Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Robinhood’s big gamble

newyorker.com

Post reply on HN
Print view View original

81–90 of 156 posts

Re: Robinhood’s big gamble

#81

Post by gruez »

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...

>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.

That's literally not payment for order flow works, and it's illegal under regulation NMS.

Re: Robinhood’s big gamble

#82

Post by raziel2701 »

themanmaran wrote: post #14
cowmoo728 wrote: post #12

Earlier quoted context omitted.

Isn't pushing Robinhood gold (leverage) onto users with repeated in app messaging about how great it is, Robinhood pushing users to do irresponsible things? Or the fact that if you end the day down, your whole app is red, unless you deposit enough additional cash to cover your losses and then it switches back to green? (edit note: not sure if this is still the case but it was true in the early days of the android app…

If you deposit more cash than you lost in a day, does it flip back to green? As far as I remember, it's just based on the gains / losses you had during the day. So depositing cash at the end of the day shouldn't affect your gain/loss.

Yes it does flip it back to green.

Re: Robinhood’s big gamble

#83

Post by SmellTheGlove »

SmellTheGlove wrote: post #41
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…

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…

Eh ok fine, I take it back, Schwab also has outages. I use Fidelity, though, and to my knowledge, they did not.

Point is, availability is important.

Re: Robinhood’s big gamble

#84

Post by [deleted] »

CarelessExpert wrote: post #78
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 the…

[deleted]

Re: Robinhood’s big gamble

#85

Post by vineyardmike »

shubik22 wrote: post #38

Last time I checked on Robinhood (and maybe they've changed it since then), when you want to buy options on their app, their UI gives you two options: "I think the stock is going to go up" and "I think the stock is going to go down." Say what you will about "democratizing" finance, but even if you think enabling retail investors to buy options is a laudable goal, surely they should at least know what a "put" and a "c…

>surely they should at least know what a "put" and a "call" is?

You do learn what this is, but the "i think its going up" is just the starting UI and tbh its more approachable and faster to navigate since you don't need to memorize turns.

Re: Robinhood’s big gamble

#86

Post by derivagral »

99_00 wrote: post #43

Everyone is encouraging risk taking. If you don't follow suit you will won't make money. It's basic strategy. Eventually the risk taking will result in you no longer making money when things go bad. But at that point when your fund, brokerage, whatever, goes bust you will have a very nice personal bank account. The person who didn't encourage risk will also go out of business (because everything will be dragged down)…

There's an assumption here that you can get out in time. What if you can't tell when and you miss conversions due to any number of reasons (congestion, availability, liquidity, counterparty risk in defi, etc)

I ask because I don't get the sense that most risk-on investors in crypto regularly convert gains back to fiat.

Re: Robinhood’s big gamble

#87

Post by ep103 »

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…

Isn't that a bit like saying the media focuses on sports car crashes, because you can crash in any car, but sports cars are objectively better than other cars?

Re: Robinhood’s big gamble

#88

Post by JKCalhoun »

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…

FTA: "He felt a surge of excitement every time he saw a green number indicating that one of those stocks had gone up in value."

I think that is the issue. There is a tighter feedback loop that amounts to "gamifying" stock trading.

It's telling to me that the new investor cited in the article didn't take his dad's $1K, put it into a Vanguard index fund and call it a day. No, very much a day-trader type of customer is drawn to RH.

I'm not saying it's bad or good, but that seems to be the difference between RH and your Schwab brokerage.

Re: Robinhood’s big gamble

#89

Post by md_ »

The thing I don't see mentioned in this thread is how incongruous Robinhood's image is (a professed goal of fighting inequality by giving the working classes access to the same return on capital as the wealthy enjoy) in relation to their business model.

Say what you will about Wall St, but customers of traditional brokers tend to know what the brokers are in it for: the money. Robinhood's big product innovation might be zero-commission trades and a gamified UX, but their big marketing innovation is to wrap themselves in the ever-dingier cloak of Silicon Valley "changing the world".

I can't help but think of this absolutely spot-on parody from "Silicon Valley": https://www.youtube.com/watch?v=B8C5sjjhsso.

Re: Robinhood’s big gamble

#90

Post by kortilla »

CarelessExpert wrote: post #78
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 the…

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

You make it sound like this is outlandish, but it happens nearly every time a disruptive player comes into a heavily regulated market full of old players.

It is much easier to cry foul than to deal with the fact that the competition just got hard.

Post reply on HN