
Robinhood Gold - sam9
http://blog.robinhood.com/news/2016/9/28/robinhood-gold
======
koolba
> Pre & After Trading Hours: Once reserved for institutional investors,
> extended trading hours let you trade before the opening bell and well after
> the closing bell — an extra two and a half hours of access, every day.

Pre/post market trading is different than normal hours. The liquidity is
totally different and generally done with only limit orders. If you don't
understand what those are, you shouldn't be doing it.

> Additional Buying Power: Gold Buying Power is money that we lend to you to
> buy stocks, giving you the equivalent of a line of credit for the stock
> market. You get up to 2x your buying power so you can invest more, and keep
> any profits. More information on our Help Center.

This is called a margin account. It's interesting that they don't call it
that.

> Bigger Instant Deposits: Take advantage of Instant Reinvesting, which lets
> you access proceeds from a stock sale immediately, and Instant Deposits,
> which eliminates the three day wait period for funds to transfer from your
> bank into Robinhood.

Again, this is called a margin account. The way it works is rather than
waiting for the prior trade to settle (i.e. the counter party to the trade
provides the cash and you deliver the stock), your broker spots you the
expected proceeds so that you can trade as if you already have the cash.

Scrolling down is the details, terms, etc. I can't tell if making it a
different color so you don't notice it's there is intentional or just
stylistic choices by their designers.

Going to their help pages[1] I found this:

> Do I get charged interest on top of the monthly charge for using Gold buying
> power?

> No! You will not get charged interest or fees in addition to the fixed
> monthly charge of the tier you selected.

I'm genuinely curious how they have the capital to do this. Can I open an
account and use double buying power to purchase a money market ETF?

[1]: [https://support.robinhood.com/hc/en-
us/articles/213262686-Ro...](https://support.robinhood.com/hc/en-
us/articles/213262686-Robinhood-Gold-Buying-Power)

~~~
artursapek
They don't call margin "margin" because they market their app to people who
don't know what they're doing. People who know what margin is will understand
what they mean by "extra buying power", but an investing novice with $500 will
have no idea what "margin" is.

That said, it's scary to think they're giving margin to people who don't know
what margin is - I hope they try to properly educate them on the risks
involved.

~~~
nodesocket
I think even novice traders know what margin is. I'd prefer they just use the
correct nomenclature.

I have an account with Robinhood and have much more than $500 in it. I don't
think the assumption that most of their users only put small amounts is
entirely accurate. I like Robinhood because I can lower my dollar cost average
buy buying small little chunks on the way down commission free.

~~~
artursapek
RH's headline feature is "free trading," a feature that mostly appeals to
people who are investing smaller amounts (for whom an $8 commission is
significant). Their oversimplified interface is consistent with this targeting
of novices. I'm saying it as a generality - of course it's not completely
black and white.

That said, RH does have several problems - notably their unreliability on days
of high volatility and their poor customer support - that generally deter
bigger investors from using them over a traditional broker.

------
83457
I know that robinhood is trying to improve things (I guess) but just remember
folks that somewhere around 80-90% of retail traders lose money.
[https://news.ycombinator.com/item?id=12339076](https://news.ycombinator.com/item?id=12339076)

~~~
platz
What is improvement exactly, better ux?

~~~
solaarphunk
At the most basic level, retail traders are paying 8 bucks every time they
enter or exit a position, which leads to reasonably significant
underperformance versus not having to pay trade commissions on Robinhood.

~~~
platz
Is that an $8 commission fee per stock trade or an $8 loss on the bid/ask
spread?

If the former that is definitely the high bar. there are many places (discount
brokers) that offer low comissions on stock ttandes more in the 1 dollar
range.. or even pennies, that arent 'disruptors'.

I think if you are trading often enough thay $1 commission is a problem you'e
doing it wrong. Presumably we are talking about folks that are not pattern-
day-traders.

~~~
yummyfajitas
That's an $8 commission.

I know Interactive Brokers offers less, but they also charge $30/month
prorated against your commissions. What other discount brokers charge pennies
or $1?

~~~
lewisl9029
FWIW it's $10 per month, and waived if your account has over $100k in assets:
[https://www.interactivebrokers.com/en/index.php?f=4969](https://www.interactivebrokers.com/en/index.php?f=4969)

------
blacktulip
So when exactly can we UK people use Robinhood?

~~~
riffraff
I wonder if the whole Brexit thingy had any effect in delaying the operation.
But the expansion to Australia was more than a year ago, so probably there is
something else going on.

~~~
jazoom
I signed up when they announced but I never heard back from them. I just
assumed they gave up on Australia.

------
HoyaSaxa
When Robinhood was first announced a few years ago, I was excited that the
retail brokerage industry was becoming more accessible for a number of
reasons. Most obviously, we live in a capitalistic society, and inherently
those who are able to make an equity investment (whether it be in a home, a
small business, a startup, or a publicly listed company) are giving themselves
a better chance at long-term financial freedom if they are also able to
properly diversify their investments.

Robinhood still provides a great service to those who have a relatively small
amount of money to create a diversified custom portfolio, but I would highly
recommend against Robinhood Gold in today's interest rate environment. If you
are 25 or younger, which is a core demographic of Robinhood, you are much
better of with Interactive Brokers for any type of margin account. The UI/UX
leaves a lot to be desired, but you will likely save a lot of money. Let's say
that you have $2000 to invest and want to borrow another $1000 for a total
investment of $3000. Since you understand the importance of long term
investing as well as diversification, let's assume you are going only going to
make 10 trades per year (if you are making more than 10 trades per year with a
$3000 account you should seriously reconsider your investment strategy). For
simplicity, let's also assume your portfolio balance maintains a $3k balance.
Each year you will pay:

Interactive Brokers: (max($1 x trades per month, $3) * 12) + 1.9% * $1000 =
$55 per year

Robinhood: $6 * 12 = $72

Of course, this is a very specific comparison, but I encourage you to look at
the total cost of a margin account for your specific situation:

[https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...](https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule.pdf)

[https://www.interactivebrokers.com/en/index.php?f=1595](https://www.interactivebrokers.com/en/index.php?f=1595)

I would also highly discourage anyone from trading outside of 9:30 AM to 4PM
ET unless there was major news on a specific company (up to 4:15PM for the
most actively traded etfs given the futures market keeps the bid/ask spreads
tight).

Finally, I would encourage you to read more about the systemic risks ETFs pose
to the market before deciding to use them as an investment vehicle. They
provide great utility to small investors, but also contribute to liquidity
risks that are still not fully understood/tested.

------
pierotofy
Robinhood is great. I'm hoping they will go forward with a public API, and
perhaps allow options trading soon.

~~~
nerdwaller
I think the margin accounts (gold) is the first step toward allowing Options
trading. Excited for this to happen as well. Glad to see a company finally
doing a more subscription based model for stock trading instead of the pay per
trade rubbish to date.

~~~
15155
I would not want to trade options on a platform that:

1) Doesn't allow limit orders

2) Goes down with even modest spikes in intraday volatility

3) Markets and caters to "uninformed" flow

I imagine they'll only allow long options or impossible-to-break spreads to
limit their risks, if they actually go this route (as evidenced by the
severely limited margin given with RH Gold).

~~~
vinay427
> 1) Doesn't allow limit orders

They certainly allow basic limit orders for buying and selling in my
experience, though not the fancier types (conditionals, etc.).

------
mikkom
Interestingly they promised shorting when margin accounts are available. I
don't see shorting on that list.

[https://twitter.com/robinhoodapp/status/581924425244655616](https://twitter.com/robinhoodapp/status/581924425244655616)

------
hartator
Subscribed to Gold yesterday, I don't like trading on margin but after hours
is nice.

~~~
15155
How and why do you trade after hours without limit orders?

Execution on RH is already pretty poor, this seems like a recipe for disaster.

~~~
hartator
From my underatanding, they are using the same exchanges than other low cost
brokers. It has been confirmed with my experience using TradeKing in parallel
of RobinHood (same spreads and same speed of execution.)

I haven't tried trading after hours yet, but it had happenned to me that I
wish I had the option in the past.

~~~
hendzen
The actual orders are handled by Apex Clearing. Apex sells this client flow to
a mix of Citadel, KCG, and a few others [0].

[0] -
[https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...](https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal/RHF%20PFO%20Disclosure.pdf)

------
Splendor
I love Robinhood. The idea of trading on credit gives me the heebie jeebies
though.

~~~
nsrivast
Think of it as acquiring technical debt. Can help you grow faster, but need to
monitor it carefully to prevent eventual trouble.

~~~
matthewowen
Using technical debt as a metaphor for debt is... I wish I could use the "100"
emoji here.

~~~
bobbyi_settv
[http://www.theonion.com/blogpost/im-like-a-chocoholic-but-
fo...](http://www.theonion.com/blogpost/im-like-a-chocoholic-but-for-
booze-10739)

------
sargun
Does anyone know of any brokerage that allows me to buy shares from an
individual (after exercising them from $STARTUP)?

~~~
mikkom
Why would you need brokerage for that?

~~~
sargun
Let's say if I wanted to buy shares from a competing company to hedge my bets.
I imagine they wouldn't want to sell to me directly.

