I may be alone here, but I feel a little uncomfortable trading stocks solely on a mobile device. Maybe I'm just having an old man moment, but I'd rather do something like this on the desktop with easier simultaneous access to data and research.
Fidelity and its ilk have some serious advantages - but Robinhood makes it so easy and almost gamifies it. I use both - Robinhood for play, Fidelity for long-term stuff - and I found myself using Robinhood more when I had an iPhone.
The way they market this app makes me pretty concerned. It seems like they're advocating short-term trading -- pretty risky behavior. I guess they don't explicitly do this, but the nature of a mobile-only platform, with what looks like no portfolio/risk analysis tools screams short term. Also, the only real reason a commission-free account would be helpful is if you're trading pretty frequently or in very small amounts. I'd rather pay $10/trade for something like Fidelity, Etrade, or the like, and have access to some mediocre portfolio analysis, risk analysis, and research tools, than have only a Buy/Sell button. However, I'd bet that uninformed investors would see this deal and jump right in without considering these things.
I guess my TLDR here is that a trading platform's selling point (for the general public) should be tools first, price second; not price first, aesthetics second.
RE: short-term trading - all of the same time constraint rules apply (wait 3 days to transfer funds in and out, settle trades, etc.) as they do to a regular retail account which makes funds in the account too illiquid to be used for very short/risky plays.
RE: No portfolio/beta analysis - this is a huge problem for me and I can't understand why they would intentionally not build at least a simple portfolio tracker in so you can analyze your investments over time.
I use the app because I don't want to pay the fees, but I've taken to tracking investments in excel which is annoying when it would be pretty trivial to add functionality to the app.
Robinhood definitely takes the cake for ease-of-use, but companies like Interactive Brokers offer very low commissions, and a much more comprehensive tool. May be worth checking out if you're a somewhat sophisticated investor.
As for your response to the short-term trading concerns. Transfer restrictions don't really matter here. I can still buy/sell stocks as much as I want. I don't have to cash out to my bank in order to trade SPY 10 times a day.
Sure, if you have enough settled funds to make 10 substantive trades in a day.
Say you have 10k of settled funds in your account. You can make a total of 10 $1k trades of SPY throughout the day, or 100 $100 trades. Your account is effectively frozen for the next 3 days as the trades "settle" and you are unable to do anything with them. So you would have needed to cash out of your bank 3 days prior to have active funds ready to go for the next day.
AKA Robinhood gets 2-3 days to earn interest on your unsettled/uninvested funds.
I've found Interactive Brokers to be rather unfriendly for long term investing due to their minimum monthly activity fees though.
But to be fair, they do advertise themselves as a platform for active traders, and the monthly minimums can be waived with a large enough account. I don't qualify for the latter yet, but once I do I'll probably switch over to IB if Robinhood isn't in Canada by then (You can't really beat free).
> It seems like they're advocating short-term trading -- pretty risky behavior.
No matter how successful they're, I'd argue that it is a drop in the bucket compared to high-frequency trading. I cannot see it hurting the markets.
> Also, the only real reason a commission-free account would be helpful is if you're trading pretty frequently or in very small amounts.
Why? It saves you $10 even if you only trade once every year. It is MORE helpful with many trades, but it is helpful regardless.
> pay $10/trade [..] and have access to some mediocre portfolio analysis, risk analysis, and research tools
Why can't people get these from third parties? A lot of other services provide these tools and information. This de-couples the bundling and allows people to shop around.
You're right on all counts. The point I was trying to make is that it caters to unsophisticated investors, and this platform indirectly encourages them to invest without understanding the risks.
Honestly, I use other sites to do my research - most of the great research communities like motley fool, stocktwits, and seekingalpha are reasonably decentralized away from a brokerage app anyway. Since my account size is relatively small, the 10 bucks really eats into a lot of my profit margin, so I appreciate not having to pay it.
That being said, I can see that the lack of features might be discouraging for people who want to run a more complex portfolio of options or require a feature like a rudimentary asset allocation model.
The potential here really seems to be for people who hold well-researched single names regularly, mixed with some index ETFs.
I just installed Robinhood. $0 commissions is a pretty nice rate, so I'll probably transfer my IRA to them. (For prop trading I'm on IB.)
But why such a user hostile interface? It's almost as if this thing is made for a techcrunch press release rather than actual use. When signing up, I can't tilt the screen into "I have big thumbs" mode. And mobile-only trading - no webapp. It also only asks me to type my password once on my mobile device, with my fat thumbs. I'm sure that this sounds great to a techcrunch journalist who only has a 401k - "mobile trading for the flexible millenial workforce" - but it's pretty terrible for anyone who actually wants to make real trades.
Also simply lovely; I look at a stock chart in the mobile app, and I can't see data older than 1 year. The default is 1 day. But I can watch SPY's last price ticking up and down in realtime, woot! I'm sure I'll also get push notifications for trades. (Disclaimer: I haven't tried to trade yet).
I really hope this is a "lean startup" only beta and will be rapidly improved. Right now, the price tag is the only good thing about it.
The IRA is the place to make highly volatile investments that might incur large capital gains taxes. In contrast, your ordinary brokerage is the place for buy&hold + occasional rebalance.
I run some frequently traded strategies as a hobby (i.e., time spent >> my salary). My strategy is profitable (15-20% returns) though not scalable. The IRA is the perfect place for these, due to the tax implications.
Steal from the rich, give to the poor...nah just let americans play with the stock market a bit easier.....which is actually (way) closer to 'steal from the poor, give to the rich'! Hoodwink Robin, more like.
Robin Hood is dangerous for the young millennial. Short term trading is really risky and if you have some cash saved up it can make a big difference in the longer term if you don't blow it up or lose it. Being young matters.
If you're in Australia and looking for something longer term access to Berkshire Hathaway shares or ETFs https://getfirststep.com is another service too [no individual shares] its more like wealthfront/betterment/acorns.
They fractionalise the investment so you don't need huge amounts which is quite nice.
This is exactly what I do personally, and RobinHood allows me to buy gradually in small increments to minimize fluctuation in my cash emergency fund. If I were to buy $100 in ETF shares at a traditional brokerage I'd start down something like 10% on fees alone.
Not saying you don't have a point, but there are a lot of ways to lose your ass in this world and I don't see Robinhood as a particularly egregious case that requires any more warning than Fidelity (which will jam fees).
Unless you have a gambling addiction, it is hard to get into trouble with a cash account. Margin accounts are another issue, but in the States, "pattern day trading" requires $25k minimum balance to execute more than 4 trades in 5 biz days. That is a pretty effective filter.
Just to be clear, unless you're in the margin account beta, "free-riding" is impossible in Robinhood, so users will never be breaking any day trading rules.
>Day trades can occur in a cash account (only) to the extent the trades do not violate the free-riding prohibition of Federal Reserve Board's Regulation T. In general, failing to pay for a security before you sell the security in a cash account violates the free-riding prohibition. If you free-ride, your broker is required to place a 90-day freeze on the account.
looking at your post history, I see your previous post also mentioned the same company. If you are affiliated with them, please add a disclaimer at the bottom.
Not saying it's wrong, my apologies if my comment came across that way!
Usually, if you have a short post history, and link to a product more than once, it raises alarm. Usually better to put a disclaimer either way: I am not affiliated w this company, just a huge fan of their product.
I read the "How we make our money" page, and if I am reading it right, they only make money on the uninvested balances? It is free ($0) to invest and free to de-vest ($0, 0%), is that right? Seems too good to be true...
Also how legal is this company? I've read about small StartUps based on the stock market who then wind up getting in trouble with the FTC.
Honestly if this is free investment, then I might start doing some micro-investment. I am been put off the stock market by the overheads of investing/de-vesting (e.g. $20/trade). Although the hassle of filing taxes might still put me off.
Interest from margin accounts is another one. They don't have margin accounts yet, but once they do, that could become a fairly significant revenue stream.
True. But if you're interested in them for micro-investing, that seems incompatible with borrowing to do it. Although I'm sure someone will want to borrow to invest...
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[ 842 ms ] story [ 1606 ms ] threadI guess my TLDR here is that a trading platform's selling point (for the general public) should be tools first, price second; not price first, aesthetics second.
RE: No portfolio/beta analysis - this is a huge problem for me and I can't understand why they would intentionally not build at least a simple portfolio tracker in so you can analyze your investments over time.
I use the app because I don't want to pay the fees, but I've taken to tracking investments in excel which is annoying when it would be pretty trivial to add functionality to the app.
As for your response to the short-term trading concerns. Transfer restrictions don't really matter here. I can still buy/sell stocks as much as I want. I don't have to cash out to my bank in order to trade SPY 10 times a day.
Say you have 10k of settled funds in your account. You can make a total of 10 $1k trades of SPY throughout the day, or 100 $100 trades. Your account is effectively frozen for the next 3 days as the trades "settle" and you are unable to do anything with them. So you would have needed to cash out of your bank 3 days prior to have active funds ready to go for the next day.
AKA Robinhood gets 2-3 days to earn interest on your unsettled/uninvested funds.
But to be fair, they do advertise themselves as a platform for active traders, and the monthly minimums can be waived with a large enough account. I don't qualify for the latter yet, but once I do I'll probably switch over to IB if Robinhood isn't in Canada by then (You can't really beat free).
No matter how successful they're, I'd argue that it is a drop in the bucket compared to high-frequency trading. I cannot see it hurting the markets.
> Also, the only real reason a commission-free account would be helpful is if you're trading pretty frequently or in very small amounts.
Why? It saves you $10 even if you only trade once every year. It is MORE helpful with many trades, but it is helpful regardless.
> pay $10/trade [..] and have access to some mediocre portfolio analysis, risk analysis, and research tools
Why can't people get these from third parties? A lot of other services provide these tools and information. This de-couples the bundling and allows people to shop around.
That being said, I can see that the lack of features might be discouraging for people who want to run a more complex portfolio of options or require a feature like a rudimentary asset allocation model.
The potential here really seems to be for people who hold well-researched single names regularly, mixed with some index ETFs.
But why such a user hostile interface? It's almost as if this thing is made for a techcrunch press release rather than actual use. When signing up, I can't tilt the screen into "I have big thumbs" mode. And mobile-only trading - no webapp. It also only asks me to type my password once on my mobile device, with my fat thumbs. I'm sure that this sounds great to a techcrunch journalist who only has a 401k - "mobile trading for the flexible millenial workforce" - but it's pretty terrible for anyone who actually wants to make real trades.
Also simply lovely; I look at a stock chart in the mobile app, and I can't see data older than 1 year. The default is 1 day. But I can watch SPY's last price ticking up and down in realtime, woot! I'm sure I'll also get push notifications for trades. (Disclaimer: I haven't tried to trade yet).
I really hope this is a "lean startup" only beta and will be rapidly improved. Right now, the price tag is the only good thing about it.
Kind of an interesting biz model.
I find it highly unlikely that almost anyone should trade anything frequently, even in the weirder corners of their portfolio.
Edit: As of July, they still do not: https://support.robinhood.com/hc/en-us/articles/203583765-Br....
If you're in Australia and looking for something longer term access to Berkshire Hathaway shares or ETFs https://getfirststep.com is another service too [no individual shares] its more like wealthfront/betterment/acorns.
They fractionalise the investment so you don't need huge amounts which is quite nice.
There's nothing stopping someone from doing long-term investing with ETFs in Robinhood, is there?
Unless you have a gambling addiction, it is hard to get into trouble with a cash account. Margin accounts are another issue, but in the States, "pattern day trading" requires $25k minimum balance to execute more than 4 trades in 5 biz days. That is a pretty effective filter.
I really hope they add IRA support soon.
disclaimer: this is not legal advice
http://www.finra.org/investors/day-trading-margin-requiremen...
>Day trades can occur in a cash account (only) to the extent the trades do not violate the free-riding prohibition of Federal Reserve Board's Regulation T. In general, failing to pay for a security before you sell the security in a cash account violates the free-riding prohibition. If you free-ride, your broker is required to place a 90-day freeze on the account.
Seems like a great app... just have to get some money in there without telling them my bank creds...
Usually, if you have a short post history, and link to a product more than once, it raises alarm. Usually better to put a disclaimer either way: I am not affiliated w this company, just a huge fan of their product.
Also how legal is this company? I've read about small StartUps based on the stock market who then wind up getting in trouble with the FTC.
Honestly if this is free investment, then I might start doing some micro-investment. I am been put off the stock market by the overheads of investing/de-vesting (e.g. $20/trade). Although the hassle of filing taxes might still put me off.
The one's I've seen get in trouble have been in trouble with the SEC rather than the FTC.