391–394 of 394 posts
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Great catch, missed that during the article skim. Doesn't this also enable front-running? Regardless, this is useful info for HFT funds, right?
Front running is something which only exists when you need to fill an order which is too large for one stock exchange's ledger at that price. For retail trader that should not be a common case.
Pretty skeptical about the value here. >A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Users pay money to be loaned money? How is this different than a microloan service? >Robinhood also earns money from rebates its gets for directing its order flow to broker dealers That means, presumably, the dealers are profiting in some way by handling trades from in…
Gold subscription is a fixed monthly cost whereas microloan services are interest based. https://support.robinhood.com/hc/en-us/articles/214681823-In...
https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...
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Investing or trading on margin is intended to allow you to trade while you are waiting for previous trades to settle. It's not meant to be a loan, but it is exploited that way by both banks and traders at their own risk. It's simple enough to fix, only allow margin to cover the amount of money waiting to be settled. In other words if a trade hasn't settled then the funds are not available for trading.
Margin can be powerful as a wealth building strategy, when interest rates are low. Risky? Yes. Profitable? Sometimes, if you've done your homework. I don't think you can be a consistent good stock picker, HOWEVER, there are certain companies you just know will do well because they're closely aligned to the industry you work in, for example. "Doubling down" using margin (borrowed at 1-2% per year, not 8-10%) can (mayb…
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Index funds (over time) tend to beat most professional money managers, much less amateur speculators.
It's worse than that. Over any period of time index funds beat the average actively invested money because they have the exact same returns and less fees: https://web.stanford.edu/~wfsharpe/art/active/active.htm