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Robinhood’s big gamble

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Re: Robinhood’s big gamble

#71

Post by room505 »

Someone1234 wrote: post #21

I have a Schwab brokerage account, until recently I could trade OTCs and can still trade warrants and futures. These are riskier securities than common stock. None of which is possible on RH as far as I know. When I created my Schwab account I received and was offered no specific training, and largely learned how to trade on YT, Investopedia, and articles. My point is this: RH has become the media's favorite whipping…

The reason Robinhood may have become a whipping boy is because they are only known for trading stocks - that's it. Brokerages like Schwab, Fidelity and TDA are well known companies that not only allow you to trade, but actually administer 401k's, pensions and have financial managers that help you with long-term goals. Sure, they make mistakes, but they're the more mature companies that provide assistance/education in long-term goals. I haven't recognized Robinhood advertise in any TV/internet ads or blogs encouraging "buy and hold" mentality. I see Robinhood as a teenager still growing up. Schwab/Fidelity/TDA are the parents that knows what's best.

Re: Robinhood’s big gamble

#72

Post by gruez »

callamdelaney wrote: post #39
Someone1234 wrote: post #21

I have a Schwab brokerage account, until recently I could trade OTCs and can still trade warrants and futures. These are riskier securities than common stock. None of which is possible on RH as far as I know. When I created my Schwab account I received and was offered no specific training, and largely learned how to trade on YT, Investopedia, and articles. My point is this: RH has become the media's favorite whipping…

Yes, but Robinhood have taken actions which purposefully harmed its users in order to benefit their corporate customers(Citadel). https://www.independent.co.uk/news/business/robinhood-gamest...

...lawsuit alleges.

Re: Robinhood’s big gamble

#73

Post by nexuist »

andreilys wrote: post #37
liquidise wrote: post #8

Articles like this strike me as FUD no matter how hard i try and read them another way. "Risk" is such a wide spectrum when it comes to financial investments. Just look at the crypto crash today, and there are hundreds of billions invested there still. Robinhood giving younger people access to options is hardly a doomsday risk scenario in my mind. Robinhood may well be responsible for a generation gaining investment…

Or they end up spending the next 10-20 years paying off margin and credit card lines they used to invest in high risk assets. This guy literally maxed out credit cards and bought doge on margin. https://www.nytimes.com/2021/05/14/technology/hes-a-dogecoin...

How is this any different from spending $70k a year on some useless degree with 0 job prospects? People will always find ways to lose money.

Re: Robinhood’s big gamble

#74

Post by makomk »

sniperjzp wrote: post #32
sithlord wrote: post #10

Earlier quoted context omitted.

Although robinhood's app was pretty revolutionary, I think their real "innovation" was removing the cost of trades, basically forced the entire market to remove that. Before, it would cost 4.99+ to execute a trade, so if you were not buying significant amounts that could EASILY eat up a lot of profits.

It’s looks like free but it isn’t, RH makes money by selling trading requests to high frequency trading firms like Citadel, which buy/sell before the actual order in a better position so they can earn a penny from selling to or buying from you. The more transactions, the more they earn. - https://fortune.com/2020/07/08/robinhood-makes-millions-sell...

The existing retail brokers were also, with very few exceptions, selling trading requests on top of the fees they charged. (Also, in general this actually results in better-than-market prices because the trading firms know that retail traders aren't likely to have information they don't and aren't likely to be making large market-shifting trades, so they can relatively safely make money by market making between people who want to buy and people who want to sell at slightly different times.)

Re: Robinhood’s big gamble

#75

Post by lexapro »

jack_pp wrote: post #42
pembrook wrote: post #22

Earlier quoted context omitted.

> That doesn't mean Robinhood is encouraging it intentionally This is news to me. As far as I can tell, everything about their app is designed for you to treat the stock market like a game. From the notification defaults down to the content layout. They also sign users up for a daily stock market newsletter that encourages "trading the news" and their unofficial user forum is essentially Wall Street Bets, which they…

The stock market is, was and always will be a game.

Life is, was and always will be a game.

Re: Robinhood’s big gamble

#76

Post by [deleted] »

Someone1234 wrote: post #21

I have a Schwab brokerage account, until recently I could trade OTCs and can still trade warrants and futures. These are riskier securities than common stock. None of which is possible on RH as far as I know. When I created my Schwab account I received and was offered no specific training, and largely learned how to trade on YT, Investopedia, and articles. My point is this: RH has become the media's favorite whipping…

[deleted]

Re: Robinhood’s big gamble

#77

Post by cjpearson »

sniperjzp wrote: post #32
sithlord wrote: post #10

Earlier quoted context omitted.

Although robinhood's app was pretty revolutionary, I think their real "innovation" was removing the cost of trades, basically forced the entire market to remove that. Before, it would cost 4.99+ to execute a trade, so if you were not buying significant amounts that could EASILY eat up a lot of profits.

It’s looks like free but it isn’t, RH makes money by selling trading requests to high frequency trading firms like Citadel, which buy/sell before the actual order in a better position so they can earn a penny from selling to or buying from you. The more transactions, the more they earn. - https://fortune.com/2020/07/08/robinhood-makes-millions-sell...

That would be front-running and it's illegal. The article you linked explains what PFOF is, but in general there's nothing wrong with market makers fulfilling brokerage orders. It means traders get a better price on their order and the market makers earn a profit.

The concern is that when market makers share that profit with brokerages they encourage brokerages to select the market maker that gives them the biggest cut rather than the one who gives the best price for the trader. Still, the trader will never get a worse price than what's available on the exchange. (That's also illegal.)

Re: Robinhood’s big gamble

#78

Post by CarelessExpert »

Someone1234 wrote: post #21

I have a Schwab brokerage account, until recently I could trade OTCs and can still trade warrants and futures. These are riskier securities than common stock. None of which is possible on RH as far as I know. When I created my Schwab account I received and was offered no specific training, and largely learned how to trade on YT, Investopedia, and articles. My point is this: RH has become the media's favorite whipping…

> A lot of this critique is aimed at RH's interface/app because it is substantially better than the existing brokerages still using websites from the 1990s

Wow... you really think the criticism is just because RH is better? What, is it jealousy or something?

Please. This isn't the case of someone being picked on by a schoolyard bully. RH is in the highly regulated, highly consequential consumer fintech space, and they are clearly gamifying trading.

All the subsequent criticisms follow from that fact.

If you want to make the claim RH isn't gamifying trading and therefore the criticisms are off base, please, I invite you to do so.

But to claim RH is the target of SEC investigations simply because they're good? Come on.

Re: Robinhood’s big gamble

#79

Post by smnrchrds »

Someone1234 wrote: post #21

I have a Schwab brokerage account, until recently I could trade OTCs and can still trade warrants and futures. These are riskier securities than common stock. None of which is possible on RH as far as I know. When I created my Schwab account I received and was offered no specific training, and largely learned how to trade on YT, Investopedia, and articles. My point is this: RH has become the media's favorite whipping…

Robin Hood did the equivalent of designing your bleach containers to look like juice boxes. They gamified day trading and made it look fun.

Re: Robinhood’s big gamble

#80

Post by theturtletalks »

TuringNYC wrote: post #66
SmellTheGlove wrote: post #41

Earlier quoted context omitted.

Schwab doesn't have outages during sell-offs of very visible investments, though. Hasn't Robinhood hit the rocks pretty hard during GME and DOGE sell-offs recently? The reason I won't use them is because I don't think I'm their customer - whoever is paying for the order flow is, and I don't trust their platform to be available in the middle of turbulence. EDIT: I get it - Schwab also had visible outages. Sorry for th…

As a Schwab customer, I can confidently note there are many outages, especially on volatile market days. Sometimes, you have no idea if an order went through. With e-trade you get a sub-second push notification for trade confirmations, but with Schwab those push notifications come minutes or hours later. Meanwhile, if the website is down, you have no idea what exposure you have.

Yes but are those outages linked to specific stocks/crypto or happen randomly? RH had a major outage on one of the busiest trading days and people were upset but quickly forgiving. What's happened recently is not the same.
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