This is great! Now I wish they would open up trading for IRAs
For IRAs just use vanguard S&P 500.
Robinhood raises $323M at a $7.6B valuation
71–80 of 130 posts
Re: Robinhood raises $323M at a $7.6B valuation
#72DST Global is a pocket of Russian oligarch Alisher Usmanov, alleged criminal, Putin's sidekick, owner of Russian social network VK, which committed numerous acts of personal information disclosure to police and FSB without court order, led to prosecution of political activists and common people. Good luck, Robin Hood (
well the money is clean now and Sequoia followed the lead, so nobody important cares about that, lets stop spending resources on whitelisting monetary transactions to begin with.
the audacity to try to limit capital flows based on owner behavior was always misguided. if you disagree with something Alisher did, then you have to indict the people that actually did it. vilifying money is just lazy.
Re: Robinhood raises $323M at a $7.6B valuation
#73I'm curious if anyone with knowledge can speak to how Robinhood sells data to high frequency traders? This seems to result in a large percentage of their revenue which of course makes sense due to not having commission revenue. I've also heard some people argue if you're investing a decent amount, you're better off with commissions over market orders on Robinhood. The arguments were the above & that orders can take a…
I'll add Matt Levine's insightful take here [0], which delves a bit into the "deal for order flow" controversy, and also makes the unique claim that for Robinhood to engage in this is very much in line with "taking from the rich and giving to the poor", because it does guarantee price improvement for RH users. [0] https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
At the volume of retail though how impactful are those price improvements over the long run?
My gut tells me it can’t be much, but I have zero data to back that up on and would love to find some.
Re: Robinhood raises $323M at a $7.6B valuation
#74Earlier quoted context omitted.
I'll add Matt Levine's insightful take here [0], which delves a bit into the "deal for order flow" controversy, and also makes the unique claim that for Robinhood to engage in this is very much in line with "taking from the rich and giving to the poor", because it does guarantee price improvement for RH users. [0] https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
Summary: Retail generates uncorrelated order flows, perfect for the market maker. Institutional generates highly correlated order flows, the nightmare of the market maker. As paradoxical as it may sound this can actually result in price improvement for the retail trader. This is one of those rare places in finance where being small is an advantage. Another is in finding value opportunities - the smaller you are the l…
I disagree with this description.
Retail flow is primarily uninformed - "noise", not "signal" (i.e. "alpha" in finance speak). Retail traders might trade based on Twitter news, Reddit suggestions, weather, gut feeling, sudden money needs, ...
Institutional traders are big and slow and they have long-term alpha (if any), I don't think they'd generate much worry for HFTs/market makers... The real worry is other HFTs, small, short term (well-funded, more rational) traders that do have "alpha". There, you're faced with negative selection - by trading passive (market making), you should assume that your order is more likely to be filled when the counter-party has better information (more alpha/signal than you) so you'll lose in the short term.
Re: Robinhood raises $323M at a $7.6B valuation
#75I'm curious if anyone with knowledge can speak to how Robinhood sells data to high frequency traders? This seems to result in a large percentage of their revenue which of course makes sense due to not having commission revenue. I've also heard some people argue if you're investing a decent amount, you're better off with commissions over market orders on Robinhood. The arguments were the above & that orders can take a…
TLDR; question answer: An HFT makes money because they see you want to buy 100 shares of Apple. Their servers are located in the exchanges, so they can buy the 100 shares of Apple for $99.99 each quickly, then flip them to you for $100 each, effectively giving them a risk free profit of $1. The HFT then gives Robinhood a small reward for sending them the order data. Multiply that times millions of trades a day. If yo…
> Their servers are located in the exchanges, so they can buy the 100 shares of Apple for $99.99 each quickly, then flip them to you for $100 each, effectively giving them a risk free profit of $1.
I don't know a lot about trading US equities, but this sounds wrong. Brokers are required by law to give their customers the best price ($99.99 in your example).
Re: Robinhood raises $323M at a $7.6B valuation
#76Earlier quoted context omitted.
Summary: Retail generates uncorrelated order flows, perfect for the market maker. Institutional generates highly correlated order flows, the nightmare of the market maker. As paradoxical as it may sound this can actually result in price improvement for the retail trader. This is one of those rare places in finance where being small is an advantage. Another is in finding value opportunities - the smaller you are the l…
I disagree with this description. Retail flow is primarily uninformed - "noise", not "signal" (i.e. "alpha" in finance speak). Retail traders might trade based on Twitter news, Reddit suggestions, weather, gut feeling, sudden money needs, ... Institutional traders are big and slow and they have long-term alpha (if any), I don't think they'd generate much worry for HFTs/market makers... The real worry is other HFTs, s…
That makes sense too (avoiding competition). But it's not what the quoted article says.
Institutional trading (like mutual funds) certainly is a problem for market makers:
> Sometimes, when a customer buys 100 shares at $100.01, it then buys another 100 shares at $100.02, and another 100 shares at $100.03, and keeps going until it has bought 10,000 shares and pushed the price up dramatically. The market maker who sold it the first 100 shares—and who is probably now short and needs to go out and buy those shares at a higher price—has been run over.
> This is a risk of being a market maker on the public stock exchanges: Sometimes you sell 100 shares to a small retail investor and it’s random noise; other times you sell 100 shares to Fidelity and you get run over. But if a market maker can guarantee that it will only interact with retail customers—if it can filter out big orders from institutional investors—then its risk of adverse selection goes way down.
Re: Robinhood raises $323M at a $7.6B valuation
#77Earlier quoted context omitted.
I'll add Matt Levine's insightful take here [0], which delves a bit into the "deal for order flow" controversy, and also makes the unique claim that for Robinhood to engage in this is very much in line with "taking from the rich and giving to the poor", because it does guarantee price improvement for RH users. [0] https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
At the volume of retail though how impactful are those price improvements over the long run? My gut tells me it can’t be much, but I have zero data to back that up on and would love to find some.
Not much, but it's not like trading is expensive these days. IBKR usually charges me 1 dollar per transaction, unless I trade many thousands USD worth of securities at a time. Improvements (of which there may be none) should be in the same ballpark.
Re: Robinhood raises $323M at a $7.6B valuation
#78Earlier quoted context omitted.
Execution price is governed by SEC and clients must get the best price. HFT doesn’t really work on retail investors who’s sells and buys can be covered with one order. You can’t front run one order trades. Institutional investors are the prey for most HFTs since they do large stock trades and they need to hide to prevent front running.
The top of book liquidity on most equity stocks is light enough that a single retail investor can absolutely submit orders which must hit multiple exchanges, especially if they do so at non-peak hours. The NBBO doesn't help you if every market maker retreats before your broker can hit the next exchange. There was a post on Reddit just a month ago where a small investment club did just that. https://imgur.com/gallery/…
This is not 1994. Catching a market order with volume is winning a Power Ball. It will be a limit and if it is not IOC/FOK order, should it clear top of the book and not be filled it would simply become a new national best.
Re: Robinhood raises $323M at a $7.6B valuation
#79I've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.
> The ability to short a stock, which I still can't believe isn't available.
Honest question: is having access to shorting THAT much different than having the ability to buy puts/sell calls? Shorting isn't the only way to profit in a bear position
Re: Robinhood raises $323M at a $7.6B valuation
#80I'm curious if anyone with knowledge can speak to how Robinhood sells data to high frequency traders? This seems to result in a large percentage of their revenue which of course makes sense due to not having commission revenue. I've also heard some people argue if you're investing a decent amount, you're better off with commissions over market orders on Robinhood. The arguments were the above & that orders can take a…
The only issue I have had with Robinhood is regarding tax planning, because they only support FIFO sell orders. There have been several instances where I would have preferred to sell shares purchased more recently, so that my older shares can pass the one year threshold for long term capital gains. The ability to specify lots when selling shares would be worth money to me.
Aren't the shares fungible?