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The only thing Robinhood did good was pushing other brokerages to get rid of commissions. I would hope that most people left their platform after they had thos

The only thing Robinhood did good was pushing other brokerages to get rid of commissions. I would hope that most people left their platform after they had those major outages during volatile trading days a few months ago. Any place that has outages lasting that long without properly explaining what happened shouldn't be licensed to deal in securities. Now they're just preying on people that aren't knowledgeable in the financial markets by showing them how "easy" it is to trade. I have studied and worked in finance, and I'll be the first person to tell you, trading isn't the least bit "easy" and shouldn't be portrayed as such.

devalgo 6y ago
Well they sell your trade data to HFT firms before a trade is executed to let them arbitrage on you so you are probably net losing money vs fees from other brokerages.
- tptacek 6y ago
  No. The opposite thing is true: HFTs want your retail trades because the cost basis of trading with you is lower than with trading with the broader market, and they can split the difference in savings with the brokerage. If anything, you're likely getting price improvement from the HFT. (None of this makes Robinhood good; it's just that PFOF doesn't explain why they're bad).
  - awinder 6y ago
    Ok now I’m re-heartened, it comes up every time but it gets good rebuttals now xD
  - edouard-harris 6y ago
    Yes, this is exactly right. The truth about HFT is that it has materially reduced the effective trading fees for retail investors across the board. > the cost basis of trading with you is lower than with trading with the broader market But this is exactly why Robinhood is bad. Trading with you (a retail investor) has a lower cost basis because retail investors are reliably less sophisticated than institutional investors. Therefore: an institution will pay to take the other side of a series of trades with you because it knows you aren't sophisticated, so it's likely to win in the long run. From there, follow the incentives: Robinhood is incentivized to sell more order flow; which it does by increasing its trading volume; which it does by making trades easier. Robinhood is also incentivized to increase its net revenue per trade; which it does by increasing the price at which it can sell a given volume of order flow to institutions; which it does by making its average trade less sophisticated. In summary: The most obvious way for Robinhood to optimize its revenue is to get its investors to make lots of bad trades.
    - tptacek 6y ago
      That's not the sense in which market makers "win" on these trades. The information market makers are capitalizing on is "your tiny retail trade isn't followed by a giant block of additional trades unloading a huge position held by a pension fund", not "you are too dumb to know what this stock costs". The money they're making is just the spread. They can safely quote better spreads to retail investors than they can to execution firms trading for giant funds.
      - tripletao 6y ago
        The market makers win on both factors. Their concern is that my sell order will be followed by many other orders to sell, because that would leave them with a large inventory of stock that they can't unload except at a loss (because the market impact of that selling probably drove the price down). That concern might exist because I'm selling a big position and my order is the tip of that iceberg, as you say; but it could also exist because I'm trading on news that hasn't yet been incorporated into the share price, and my order will be followed by many other people selling once they learn that news themselves.
    - blahbhthrow3748 6y ago
      > Trading with you (a retail investor) has a lower cost basis because retail investors are reliably less sophisticated than institutional investors It's not about winning or losing, it's about getting "run over" by massive momentum. Retail investors move less volume and randomly take both sides of trades, so it's much less risky to trade with them. Conversely, large players can dump so much volume that they move the price against a market maker and decimate their revenue from whatever very small spread they usually collect. > The most obvious way for Robinhood to optimize its revenue is to get its investors to make lots of bad trades. Robinhood doesn't care whether trades are good or bad. A discount brokerage is a moving business, not a storage business (unless you count interest on cash balances, which Robinhood doesn't make much from). They make money from retail investors doing a lot of trades. Arguably that's against the interest of the investors because retail investors tend to make bad trades, but there's no malice on the part of Robinhood there. If all their clients made a lot of money presumably they'd use it to make more trades and make Robinhood more money.
  - this_user 6y ago
    That is not true. The market makers buying the order flow are bound by the National Best Bid and Offer (NBBO) according to Reg NMS. Which means they cannot fill you at a worse price than the NBBO. However, there is a lot of liquidity on venues that are not part of the National Market System. A good, real broker will find you that price improvement, and pass it through. The MM buying your order flow will not, and will pocket the difference. So, let's say you are trading 1000 shares. Normally, you might pay around $10 for that with a real broker. Now you execute that same trade at RH (or some other zero-commission broker), and let's say your average price is just 2c worse than what the other broker would get you. Well, now you just paid $20 for your "free" trade. And this gets worse for odd-lot orders (those that are not multiples of 100 shares). Because with those the MM is not bound to the NBBO, and can give you an even worse fill. Given that a lot of these RH accounts are presumably rather small, that likely applies to a decent amount of orders executed. > the cost basis of trading with you is lower than with trading with the broader market These are market makers; they don't take directional bets, hence this is irrelevant, as they only trade in a reactive way while trying to maintain a neutral book. What you are presumably talking about is toxic (i.e. informed) vs non-toxic order flow. Having a big player, who knows more than the MM, is what they are afraid off, because they can lose a lot of money by being on the wrong side of the market. They know that retail traders are unlikely to be informed traders, hence their order flow is less risky. However, the volume retail traders are moving is a drop in the bucket compared to what instis do.
    - Scoundreller 6y ago
      Out of curiousity, what happens with a 123 share order? Are 100 subject to those rules and 23 are not or?
    - jmole 6y ago
      yeah - if you place two market orders with two different brokers, you will get two different results. so what? use a limit order. with all the electronic routing that markets have nowadays, I would be surprised if retail brokerages differed that much in their ability to execute a limit order in the same set of market conditions.
    - tripletao 6y ago
  - KoftaBob 6y ago
    Interesting, is there anywhere I can read more about this? Having a bit of trouble wrapping my head around it.
    - wolf550e 6y ago
      https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
- paulgb 6y ago
  Matt Levine has written about how that's not exactly an accurate portrayal (second section of the newsletter below) https://www.bloomberg.com/opinion/articles/2018-10-16/carl-icahn-wants-to-fight-dell-again https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
- cosmodisk 6y ago
  It's called frontrunning. I would believe it if they'd do it themselves,as there isn't enough time to pass on the trading data to someone else.
  - kevin_thibedeau 6y ago
    There is when you've got a microwave link.
- jariel 6y ago
  "Well they sell your trade data to HFT firms before a trade is executed " Is this actually true? If so it blows me away this this is not illegal, or that the press hasn't destroyed them for it. RobinHood is has one of the most ridiculous branding efforts ever: 'borne of the Occupy Wall Street' movement, the idea was to empower Millennials to 'break the system' ... by 'buying into the system'??? It's like the perfect script written by a NY agency for a bank to re-position the exact same financial products under the banner of a ridiculous 'empowerment branding', like Exxon creating a hipster brand to sell 'clean oil'. "Robinhood Raises $323M to Democratize Finance For All" [1]. "Trading app tries to fix a 'rigged' financial system" [2] from CNN. How does a startup get major news agencies to consistently promote their narratives unchallenged, especially when they're so ridiculous? We saw this a lot with WeWork as well. I can't figure out is how the press, particularly CNN bought into hook-line and sinker especially early on. They've been consistently promoting Robin Hood and their 'empowering message' with fluff stories, not remotely critical of the materiality of the business. Have a look [3] Recently, they've started to question some things, and perhaps the press will fall out of love with them and it'll be narrative in the other direction. There is absolutely something amiss here, if anyone with deep relationships in the PR and story placement care to comment, it would be enlightening as I think that's a big part of the underlying story. Edit: another great example of the press point-blank driving RH's branding, in this case 'intergenerational' [4]. What kind of agency can get this kind of coverage? [1] https://blog.robinhood.com/news/2019/7/21/robinhood-raises-323m-to-democratize-finance-for-all https://blog.robinhood.com/news/2019/7/21/robinhood-raises-3... [2] https://www.cnn.com/videos/business/2018/09/21/robinhood-founders-investing-fresh-money-orig.cnn https://www.cnn.com/videos/business/2018/09/21/robinhood-fou... [3] https://money.cnn.com/2017/09/08/investing/robinhood-baiju-bhatt-vlad-tenev-fresh-money/index.html https://money.cnn.com/2017/09/08/investing/robinhood-baiju-b... [4] https://www.trtworld.com/magazine/robinhood-and-merry-millennial-investors-stare-down-boomers-37200 https://www.trtworld.com/magazine/robinhood-and-merry-millen...
  - basch 6y ago
    Everybody does it. "Schwab earned 1.4% of revenue from payment for order flow, TD Ameritrade about 8.4%, and E*TRADE about 6.1%. Interactive Brokers has historically been quite reticent about participating in internalization, because it doesn’t play well with their sophisticated clients; they earn about 1.1% from it." Scroll down to "payment for order flow" https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... Schwab sells theirs as a feature/benefit. https://www.schwab.com/public/schwab/active_trader/trading_tools/execution_quality https://www.schwab.com/public/schwab/active_trader/trading_t...
- awinder 6y ago
  Man this comes up every time. Pretty much everyone does payment for order flow now, and some brokerages cut you in on it, all reflected in the price of the buy/sell. You should look at overall order quality and not just PFOF because places that do PFOF are trading better than national best average and places that do PFOF are doing worse, it’s a variable.
- vgatherps 6y ago
  The hfts HAVE to give you at least as good execution as is available on the market, and if they trade while they are holding your order your order can’t execute at a worse price than their trades (Manning rule). HFTs like retail orders because they don’t move the market, so you can collect some of the spread without worrying about getting run over by an informed institutional player.
basch 6y ago
Robinhood is "easy" and mobile first. It wins because of UX. A conversation I had with a person yesterday. Him: My older coworkers asked me if I use all the new apps like Tik-Tok and Robinhood. Me: With everybody being free now, theres no real reason to start with robinhood. Him: "But is it as easy. If not, dont care." My counterargument was customer service, but was not persuasive. He has no intention of ever picking up a phone or asking for help. He wants a toy to play with, while he and his friends cant be at the casino. The majority of his money is at Vanguard, hes not moving it to robinhood. It's just something to look at everyday for some entertainment value. Its the same mindset where "I made x today (or at the casino)" but ignore the losses or how much they put in. This is the same group of friends that are excited their $75 in dogecoin is up 50% today, or who are playing with options against Draftkings for the thrill of it. Gambling on gambling. Fun. Games. Thrill. I can't say with a straight face that the Schwab or Fidelity have mobile apps that are as simple to pick up or navigate. They involve more clicks, and buried options. Free gave robinhood publicity and got people to give it a try. UX keeps them around. If Schwab, Fidelity, Merril, Goldman Sachs/Marcus want to compete in this space, they need lite versions of their platforms that are true mobile first apps AND some kind of value add above Robinhood to lure people to try it and convert. Maybe these arent the customers they are looking for, some of them at least.
- pathseeker 6y ago
  To expand on this, Robinhood offers instant gratification as well without requiring a wire transfer. They have "instant deposit" limits that allow you to start an ACH xfer and use the money to buy options/stock within a few seconds. Most brokerages require the multi-day ACH settling period before you can trade.
- TedDoesntTalk 6y ago
  RobinHood is NOT free: https://www.wsj.com/articles/why-free-trading-on-robinhood-isnt-really-free-1541772001 https://www.wsj.com/articles/why-free-trading-on-robinhood-i...
  - usmannk 6y ago
    I recommend ignoring this misinformed WSJ article and reading this: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... After that come back and see how the WSJ article is just a poorly written hit piece on RH.
deleted 6y ago
[deleted]
izend 6y ago
Robinhood has terrible fills in my experience vs ToS or IB.
- arcticbull 6y ago
  IB has a terrible UI but excellent order routing.
  - Schweigi 6y ago
    Did you try the IB mobile app? It has quite a nice UI compared to the desktop trading software. For example the option chain builder is very easy to use on the app. Obviously if you need all the advanced features then the app will not be good enough.
    - arcticbull 6y ago
      Agreed the option chain & strategy builder is both better and seemingly more complete on mobile. For instance, there are far more expirations available for futures options on mobile than on TWS.
      - angled 6y ago
        The IBKR API would likely list them, and I assume that's how people get the most value from using it as their broker.
        arcticbull 6y ago
        I'm actually in the process of building a low-frequency trading bot on top of the IBKR API haha.
- gen3 6y ago
  It’s fine if you do a limit order.
  - 6y ago
JMTQp8lwXL 6y ago
It's easy to end up ahead if you buy diversified index funds and hold them for a long period of time. Stock investing should be boring. The bigger issue is people want results now and not in 10 years, and that's when the speculative investments begin. People need understand that's not what the stock market is, and that strategy is very likely to end with having the rug pulled under you.
- basch 6y ago
  M1 deserves some credit for designing something in the same space, but for a different market, and encouraging different behavior. They built the app around setting it and forgetting it, making day trading impossible, and auto balancing. You set percentages, and when you deposit or autodeposit, it buys whatever proportion is the shortest. You can active pick stocks or index etfs, but the only proper way to use the tool is buy and hold. More firms would be wise to offer that kind of simplicity, without having to manage WHICH shares to buy. It gives people a similar experience to buying a Total Stock Market ETF, but still lets them have some runway to be foolish. The 30% nanny state of investing software.
- WalterBright 6y ago
  That's the sort of knowledge that only comes with experience. Inexperienced people need to get burned a few times before they are ready to listen. I have plenty of experience in this, both my own behavior and that of many people I know.
- dpoochieni 6y ago
  Good luck when the ETF's see issues from poor underlying liquidity.
- logicslave 6y ago
  Honestly, putting your money in an ETF so you have a bit more money when you retire is stupid. You cant retire any earlier investing that way, and you are subsidizing all of the terrible sectors included in the etfs. Its brainwashing to do it.
  - 6y ago
hourislate 6y ago
I've read a few articles that have suggested it's like a mobile game for the millennial. They look at it as something to play and have fun with. Perhaps this trading platform is a form of entertainment for them, like a slot machine or roulette wheel........
User23 6y ago
They also have a surprisingly low margin interest rate for low net worth individuals. As far as I know only Interactive brokers beats them (and they beat everyone at every level). We like to take the piss with lol wsb and so on, but I know for a fact their clearing partners have a lot of respect for their operation. I see them as a Tesla tier operation: lots of haters, but they do more right than they do wrong.
- throaway1990 6y ago
  Exactly, It is ridiculously hard for poor people to invest in securities without Robinhood.
- danielscrubs 6y ago
  Tesla is innovative but has shoddy quality. They rank the lowest in quality even if you check insurance companies. But boy was the innovation needed in the car industry. I’m just happy it got enough in government subsidies to stay in the market. https://amp.usatoday.com/amp/3249943001 https://amp.usatoday.com/amp/3249943001
throaway1990 6y ago
What? I put on orders to buy two funds in Fidelity IRA and they still haven't closed my position and no explanation of what's going on. Robinhood actually sent me an email and follow-up on outages, even though it didn't affect me one bit. Robinhood actually gives tools and resources to explore and learn about investing, instead of it being "experts" only. Every software platform has bugs and user issues but that risk is far outweighed by the services provided.

devalgo 6y ago

Well they sell your trade data to HFT firms before a trade is executed to let them arbitrage on you so you are probably net losing money vs fees from other brokerages.

tptacek 6y ago
No. The opposite thing is true: HFTs want your retail trades because the cost basis of trading with you is lower than with trading with the broader market, and they can split the difference in savings with the brokerage. If anything, you're likely getting price improvement from the HFT. (None of this makes Robinhood good; it's just that PFOF doesn't explain why they're bad).
- awinder 6y ago
  Ok now I’m re-heartened, it comes up every time but it gets good rebuttals now xD
- edouard-harris 6y ago
  Yes, this is exactly right. The truth about HFT is that it has materially reduced the effective trading fees for retail investors across the board. > the cost basis of trading with you is lower than with trading with the broader market But this is exactly why Robinhood is bad. Trading with you (a retail investor) has a lower cost basis because retail investors are reliably less sophisticated than institutional investors. Therefore: an institution will pay to take the other side of a series of trades with you because it knows you aren't sophisticated, so it's likely to win in the long run. From there, follow the incentives: Robinhood is incentivized to sell more order flow; which it does by increasing its trading volume; which it does by making trades easier. Robinhood is also incentivized to increase its net revenue per trade; which it does by increasing the price at which it can sell a given volume of order flow to institutions; which it does by making its average trade less sophisticated. In summary: The most obvious way for Robinhood to optimize its revenue is to get its investors to make lots of bad trades.
  - tptacek 6y ago
    That's not the sense in which market makers "win" on these trades. The information market makers are capitalizing on is "your tiny retail trade isn't followed by a giant block of additional trades unloading a huge position held by a pension fund", not "you are too dumb to know what this stock costs". The money they're making is just the spread. They can safely quote better spreads to retail investors than they can to execution firms trading for giant funds.
    - tripletao 6y ago
      The market makers win on both factors. Their concern is that my sell order will be followed by many other orders to sell, because that would leave them with a large inventory of stock that they can't unload except at a loss (because the market impact of that selling probably drove the price down). That concern might exist because I'm selling a big position and my order is the tip of that iceberg, as you say; but it could also exist because I'm trading on news that hasn't yet been incorporated into the share price, and my order will be followed by many other people selling once they learn that news themselves.
  - blahbhthrow3748 6y ago
    > Trading with you (a retail investor) has a lower cost basis because retail investors are reliably less sophisticated than institutional investors It's not about winning or losing, it's about getting "run over" by massive momentum. Retail investors move less volume and randomly take both sides of trades, so it's much less risky to trade with them. Conversely, large players can dump so much volume that they move the price against a market maker and decimate their revenue from whatever very small spread they usually collect. > The most obvious way for Robinhood to optimize its revenue is to get its investors to make lots of bad trades. Robinhood doesn't care whether trades are good or bad. A discount brokerage is a moving business, not a storage business (unless you count interest on cash balances, which Robinhood doesn't make much from). They make money from retail investors doing a lot of trades. Arguably that's against the interest of the investors because retail investors tend to make bad trades, but there's no malice on the part of Robinhood there. If all their clients made a lot of money presumably they'd use it to make more trades and make Robinhood more money.
- this_user 6y ago
  That is not true. The market makers buying the order flow are bound by the National Best Bid and Offer (NBBO) according to Reg NMS. Which means they cannot fill you at a worse price than the NBBO. However, there is a lot of liquidity on venues that are not part of the National Market System. A good, real broker will find you that price improvement, and pass it through. The MM buying your order flow will not, and will pocket the difference. So, let's say you are trading 1000 shares. Normally, you might pay around $10 for that with a real broker. Now you execute that same trade at RH (or some other zero-commission broker), and let's say your average price is just 2c worse than what the other broker would get you. Well, now you just paid $20 for your "free" trade. And this gets worse for odd-lot orders (those that are not multiples of 100 shares). Because with those the MM is not bound to the NBBO, and can give you an even worse fill. Given that a lot of these RH accounts are presumably rather small, that likely applies to a decent amount of orders executed. > the cost basis of trading with you is lower than with trading with the broader market These are market makers; they don't take directional bets, hence this is irrelevant, as they only trade in a reactive way while trying to maintain a neutral book. What you are presumably talking about is toxic (i.e. informed) vs non-toxic order flow. Having a big player, who knows more than the MM, is what they are afraid off, because they can lose a lot of money by being on the wrong side of the market. They know that retail traders are unlikely to be informed traders, hence their order flow is less risky. However, the volume retail traders are moving is a drop in the bucket compared to what instis do.
  - Scoundreller 6y ago
    Out of curiousity, what happens with a 123 share order? Are 100 subject to those rules and 23 are not or?
  - jmole 6y ago
    yeah - if you place two market orders with two different brokers, you will get two different results. so what? use a limit order. with all the electronic routing that markets have nowadays, I would be surprised if retail brokerages differed that much in their ability to execute a limit order in the same set of market conditions.
  - tripletao 6y ago
- KoftaBob 6y ago
  Interesting, is there anywhere I can read more about this? Having a bit of trouble wrapping my head around it.
  - wolf550e 6y ago
    https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
paulgb 6y ago
Matt Levine has written about how that's not exactly an accurate portrayal (second section of the newsletter below) https://www.bloomberg.com/opinion/articles/2018-10-16/carl-icahn-wants-to-fight-dell-again https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
cosmodisk 6y ago
It's called frontrunning. I would believe it if they'd do it themselves,as there isn't enough time to pass on the trading data to someone else.
- kevin_thibedeau 6y ago
  There is when you've got a microwave link.
jariel 6y ago
"Well they sell your trade data to HFT firms before a trade is executed " Is this actually true? If so it blows me away this this is not illegal, or that the press hasn't destroyed them for it. RobinHood is has one of the most ridiculous branding efforts ever: 'borne of the Occupy Wall Street' movement, the idea was to empower Millennials to 'break the system' ... by 'buying into the system'??? It's like the perfect script written by a NY agency for a bank to re-position the exact same financial products under the banner of a ridiculous 'empowerment branding', like Exxon creating a hipster brand to sell 'clean oil'. "Robinhood Raises $323M to Democratize Finance For All" [1]. "Trading app tries to fix a 'rigged' financial system" [2] from CNN. How does a startup get major news agencies to consistently promote their narratives unchallenged, especially when they're so ridiculous? We saw this a lot with WeWork as well. I can't figure out is how the press, particularly CNN bought into hook-line and sinker especially early on. They've been consistently promoting Robin Hood and their 'empowering message' with fluff stories, not remotely critical of the materiality of the business. Have a look [3] Recently, they've started to question some things, and perhaps the press will fall out of love with them and it'll be narrative in the other direction. There is absolutely something amiss here, if anyone with deep relationships in the PR and story placement care to comment, it would be enlightening as I think that's a big part of the underlying story. Edit: another great example of the press point-blank driving RH's branding, in this case 'intergenerational' [4]. What kind of agency can get this kind of coverage? [1] https://blog.robinhood.com/news/2019/7/21/robinhood-raises-323m-to-democratize-finance-for-all https://blog.robinhood.com/news/2019/7/21/robinhood-raises-3... [2] https://www.cnn.com/videos/business/2018/09/21/robinhood-founders-investing-fresh-money-orig.cnn https://www.cnn.com/videos/business/2018/09/21/robinhood-fou... [3] https://money.cnn.com/2017/09/08/investing/robinhood-baiju-bhatt-vlad-tenev-fresh-money/index.html https://money.cnn.com/2017/09/08/investing/robinhood-baiju-b... [4] https://www.trtworld.com/magazine/robinhood-and-merry-millennial-investors-stare-down-boomers-37200 https://www.trtworld.com/magazine/robinhood-and-merry-millen...
- basch 6y ago
  Everybody does it. "Schwab earned 1.4% of revenue from payment for order flow, TD Ameritrade about 8.4%, and E*TRADE about 6.1%. Interactive Brokers has historically been quite reticent about participating in internalization, because it doesn’t play well with their sophisticated clients; they earn about 1.1% from it." Scroll down to "payment for order flow" https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... Schwab sells theirs as a feature/benefit. https://www.schwab.com/public/schwab/active_trader/trading_tools/execution_quality https://www.schwab.com/public/schwab/active_trader/trading_t...
awinder 6y ago
Man this comes up every time. Pretty much everyone does payment for order flow now, and some brokerages cut you in on it, all reflected in the price of the buy/sell. You should look at overall order quality and not just PFOF because places that do PFOF are trading better than national best average and places that do PFOF are doing worse, it’s a variable.
vgatherps 6y ago
The hfts HAVE to give you at least as good execution as is available on the market, and if they trade while they are holding your order your order can’t execute at a worse price than their trades (Manning rule). HFTs like retail orders because they don’t move the market, so you can collect some of the spread without worrying about getting run over by an informed institutional player.

basch 6y ago

Robinhood is "easy" and mobile first. It wins because of UX. A conversation I had with a person yesterday. Him: My older coworkers asked me if I use all the new apps like Tik-Tok and Robinhood. Me: With everybody being free now, theres no real reason to start with robinhood. Him: "But is it as easy. If not, dont care." My counterargument was customer service, but was not persuasive. He has no intention of ever picking up a phone or asking for help. He wants a toy to play with, while he and his friends cant be at the casino. The majority of his money is at Vanguard, hes not moving it to robinhood. It's just something to look at everyday for some entertainment value. Its the same mindset where "I made x today (or at the casino)" but ignore the losses or how much they put in. This is the same group of friends that are excited their $75 in dogecoin is up 50% today, or who are playing with options against Draftkings for the thrill of it. Gambling on gambling. Fun. Games. Thrill. I can't say with a straight face that the Schwab or Fidelity have mobile apps that are as simple to pick up or navigate. They involve more clicks, and buried options. Free gave robinhood publicity and got people to give it a try. UX keeps them around. If Schwab, Fidelity, Merril, Goldman Sachs/Marcus want to compete in this space, they need lite versions of their platforms that are true mobile first apps AND some kind of value add above Robinhood to lure people to try it and convert. Maybe these arent the customers they are looking for, some of them at least.

pathseeker 6y ago
To expand on this, Robinhood offers instant gratification as well without requiring a wire transfer. They have "instant deposit" limits that allow you to start an ACH xfer and use the money to buy options/stock within a few seconds. Most brokerages require the multi-day ACH settling period before you can trade.
TedDoesntTalk 6y ago
RobinHood is NOT free: https://www.wsj.com/articles/why-free-trading-on-robinhood-isnt-really-free-1541772001 https://www.wsj.com/articles/why-free-trading-on-robinhood-i...
- usmannk 6y ago
  I recommend ignoring this misinformed WSJ article and reading this: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... After that come back and see how the WSJ article is just a poorly written hit piece on RH.

deleted 6y ago

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izend 6y ago

Robinhood has terrible fills in my experience vs ToS or IB.

arcticbull 6y ago
IB has a terrible UI but excellent order routing.
- Schweigi 6y ago
  Did you try the IB mobile app? It has quite a nice UI compared to the desktop trading software. For example the option chain builder is very easy to use on the app. Obviously if you need all the advanced features then the app will not be good enough.
  - arcticbull 6y ago
    Agreed the option chain & strategy builder is both better and seemingly more complete on mobile. For instance, there are far more expirations available for futures options on mobile than on TWS.
    - angled 6y ago
      The IBKR API would likely list them, and I assume that's how people get the most value from using it as their broker.
      - arcticbull 6y ago
        I'm actually in the process of building a low-frequency trading bot on top of the IBKR API haha.
gen3 6y ago
It’s fine if you do a limit order.
- 6y ago

JMTQp8lwXL 6y ago

It's easy to end up ahead if you buy diversified index funds and hold them for a long period of time. Stock investing should be boring. The bigger issue is people want results now and not in 10 years, and that's when the speculative investments begin. People need understand that's not what the stock market is, and that strategy is very likely to end with having the rug pulled under you.

basch 6y ago
M1 deserves some credit for designing something in the same space, but for a different market, and encouraging different behavior. They built the app around setting it and forgetting it, making day trading impossible, and auto balancing. You set percentages, and when you deposit or autodeposit, it buys whatever proportion is the shortest. You can active pick stocks or index etfs, but the only proper way to use the tool is buy and hold. More firms would be wise to offer that kind of simplicity, without having to manage WHICH shares to buy. It gives people a similar experience to buying a Total Stock Market ETF, but still lets them have some runway to be foolish. The 30% nanny state of investing software.
WalterBright 6y ago
That's the sort of knowledge that only comes with experience. Inexperienced people need to get burned a few times before they are ready to listen. I have plenty of experience in this, both my own behavior and that of many people I know.
dpoochieni 6y ago
Good luck when the ETF's see issues from poor underlying liquidity.
logicslave 6y ago
Honestly, putting your money in an ETF so you have a bit more money when you retire is stupid. You cant retire any earlier investing that way, and you are subsidizing all of the terrible sectors included in the etfs. Its brainwashing to do it.
- 6y ago

hourislate 6y ago

I've read a few articles that have suggested it's like a mobile game for the millennial. They look at it as something to play and have fun with. Perhaps this trading platform is a form of entertainment for them, like a slot machine or roulette wheel........

User23 6y ago

They also have a surprisingly low margin interest rate for low net worth individuals. As far as I know only Interactive brokers beats them (and they beat everyone at every level). We like to take the piss with lol wsb and so on, but I know for a fact their clearing partners have a lot of respect for their operation. I see them as a Tesla tier operation: lots of haters, but they do more right than they do wrong.

throaway1990 6y ago
Exactly, It is ridiculously hard for poor people to invest in securities without Robinhood.
danielscrubs 6y ago
Tesla is innovative but has shoddy quality. They rank the lowest in quality even if you check insurance companies. But boy was the innovation needed in the car industry. I’m just happy it got enough in government subsidies to stay in the market. https://amp.usatoday.com/amp/3249943001 https://amp.usatoday.com/amp/3249943001

throaway1990 6y ago

What? I put on orders to buy two funds in Fidelity IRA and they still haven't closed my position and no explanation of what's going on. Robinhood actually sent me an email and follow-up on outages, even though it didn't affect me one bit. Robinhood actually gives tools and resources to explore and learn about investing, instead of it being "experts" only. Every software platform has bugs and user issues but that risk is far outweighed by the services provided.