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Transfer Stocks Out of Your Robinhood Account
211–220 of 270 posts
Re: Transfer Stocks Out of Your Robinhood Account
#212The RH apologists are going on long winded explanations about clearing houses (and to some extent there’s elements of “it’s too complex for your little brain”). But even to the extent it’s true, if I put in 5k from my checkings into RH and buy stock, why does Rh need all this liquidity to get orders filled? I understand turning margin accounts off, but that’s it . Past that, at best robinhoods business model is highl…
One of Robinhood’s innovations was that they gave everyone a margin account, but hid the details. When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (transparently) on margin. Robinhood is loaning you the money to make it happen. Likewise, when you buy or sell a stock, the trade doesn’t settle for t+2 days. Robinho…
They really should have said that from the start:
"To let you trade instantly, we lend you money. Because lending is risky, we won't let you use it on high-volatility stocks like GME. We screwed up by applying the same restrictions to confirmed deposits, which no longer involve loan risks. Our team is working on a fix."
Re: Transfer Stocks Out of Your Robinhood Account
#213Re: Transfer Stocks Out of Your Robinhood Account
#214Earlier quoted context omitted.
Stock market is a 0 sum game. Someone is going to pay in the end. It’s not the hedge fund, they already covered to the tune of $2 billion and someone has pocketed that money and it’s not retail investors.
I think the reality with the stock market seems to be that eventually the tax payer is left with the bags whether they owned any stocks themselves or not.
Sure. People should be pissed about bailouts using tax payer money.
So what was done was regulations were put in that forced brokers to limit risk. So RH followed those regulations and now people are pissed.
Re: Transfer Stocks Out of Your Robinhood Account
#215The RH apologists are going on long winded explanations about clearing houses (and to some extent there’s elements of “it’s too complex for your little brain”). But even to the extent it’s true, if I put in 5k from my checkings into RH and buy stock, why does Rh need all this liquidity to get orders filled? I understand turning margin accounts off, but that’s it . Past that, at best robinhoods business model is highl…
One of Robinhood’s innovations was that they gave everyone a margin account, but hid the details. When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (transparently) on margin. Robinhood is loaning you the money to make it happen. Likewise, when you buy or sell a stock, the trade doesn’t settle for t+2 days. Robinho…
Thanks for the insight. Funnily to me this looks like a prime example of a leaky abstraction [1] - so this not only happens in software architecture.
[1] https://www.joelonsoftware.com/2002/11/11/the-law-of-leaky-a...
Re: Transfer Stocks Out of Your Robinhood Account
#216Earlier quoted context omitted.
Ask yourself: why didn't they just freeze trading these securities instead of forcing liquidations across retail brokerages and putting everyone in sell only mode? They're covering for the market makers and shorts who are on the hook for all the options bought and shares shorted. Institutions could enough to ameliorate their pain while the only option given to everyone else was sell. They should have instead stopped…
What if they disabled trading, the stock slowly lost value, and people who were long the stock couldn't exit their position? Someone's gonna complain and ask "why didn't they just disallow buying but allow selling".
This stock was short over 100% of the float and dealers were short gamma. They got out of this in the way that would guarantee they could save themselves, forced liquidation.
They picked the least painful option for themselves. Three options existed:
- Halt all trading - Halt buying - Halt selling
Everyone is pissed no matter what. The first is perhaps the most fair. The last helps the big institutions in this circumstance, the second retail traders.
Re: Transfer Stocks Out of Your Robinhood Account
#217The RH apologists are going on long winded explanations about clearing houses (and to some extent there’s elements of “it’s too complex for your little brain”). But even to the extent it’s true, if I put in 5k from my checkings into RH and buy stock, why does Rh need all this liquidity to get orders filled? I understand turning margin accounts off, but that’s it . Past that, at best robinhoods business model is highl…
One of Robinhood’s innovations was that they gave everyone a margin account, but hid the details. When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (transparently) on margin. Robinhood is loaning you the money to make it happen. Likewise, when you buy or sell a stock, the trade doesn’t settle for t+2 days. Robinho…
So then how is HFT a thing then? Wouldn't millions of yet-to-be-cleared trades over a few days require them to hold a massive amount of collateral?
Re: Transfer Stocks Out of Your Robinhood Account
#218The most fascinating thing, to me, about all of this is the potential for large groups of retail investors to invest in a company not because it's doing well, or they think it's undervalued, but because they want it to do well-- investing with the specific intent to give it the resources needed to do well. Perhaps unintended, this seems to be the net result with AMC. A few days ago they probably wondered how to keep…
I mean, that's a pretty legitimate reason to invest, no?
Softbank bought Sprint with the intent to give it the resources needed to do well. They pumped money into the company to cover debt service until eventually it merged with T-Mobile.
AMC got out of $600mm of debt as a result of its share price appreciation in all this madness.
https://www.marketwatch.com/story/amc-entertainment-to-issue...
Share price is not arbitrary. It has ramifications for a company's credit, debt load, and ability to make acquisitions.
Re: Transfer Stocks Out of Your Robinhood Account
#219Earlier quoted context omitted.
None of them have any gains until they press the sell button. The early buyers will probably sell a little bit to lock in profits. This drives the price down. They’ll then go on to social media and pump GameStop everywhere with memes and stories about taking down Wall Street. This brings in new money to pump the price back up. This is what they’re already doing: Pumping the stock to bring in new money, which they col…
Thanks, that's a great explanation of what I probably the most likely outcome. Humor me for a second - what happens the the (unlikely event) they ALL hold until it hits $10,000, and the "infinity squeeze" really does happen?
> Humor me for a second - what happens the the (unlikely event) they ALL hold until it hits $10,000, and the "infinity squeeze" really does happen?
At some point, you can't squeeze infinite money out of short sellers. In theory, if they're still short when the price passes a threshold higher than their margin limits, they'll get margin called and forced to sell. If the brokers and clearing houses didn't get the risk math right, they'll have to cover some of the difference. This is part of why RH had to pay (a lot) extra into collateral pools just to trade GME at all today. I don't exactly know which parties bear the risk in extreme scenarios.
Practically speaking, if they suspect a squeeze is happening they'll start competing against each other to get order fills. If they all set sell limits at $10K, they risk losing out to someone who sets their sell at $9999. That person risks losing out to someone who sells at $9800, and so on down the line. Again, there isn't actually infinite money to be extracted from the system, so it becomes a competition to sell before your WSB peers.
Even worse, the subreddit will be full of posts about "buy the dip" and "diamond hands" that encourage the naive players to not exit the trade. This creates more room for savvy players to get their sells in before the situation resolves and the price comes crashing back down. Again, it's a race to the bottom.
Sadly, much of the profit going to WSBers will come not from hedge funds, but from other WSBers who think they're "buying the dip" or front-running a short squeeze when in reality they're just buying shares from other WSBers.
Re: Transfer Stocks Out of Your Robinhood Account
#220The RH apologists are going on long winded explanations about clearing houses (and to some extent there’s elements of “it’s too complex for your little brain”). But even to the extent it’s true, if I put in 5k from my checkings into RH and buy stock, why does Rh need all this liquidity to get orders filled? I understand turning margin accounts off, but that’s it . Past that, at best robinhoods business model is highl…
Sigh. In a different life, I worked for a well known discount brokerage in 2005 processing corporate actions. Mergers, splits, divided payments, proxy voting, exercising bond contract provisions, warrants, short covering etc.for retail customers. Not glamorous work to be sure. I can tell you unequivocally that to deliver the simplicity, affordability, and transaction efficiency we now take for granted, many MANY laye…
>lord knows what happens if this gets messed up
Citi accidentally paid back a $900 million loan they weren't supposed to. The recipients mocked them and refused to give it back.