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Robinhood will lend people money, so they can invest with that. Buying stocks with money that isn't yours. What could possibly go wrong here?
People do this when buying houses all the time, and often at a 5x or 10x margin, rather than just 2x. Even Vanguard supports this.
“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
Margin trading is a pretty standard feature across all brokerages. Dangerous if used ignorantly, but greatly increases you returns if used effectively.
“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
> Even if you are a professional trader you'll take a bath on margin over the long run. Huh? It would be difficult to find a professional trader that doesn't trade equities on margin. They pretty much have to due to the way the settlement process works. The returns of a professional trader depend on many factors, including available capital and the capacity or manner in which the trader operates. That said, they're…
In theory, sure. But most do not "far exceed 5%", and instead have the fees of their employing funds to subsidize their strategies.
For traders who are working independently, or in prop shops, I suppose it might be true by definition (if they last in the market they are either re-upping and gambling, or at least profitable). But that's still not the rule.
More importantly, retail investors are not professionals, and Robinhood is basically catering to /r/wallstreetbets with this sort of product offered to them.
Robinhood will lend people money, so they can invest with that. Buying stocks with money that isn't yours. What could possibly go wrong here?
Earlier quoted context omitted.
They explicitly call out in the article they don't do that
No, they didn't. It was more of a "non-denial". > Robinhood also earns money from rebates its gets for directing its order flow to broker dealers, though Bhatt insists “We do not sell data to anyone. We have never sold data to anyone. We just do not do that.” There have been misconceptions that Robinhood sells high-frequency traders its data to help them trade against the startup’s customers. But Bhatt says “The rule…
“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
Eh I don't consider it a new credit vehicle, margin trading is available in every trading platform. It doesn't make a huge difference for Robinhood; they'll issue a margin call if you're undercapitalized, so the likelihood you would lose any of Robinhood's money is very low. As for the investors, the percentage rate is very reasonable; given standard market conditions you'd make good money using robinhood gold and pu…
“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
Depends what you want to do, I'm about 98% in plain old, boring index-tracking ETFs. But sometimes I want to take a bit of money to make some stupid bet. Yes, to gamble. And for that purpose, often having the leverage is a good thing. The way I see it, the bets are much more entertaining than those at casinos and with better odds. Maybe it's just me, but I find casinos incredibly boring, but gambling on the market ca…
So I'm willing to bet you view this app very differently than someone who finds it on the App Store in a spur of the moment enticed-by-Wall-Street feeling, where it can be mistakenly thought as a get-rich-quick scheme. There's no education component to Robinhood
(This conflation between speculator/investor has been happening for a while, see "The Intelligent Investor" by Benjamin Graham.)
Earlier quoted context omitted.
Well, I don't think this is a legal use of order flow (waiting days to make a purchase), but the analogy is kinda sorta on the right path. Reality is more like "I know an order for NVIDIA is going to hit at $50, but I see it for sale for 49.9998 all over the place, I can go scoop some up at 49.9998 and put for sale at 49.9999 and make some money. But then real reality is a step more complicated about when it is legal…
Front running would be going the same direction (buy for buy). In buying order flow, you are usually going in the opposite direction, selling out of you own inventory against a buy.