Robinhood for orders under 500 shares because commissions are $4.95 and the fill improvement is less than that. Is that your interpretation as well?

Do you mean price improvement? I seen no mentioning of fill improvement on the Schwab link. But yep, seems about right.

> Do you have a link showing that Robinhood customers do not get any fill improvement?

> I don't think the KCG link is relevant as they do not have retail customers.

Robinhood lists KCG, Citadel and Two Sigmas as their market centers - so that's the best information I could find regarding price improvement for Robinhood customers.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#137

I don't know if I might be a little less smarter than average but could someone please enlighten. e on why RobinHood is valued at such an amount? What special purpose do they solve that C.S wouldn't copy as a feature or own in the nearest future?

1) Robinhood Gold is margin lending i.e. lending money to customers who want leverage. The monthly fee is effectively the loan's interest rate, rebranded in less shady terms. 2) They have very valuable order flow, which they sell. Almost all of Robinhood's customers are unsophisticated investors. Trading firms pay a lot of money for unsophisticated trading flow as there's room to "skim off the top". 3) Add in the typ…

"...less shady terms"?

I'd say more shady. If you use less than the margin amount that they allow you, that fee looked at as an interest rate can be rather usurious.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#138
post #102

Here are my 2cents: Robinhood is irrelevant and border line dangerous. Irrelevant, because for someone who knows what they are doing in the stock market paying $10 or $0 per trade is not going to save them any money. Dangerous, because it promotes more trades for the “unsophisticated” investor and encourages leverage = very dangerous situation. Bottom line, if you do not know what you are doing, don’t do it, buy and…

Wow, what a ignorant comment. You buy order would have to be in excess of $1000 for a transaction cost of $10 to be insignificant. As for the buy and hold remark, read the literature.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#139
post #14

I laughed at the article's url slug playing on the company's name - now-whos-the-rich . I haven't used Robinhood, but welcome new fintech companies who lower the barrier of entry toward financial health for the average consumer. Good for them, and I hope they use this money well.

I have my doubts that playing with the stock market is in any way conducive to "financial health" for the average consumer.

I'm not sure what you mean by "playing" the market but there has been no better creator of wealth for the working professional than owning, (yes that what you are doing when you "play") the total stock maket index. conpanies

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#140

I think what Robinhood is doing with Gold accounts is pretty shady. I'm guessing that the vast majority of people who trade on margin don't fully comprehend the risks in doing so.

It's not rocket science, and it is obviously a loan. How is margin shady? This claim that it is somehow predatory or that consumers need to be protected is nonsense. This assumes that people can't do research and due diligence. If you aren't informed to make financial decisions than you probably shouldn't be trading. If you choose to proceed, do so at your own risk. All brokerages offer margin and typically this is h…

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