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Robinhood’s big gamble

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Re: Robinhood’s big gamble

#111

Post by 99_00 »

derivagral wrote: post #86
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.

It depends. People who have skin in the game are going to be the most responsible.

People who's compensation is based on bonuses... not so much.

Re: Robinhood’s big gamble

#112

Post by CarelessExpert »

stickfigure wrote: post #109
CarelessExpert wrote: post #102

Earlier quoted context omitted.

> If there are any parts of their app which encourages gambling, I agree it should be removed, but the actual criticisms I read are things like "they use bright flashy lights like slot machines" which seems very unconvincing. That's quite literally what gamifying is: providing the kind of visual rewards/stimulus, combined with an extremely low friction experience, that's specifically designed to work in concert to en…

>> Do they need to make their UI flow less smooth, or give some big warning that people are dealing with real money? >Yes. Absolutely. Why would that be a problem? Are you proposing that this warning can't be disabled or permanently dismissed? As an adult consumer I do NOT want this.

Why not? Are you trading so often that a bit of additional friction is an issue?

If so, a) you should reconsider, that's generally a good way to lose money, and b) you're probably classified as a pattern day trader, anyway, and you're already subject to a (very mild) speedbump:

https://robinhood.com/us/en/support/articles/pattern-day-tra...

> Pattern Day Trade Protection alerts you when you’ve placed three day trades and you’re about to place your fourth. You’ll have the option to proceed with your trade, or cancel it to avoid being marked as a pattern day trader.

Also, note even if you turn that alert off, you get another mild warning:

> Even if you turn off Pattern Day Trade Protection, we’ll still let you know when you’ve placed your second and third day trades in the five-day window. On your third day trade in the five-day window, we’ll remind you that you’ll be marked as a pattern day trader if you place one more day trade within the five days of your first day trade.

Re: Robinhood’s big gamble

#113

Post by ghufran_syed »

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)…

Seemed to work well for Vanguard: https://en.wikipedia.org/wiki/The_Vanguard_Group

Re: Robinhood’s big gamble

#114

Post by suifbwish »

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…

We don’t have a responsibility ethical or otherwise to protect adults from themselves. Any argument to the contrary is an appeal to emotion at best.

Re: Robinhood’s big gamble

#115

Post by akarma »

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…

While gamifying trading is dangerous for society, the onus for that is more on society's current obsession with memes overlapping into reality. Uneducated retail investors will lose a lot on Gamestop and Dogecoin and Shiba Inu coin, and whatever the TikTok, Reddit, etc., community hype up next, not because they haven't learned options terminology.

When I was young and started investing in individual stocks, I would've appreciated "I think the stock is going to go up/down" (as an intro as Robinhood uses it) instead of needing to google and memorize put/call. Knowing a put vs. a call added nothing useful as a retail investor. It didn't change my hypothesis about the stock or my decision to trade.

Re: Robinhood’s big gamble

#116

Post by [deleted] »

TuringNYC wrote: post #91
theturtletalks wrote: post #80

Earlier quoted context omitted.

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.

They dont happen randomly, they happen on high-volatility and high-volume days. Days where I want to re-balance my portfolio, or hedge. They happen at the worst times. Taking a guess as an Engineer, they seem like load issues. Because page response times degrade from 2s, to 10s, to 30s, to timeouts.

[deleted]

Re: Robinhood’s big gamble

#117

Post by nimbius »

>is the app democratizing finance or encouraging risky behavior?

For anyone who paid attention to the WSB fiasco This isnt a meaningful question.

When Robinhood halted trading on a stock that had the very real potential to harm monied, cloistered elites it basically confirmed whatever definition of "finance" it claimed to represent was rigged from the start. the app is no different than facebook. You arent an empowered investor, you are their product.

Re: Robinhood’s big gamble

#118

Post by dmoy »

sithlord wrote: post #10
notyourwork wrote: post #3

The internet makes risky behavior more accessible by very nature of connectivity. You can talk to someone on the other side of the world with much less friction. Similarly, a fintech company like Robinhood decided to make stock trading more modern and reduce the barrier to entry. Granted, this wasn't really a big change in accessibility if you wanted to trade stocks. One could simply goto Fidelity ore other brokers a…

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.

Nobody moved to remove the cost of trades until after IBKR in 2019.

The large brokers more or less did not care when robinhood did the same thing years and years and years ago.

Re: Robinhood’s big gamble

#119

Post by rurp »

nullspace wrote: post #98
CarelessExpert wrote: post #78

Earlier quoted context omitted.

> 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…

> they are clearly gamifying trading. > 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. I have used RobinHood just a little bit, and it's not my main brokerage. However, I take issue with your phrasing. You start with the premise that whatever it is that RobinHood is doing is bad, it's impossible to argue against this where you are sta…

> it is also super easy to find information on the stock that you're trading, so it's not like they are making the UI dumb.

I don't agree with this. It's been a while since I used RH so maybe the current UI is different, but when I used it the stock price charts literally had no numbers on them. It was just a vague line that went up and down.

The options UI was also similarly dumbed down. It gave very light descriptions of different kinds of trades when purchasing, but very little concrete information about prices or risks. Plus the functionality was awful, you couldn't even sell options you held, outside of sending RH an email.

Stock and option flows are clearly designed towards appealing to users who know very little about investing.

Re: Robinhood’s big gamble

#120

Post by LatteLazy »

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…

I broadly agree, I wouldn't say RH are without blame though. They actively marketed themselves towards the WSB, Yolo, "gambling but on stock" end of the market. That's not the same as pushing misinformation, but it's pretty scummy...
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