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

Robinhood and How to Lose Money

themargins.substack.com

Post reply on HN
Print view View original

131–140 of 209 posts

Re: Robinhood and How to Lose Money

#131

Post by PascLeRasc »

grecy wrote: post #19
platz wrote: post #7

Earlier quoted context omitted.

You can do those things on any brokerage. You can buy options pretty much anywhere. Not seeing where the democratization is coming from that is different from the status quo

My brokerage will only let me buy options in the standard batch of 100, which means to get anything I'm interested in I need to drop $20k, which isn't going to happen. I only want to spend a couple of hundred on long term options ..

Unfortunately the viability of options depend on their volume - you can have a call go from OTM to ITM and not be able to find a buyer because there's just no interest in it. Half-options (50 contracts) and other denominations exist but they're incredibly rare, and I believe only used for reverse stock splits. If you're looking to get into options I'd recommend either choosing a farther OTM strike price/earlier date or starting with a stock that's significantly lower in price.

Re: Robinhood and How to Lose Money

#132

Post by orojackson »

kiplkipl wrote: post #102
WalterBright wrote: post #80

Earlier quoted context omitted.

Just invest in the S&P 500. It isn't rocket science.

500 companies in one country isn't diversified.

That's what ETFs like VXUS and IXUS are for. You get international exposure.

VT is another good choice if you're lazy and just want to own a slice of the global stock market.

Re: Robinhood and How to Lose Money

#134

Post by BoorishBears »

kjksf wrote: post #63
BoorishBears wrote: post #55

Earlier quoted context omitted.

People keep saying this and all I can say is, have you used Robinhood AND a "real" brokrage platform? Crashes during periods of high volatility at a much higher rate than competitors, puts detailed views of stock market behind a paywall, actively advertises options with asinine strike/expiries for people who don't get options, no full support for spreads are on their mobile app, their general poor handling of multi l…

Yes, I do use IBKR, which is one the "real" brokerage platforms. Your portrayal of RobinHood is a caricature. Crashes? It happened a few times. I'm not an active trader, so I don't use IBKR all the time, but even in my light usage when I couldn't log in because their security-theater activation code never arrives. Often IBKR can't show the value of my portfolio because, apparently, they can't load the data. The whole…

> I'm sure there were people who lost money and committed suicide and were customers of "real" brokerage platforms.

Let's start with the suicide because that alone should have been the end of Robinhood...

This person did NOT lose their money.

Normally to sell an option you need the underlying equity (unless you're selling naked options, but RH won't let you do that)

A spread is when you use options to get the right to buy the underlying equity on a given day, then use that to sell an option on the same day.

So your sold option is covered by your bought option

Robinhood erroneously disregarded the option the person had bought, and told them they were on the hook for millions of dollars worth of shares. They had no access to leverage that would have let them owe that much money.

They committed suicide not because they lost their money, but because they thought they owed millions on an account worth hundreds...

THIS IS STILL A BUG! Someone killed themselves over this, and this is literally still happening!

-

The rest of your complaints are either off base, or just deflections unrelated to things I said

Like, no one is complaining RH having a good UI is a bad thing, come off that.

RH sends emails for orders, I'm guessing you turned it off because you felt they were "asking for your life story"

RH's fills are legendarily bad, I'm sorry I can't do a research study for you, but you're free to search this yourself

If we're just trading bug stories, are we going to ignore RH has completely broken two leap years in a row? I mean I don't want to stoop to that, that's why I specifically mentioned a scenario where it keeps happening, periods of high volatility

All platforms strain doing those, but RH keeps breaking in the same ways, and it doesn't seem to phase them

Your portfolio value example is actually my favorite...

IB gets that your portfolio value could have an effect on your trading habits and mental state... so it doesn't load a value

Robinhood every single period of increased volatility will start showing randomly wrong amounts for my portfolio value!

There've been times when I sold out of positions because RH showed portfolio wide losses only for me to realize it was literally making up a number...

Imagine what happens if it shows you owing millions of dollars

-

Robinhood's option views deserve their own article.

Do you mean "Discover" where they show you those asinine positions (asinine even for a Yolo mind you, some of them have no volume or open interest, so even if the spike by some miracle, you can't even sell)

Or the normal view where the most important information, like Volume and the Greeks is buried under a sub heading?

Or the mobile app, which previously won't let you do spreads outside the discover view, and still randomly doesn't show spreads for some tickers for those using the Discover view

Not to mention the insanity that the "Discover" view exists. Because it shows strike expiry but doesn't explain that if there's no Volume that doesn't matter, doesn't explain Theta

Now before you complain "That's just sandbagging people who want to trade options!!!"

This is stuff you can literally explain in 2 sentences! "The closer to expiring this option we're showing you is, the less it's worth" and "Volume and Open Interest represent if anyone will actually buy this thing we saddled you with before expiry"

IB is showing you all this annoying stuff to sandbag you that just happens to actually be incredibly simple if you take 10 minutes to look it up.

Now if we were talking about using a new OS I'd be totally with all the people saying "wow they want you to read an instruction manual, crappy UX"

But here it's your actual money, and 10 minutes really is 10 minutes to learn stuff that exists no matter what platform you use.

Re: Robinhood and How to Lose Money

#135

Post by softawre »

dmoy wrote: post #11

I do not get the appeal of largely gambling with your money on RH instead of just passively investing for the long term. Maybe with some of your money, but not to the extent a lot of people are doing. People want to get rich quick I guess? Even if you do want to do that, why not pick a brokerage which doesn't take as much from you, like IBKR? It's just a surreal situation to me.

Do you not understand how people get addicted to gambling and the dopamine rush that pushes them there?

This is that for people who consider themselves "gifted".

Re: Robinhood and How to Lose Money

#136

Post by timavr »

This is just nuts, people know zilch about risk management. It is just a wealth transfer from people with zero knowledge to professional traders and brokers.

Paying of credit cards, maximising your tax return, investing in things you 100% understand, way easier ways to make money.

People still might get lucky and make epic money, but it is in the same zip code as driving drunk and not getting into a crash.

Re: Robinhood and How to Lose Money

#137

Post by bob1029 »

dmoy wrote: post #11

I do not get the appeal of largely gambling with your money on RH instead of just passively investing for the long term. Maybe with some of your money, but not to the extent a lot of people are doing. People want to get rich quick I guess? Even if you do want to do that, why not pick a brokerage which doesn't take as much from you, like IBKR? It's just a surreal situation to me.

I moved from RH to IBKR a few months ago. Going from 5% to ~2% margin fees was a wake up call for me. Their tools are incredible too. For anyone trapped on RH and looking for alternatives, the ACATS transfer process is about as painless as it gets.

Re: Robinhood and How to Lose Money

#138

Post by newen »

NovemberWhiskey wrote: post #104
Cthulhu_ wrote: post #91

Earlier quoted context omitted.

But they do; sure, they spend heaps on shit like houses and cars and parties and vacations or whatever other hobbies they have, but most of their money is in their companies, stocks, stock options, tax havens, etc. At some point they reach a critical mass where no matter how much they splurge, they will never see their wealth decline. At best the companies / stocks they own will lose some value, but they will NEVER f…

> but most of their money is in their companies, stocks, stock options, tax havens, etc. That is not "hoarding cash" - keeping your net worth under the mattress or in a savings account is hoarding cash. Perhaps, at the margin, a money market account.

But when people colloquially say that wealth people are hoarding cash, they mean what the comment you're replying to is saying and not the keeping cash under the mattress thing. More commonly, people say hoarding wealth.

Re: Robinhood and How to Lose Money

#139

Post by magicnubs »

mam2 wrote: post #126
Cthulhu_ wrote: post #89

Earlier quoted context omitted.

You got lucky; your post is why people pick Robinhood and day trading over the long-term one. It's survivorship bias. For every success story like yours, there's at least one - probably more - that lost three-quarters of what they put in. If you're thinking of investing, apply the "strong beliefs weakly held" practice; you think you may get high returns, so look for examples to the contrary to challenge your own beli…

It's not luck if you make consistent returns over 4 years. "gambling" is the term people use because they don't understand the stock market

It could easily still be luck if they bought Tesla or TECL 3 years ago and that is where their 4x return came from.

Regardless, even if you have a strategy that works for now, that doesn't mean it will continue to work forever. Anyone investing that isn't an expert in a particular industry in which they trade is basically just guessing. Any insight they have will almost invariably already be priced in.

Re: Robinhood and How to Lose Money

#140

Post by mam2 »

magicnubs wrote: post #139
mam2 wrote: post #126

Earlier quoted context omitted.

It's not luck if you make consistent returns over 4 years. "gambling" is the term people use because they don't understand the stock market

It could easily still be luck if they bought Tesla or TECL 3 years ago and that is where their 4x return came from. Regardless, even if you have a strategy that works for now, that doesn't mean it will continue to work forever. Anyone investing that isn't an expert in a particular industry in which they trade is basically just guessing. Any insight they have will almost invariably already be priced in.

Ok but then your whole point is basically "things can change in life". It's true and it's a good thing to be risk adverse but it doesn't bring much to the discussion at the end of the day.

The more interesting questions is "can you actually, consistently, make money if you are good and spend a lot of time analyzing the market. In other words "can you actually have an edge on the market". From what I've seen it's so but most people don't believe it.

Post reply on HN