Robinhood deserves negative attention, but not for restricting trades to closing-ony. That appears to not have been much of a choice.
They do deserve a lot of negative attention for running a brokerage in a way that invited a lot of risk-ignorant retail traders to instantly trade into leveraged positions for which they should never have been qualified in the first place. Robinhood has the valuation it does because it brought leveraged day trading to the masses. As someone who worked at a brokerage and designed trading tools, leveraged day trading isn't for the masses.
I don't think the inviting was where it went wrong, but in having a criminally bad UX that deceives those same naive users. Like executing your purchase as a margin buy without making clear it is a margin buy that can be sold out from under you:
The unfortunate story with the kid was RH showing him (temporary) correct information.
In any case it always comes back to argument if general public is suitable to participate in the market which in turn brings in more legislation to keep retail market far away from Wall Street.
If his position was not substantively very negative, then it was not correct to represent position as very negative. (Even if he was waiting for an asset to settle, that has a positive value that should have canceled out any negative.)
The fact that it's "normal convention" to represent positions this way is a problem with the convention, not with retail investors.
I'm not a big fan of "RH should protect people more"
They clearly did not have the finances available to provide the service they offer. Regardless of whether that was forced on them, the outcome was RH's failures manipulating a market.
RH should be fined and sued out of existence.
I also don't see the value in short selling. Seems like a way to gamble legally in all 50 states.
Short-selling is a way to profit off of a company's fall. It sounds morally wrong, but it also allows someone to put their money where their mouth is and gamble on a company's loss, with the risk being that they lose money if the company ends up succeeding.
Of course, it creates a perverse incentive. A short-seller who is invested in a company's failure will spew tons of FUD around the company, whether it's true or not. TSLA used to be one of the most shorted companies on the market, and many bloggers that were highly critical of Tesla were short-sellers, and the noise it created made it difficult to figure out how bad the problems were.
> Seems like a way to gamble legally in all 50 states.
You could say the exact same about long positions, which is nothing more than gambling on the success of a company, the same way a short is a gamble on the failure.
Sure, I'm not lobbying the law to be changed on my feelings, but someone able to risk _infinity_ money in the hopes of a company's value decreasing does "feel" dangerous and wrong.
And add these adverts plugging "factional" shares at naive first time investors to the list, tbh I think the SEC should encourage share splits once a share gets to Tesla levels.
Your first investments should never be in individual shares - start with an tracker ETF for a few years before branching out to active management or even individual shares.
They do deserve a lot of negative attention for running a brokerage in a way that invited a lot of risk-ignorant retail traders to instantly trade into leveraged positions for which they should never have been qualified in the first place. Robinhood has the valuation it does because it brought leveraged day trading to the masses. As someone who worked at a brokerage and designed trading tools, leveraged day trading isn't for the masses.