[system2]

What's the reason of this article showing RH as an evil corp? People also gamble in Las Vegas, no one is stopping them.

It is a good tool, thought me a lot about stocks and options. I am not investing heavily, but overhead of my investments would be far more higher with other competitors.

The other trading companies literally asked my lifestory, bunch of scans and very long process of acceptance. Let alone their extremely cumbersome software would possibly (I am certain) lose more money because of the mistakes I would make.

[jariel]

"People also gamble in Las Vegas, no one is stopping them."

If Robin Hood was positioned and sold as 'gambling' and regulated a such, nobody would have a problem with it.

But if anyone doesn't see the maximal hypocrisy in their branding (literally: Robin Hood) and the materiality of their offer, then that's the issue right there.

By 'gravy' the author means 'fish' in gambling terms.

There's just no way kids on their app, are, on the aggregate going to be able to be beating pros esp. on sophisticated things like options trading, but that's the whole point.

[kjksf]

In stock market you're not playing against other people, including the "pros".

You try to pick companies that will grow in the future.

If you pick well, then it doesn't really matter if other people (including "pros") pick the same company or not because there's enough future growth for everybody.

And I have much less reverence towards pros than you.

The pros were saying that Amazon's valuation is so crazy that even if they sold every book in the universe, it still would be too high. In which they were right except they couldn't see that Amazon is not a book store.

The pros were writing articles about how Nokia is, and will be, the king of the world a year after iPhone debuted and people were camping overnight and lining around the block to get it.

And today an average price target on Tesla is 1/3 of the current price. The pros at predicting future price of the stock are failing spectacularly to do so, despite being paid big bucks by the most prestige financial institutions and having more access to information than anyone else.

While I'm not playing against the pros, I sure am getting better returns than 90% of them.

[jariel]

"In stock market you're not playing against other people, including the "pros". You try to pick companies that will grow in the future."

Ah ha!

This is the fallacy, unfortunately.

Once stocks are public, it's more akin to poker than investing.

Every time you buy a stock, there is someone on the other side, wanting to sell it to you for the same price.

Now, you have to ask yourself the question - why is that person will to part with something that you think is going to be worth more?

If everyone were doing 'value investing' I think there would be a case.

But with day trading, leveraged into option trading ... it's poker. People are 'making bets on stocks' just like they would on horses.

[i_cannot_hack]

> While I'm not playing against the pros, I sure am getting better returns than 90% of them.

How much you're making right now is not relevant for anything other than your personal bank account, the same way that winning a single hand at the poker table is not relevant for anything except your daily winnings.

What is relevant for the rest of us in this context (since we have no stake in your current bank balance) is this: Will you beat the average professional, or better yet an index fund, over a period of 20 years?

In fact, your personal success over 20 years is just as irrelevant, unless a statistically significant amount of people doing the same thing, as a well defined and replicable strategy, achieves similar success.

"I did this thing and made more money than X" is just noise and not indicative of anything.

P.S. Keeping up with, or even beating, the average professional, is easy: just invest in an index fund. So it's a very low bar to achieve.

[csa]

> In stock market you're not playing against other people, including the "pros".

In one short sentence, you showed why people are hating on RH.

When you buy or sell a stock (or option or whatever), there is a counterparty to your trade. That person is making the trade because, essentially (in an oversimplified way), they believe the opposite of what you believe regarding the value of the underlying stock. One of you will be wrong. You are precisely "playing against other people", because without those other people, there will be no market.

> If you pick well, then it doesn't really matter if other people (including "pros") pick the same company or not because there's enough future growth for everybody.

While correct, this is shortsighted, and it is precisely why people (rightly or wrongly) suggest investing in an index fund. The issue is that the benchmark for successful investing is beating the general market, not zero. Specifically, if you aren't beating the market or some proxy thereof, you are paying an opportunity cost by investing inefficiently.

Most professional money managers do not beat the market over any reasonable time frame (although they may mitigate certain types of risk relatively effectively), and the folks who sling stocks on RH or TD Ameritrade or whatever also do not beat the market over any reasonable time frame (certainly in aggregrate, and disproportionately true on an individual basis).

> And I have much less reverence towards pros than you.

I actually think this lack of reverence towards the pros is a good thing, but probably not for the reason you think. The pros who exploit less sophisticated counterparties don't advertise this fact very much, if at all -- it is not in their financial best interest to do so.

There is terrible group-think on Wall Street, and there are niche firms that make a killing exploiting this group-think. I consider these niche firms the real "pros".

> While I'm not playing against the pros, I sure am getting better returns than 90% of them.

Your reference time frame is way too short if you actually think this is true. If you think you can scale your returns that beat the market over the long term on a relatively small eight figure fund, you stand to make many millions for yourself, and I recommend you make some friends in the financial world ASAP -- the money will find you. I will bet the don't on your ability to produce market beating results over the long term, since it seems to me that you don't even really understand the basic mechanics of how the market actually works or who the various players actually are.

That said, best of luck.

[kasey_junk]

The zero sum counterparty view of each individual trade is as incorrect as the ‘not playing against other people’ view because it doesn’t account for risk/liquidity across time and space.

If I’m using the market to grow wealth for (example) a child’s college fund, it is largely immaterial if my counterparty then later makes more money holding what I sold to them. More power to them, I needed to be liquid and they made that possible. We both got utility out of the trade.

Similarly, I’ve written HFT algo strategies myself that would aggressively take on losers because by doing so I could get to higher rebate levels. Virtually any modern portfolio is going to be taking on expected losers to de risk the whole portfolio, thats money management 101 stuff. In both of those cases ‘professionals’ ‘lost’ to ‘dumb’ money but everyone received utility from it.

[csa]

Yeah. That's precisely why I wrote "in an oversimplified way".

Note that you are taking a relatively sophisticated view of financial instruments, and the original poster was not. There is a difference, and that difference was exactly what I was trying to highlight in a simple way.

[BoorishBears]

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 leg options strategies resulted in the suicide of person wrongly shown to owe millions in their account, terrible for tracking P/L, terrible fills on orders, the asinine fake chat bot system and lacking support in general

Robinhood as a trading platform is deeply flawed, you say your commissions would outweigh your investments, but a) now zero fee trades is not a differentiator, and b) you're paying commissions on every RH trade with subpar fills, both on time taken to fill and prices, those add up over time, and are why RH could even afford commission free trades in the first place

[kjksf]

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 web app is slow, switching between different parts is slow.

They don't even bother to send you an e-mail immediately after fulfilling the order.

The way RobinHood show option pricing makes way more sense than IBKR's view.

"Terrible fills on order" - you're just making stuff up. Care to show evidence that some other brokerage can fill your order faster or at better price than RobinHood.

"IB's trading system had a defect that prevented clients from selling any WTI Futures at negative prices, which caused IB's clients over $100 million in losses." https://finance.yahoo.com/news/sadis-hired-investigate-inter...

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

RobinHood is just a better app. Why do people think it's a bad thing is beyond me.

[BoorishBears]

> 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.

[QuesnayJr]

  options with asinine strike/expiries for people who don't get options

I've never used Robinhood, so I was curious what you meant by an "asinine" strike. (I know all about options, FWIW.)

[BoorishBears]

Stuff that's just so insanely out of the money, and so close to expiry, that even by "YOLO" standards, it's stupid.

You usually get burned right off the bat because the bid/ask spread is huge, so to even get the order filled, you need a limit order with a really unfavorable price

[QuesnayJr]

Thanks. That makes sense.

[WalterBright]

> literally asked my lifestory

That's a result of federal regulation and lawsuits. Investors have a tendency to sue brokerages when they lose money, arguing that "nobody told me stocks could go down!" Hence brokerages try to head this off by refusing to sell to you if you don't certify you are a "sophisticated" investor.