what do discount brokerage firms think about Robinhood?

[SteveH]

Yeah, market is in bubble mode. You just don't see this during your run-of-the-mill market conditions:

 

[sss12]

sss12 said:
Except cash returns are not anywhere near 200 BP. If RH can't return to PFOF they are toast or going to have to come up with a diff mode

it sounds terrific to me. suppose the avg. size of an account doubles to 2k or 5x and interest rates rise. they are starting from a very low base. the increase in the bottom line will be very large.

Robinhood in brokerage has become what Apple is to millennials , choice #1. it is the cool factor with a decent product .

posters here are missing the big picture and are assuming a static analysis that the future remain the same. the 4X increase in valuation in less than 2 years is the evidence.

who would let their balances rise if they are not getting the int ?

 

[Robert Morse]

That was......weird.

 

[zdreg]

who would let their balances rise if they are not getting the int ?

if they trade with larger balances their cash balances will also increase.

 

[sss12]

if they trade with larger balances their cash balances will also increase.

again, what serious investor would let their cash balances sit and not earn interest ? that was the posters point as to how RH made money. My point..it is not a viable b model.

 

[zdreg]

again, what serious investor would let their cash balances sit and not earn interest ? that was the posters point as to how RH made money. My point..it is not a viable b model.

you answered the question yourself.these are beginning investors the avg, account size is 1k.
what are they giving up? they make it back on the 1st commission free trade.

 

[toc]

Do not know the regulations, but can brokerage firms like these trade on the funds available to them via clients or use these funds in partial as collateral to take margin and then trade on them.

 

[stockmarketbeginner]

I'm actually opened a Robinhood account last month....I can tell you it's free commission. I have made over 20 trades so far without paying a single penny in commission. Yes you can opt to the gold plan for a margin account and extended hours trading....now the app is very very very basic. I guess that's what comes with free commissions, I mean how many investors who use online brokerage accounts actually use every single option available to them? I know about 4-5 people who use Robinhood. They are pretty much first time traders...I was speaking to one of robinhoods competitors the other day and they couldn't believe how Robinhood could give free commission to stock trades, they asked me how they make their money. Pretty simple. They take all the millions accounts with all the tens of millions of dollars in them and grab the interest, so instead of a money market account bearing Say 2% interest that would otherwise be yours is actually going to them. Hey I say that fine. Brokers are charging 5-6-7 dollar trades...which by historical measures is actually still very cheap but if you can have free commissions why not....I have heard brokers are trying to push free equity trading soon. I think in the next 2-3 years there will be another price war where brokers lower commission costs even more, then I believe in the next 3-5 years all equity trading will be free....should get interesting moving forward.

I am waiting for the desktop version. It seems like it would be confusing to manage a trading portfolio on a phone screen. Have you found it difficult to manage all of your positions on a small phone screen?

The greatest value of free trading is you can take small positions without getting hammered on the percentage. If you take a $200 position and its a $6 trade fee, that is 3% in. If you then sell, that's 3% out. So if you wanted to buy and sell a $200 position after a year, you are out 6%. That's a huge drag on gains. So I'm looking forward to the desktop version. I'll use Robinhood to take small positions in lots of different things.

 

[learner88]

Can foreign investors outside of U.S become customers of RobinHood? Does Robinhood take on only local American retail investors?

 

[toc]

Can foreign investors outside of U.S become customers of RobinHood? Does Robinhood take on only local American retail investors?

Robinhood wants either SS# or passport and if foreign national then a US visa stamp or residency status. No foreign accounts at this moment except for Australia.