Robinhood | Zero Commission Stock Trading

Status
Not open for further replies.
A

AuthenticM

Member
Robinhood in an app for iOS (coming to Android in 2015) that lets people invest in stocks without the help, and fee, of a broker. It was launched last Thursday in early access by its creators, two Stanford graduates. Their goal is to democratize stock investment and to encourage the younger generations to invest. There was a Forbes article on it written in February that is very interesting to read. Here's a passage:

“We realized institutions were paying fractions of a penny for trading and transactions,” says Tenev.

The technology efficiencies institutions are privy to weren’t available to everyday retail investors who are subject to $10 fees when placing a single trade. Some deeply-discounted firms like OptionsHouse charge $5, but account minimums run anywhere from $500 to $5,000. That’s a high threshold for investors who are just getting started.

Tenev and Bhatt estimate there are 1.5 million active traders who trade more than 10x per month, and who end up paying thousands each year to existing online brokerage firms like ETrade, Scottrade, TDAmeritrade and others.

Bhatt notes that online brokerage firms have a stronghold on investors in their 40s and 50s but fail to capture younger, less profitable investors who have less money to invest. But that’s exactly who Robinhood is targetting. Of the 150,000 accounts that have signed up before Robinhood’s official launch, 75% were born in 1980 and later. The duo, and their team of 11 full-time employees including engineers and designers out of MIT, Caltech and Stanford, are essentially bringing the efficiencies of an institutional trading firm to retail investors who trade on their own.
Click to expand...

Here's another one from Techcrunch, published on the app's launch day. Passage:

Why pay E*Trade $8 to buy or sell a stock when you can trade for free on Robinhood? After two years of development, $16 million in funding, and 500,000 waitlist signups, Robinhood finally hits the iOS App Store today. Robinhood lets you track the performance of stocks, and buy or sell them with just a few taps at no cost.

The app could attract a younger, less wealthy demographic to the stock market because people can trade smaller amounts without having their potential earnings eaten up by the fees most brokerages charge. Instead, Robinhood makes money through interest on funds you hold with it or when you trade on margin, plus selling trade volume to stock exchanges.

During my demo, I found Robinhood to be stylish, and easy to use — uncommon traits for financial apps. Robinhood hopes to onboard the waitlist within two months and then start adding those who signup today. But until then, anyone can use the app to just monitor stocks.

Financial tech serial entrepreneurs Vlad Tenev and Baiju Bhatt hope the third time’s the charm with Robinhood. The two met at Stanford [Disclosure: I was friends with them there and was in a fraternity with Tenev], before both going on to prestigious grad programs in math. They started an algorithmic trading tech startup called Celeris, and then took another swing building software for big investment banks. Neither worked out, but in the meantime they noticed there wasn’t a good mobile app for stock trading.

What surprised them, though, was that there was no excuse for the exorbitant fees the E*Trade and Scottrade charge other than own gross inefficiency. By replacing brick and mortar branches and TV marketing budgets with a handful of engineers and mobile virality, Robinhood was able to ditch the commission fee.

robinhood-founders.png
Click to expand...

I personally find this fascinating. I have registered on their waiting list, as the app is invite-only for now.

Has anyone here, by any chance, tried the app ?
 
I got an email from them a couple days ago saying I can download it but I don't have an iphone. Guess web/android stuff is coming in 2015 sometime.
 
This sounds like a pretty interesting idea. I have been using Nadex to trade on binary options for a while now to avoid high fees and high account minimums. The whole time I was wishing for something just as good to buy traditional stocks.
 
It's a pretty bad idea for a small investors to trade on margin.
They don't force you to do that, but I think it's worth mentioning here since it seem to be a big part of their business model.
 
Was looking to start trading stocks, but keep getting put off to doing it because of the high fees and minimums on eTrade and the like. I don't have tens of thousands to invest.

StockGAF- Does this seem like something a noob like me should be looking into? I'm already seeing some negative reactions here...
 
Well... not very many people have been able to use the app yet so it's difficult to ascertain just how meaningful it is. And in general picking good stocks requires considerable effort... which I doubt many GAF members are interested in.

I'm also on the wait list. Somewhere in the 478K range.
 
If you refer someone it knocks you down a couple hundred spots it says. Haven't tried it yet, but seems to be the case per their little note.
 
I actually have 3 invites that skips the waiting line (it's what the email says) .. I think it's because I quickly signed up when it was available on Friday.
 
I hope this is good and works well. I've always been interested in stocks but it's so confusing to actually go about buying them, it always confused me how you had to pay someone to buy them for you.
 
kirby_fox said:
Was looking to start trading stocks, but keep getting put off to doing it because of the high fees and minimums on eTrade and the like. I don't have tens of thousands to invest.

StockGAF- Does this seem like something a noob like me should be looking into? I'm already seeing some negative reactions here...
Click to expand...

This app looks like it would be great fun as a game. Put $100 bucks in, see how much you can make. But don't go out like a newbie and start day trading individual stocks with money that you intended to invest, trading in individual stocks will burn you unless you know what you are doing or get lucky.
 
Hari Seldon said:
This app looks like it would be great fun as a game. Put $100 bucks in, see how much you can make. But don't go out like a newbie and start day trading individual stocks with money that you intended to invest, trading in individual stocks will burn you unless you know what you are doing or get lucky.
Click to expand...

The way the exchanges have been this last week, some stocks are very cheap right now. But are they cheap because of the downturn or because they should be cheap? Research is your first step.
 
Interesting. I always wanted to try this but I don't have enough money to do it "for real".

mercenar1e said:
I actually have 3 invites that skips the waiting line (it's what the email says) .. I think it's because I quickly signed up when it was available on Friday.
Click to expand...

If you're giving them I'd be happy to take one.
 
App is really slick. I haven't started trading but my account got approved today.

I have 3 invites as well. Pm me if you want one
 
Although trading for free sounds like a good idea, seems to me all it does is encourage you to trade more frequently, which leads most people to lower results. While it's definitely true that fees reduce your returns, I bet trading costs is way down on the list when you rank factors reducing returns.

Combine no fees with margin and that's a live wire there.

Sounds interesting though!
 
Tenev and Bhatt estimate there are 1.5 million active traders who trade more than 10x per month, and who end up paying thousands each year to existing online brokerage firms like ETrade, Scottrade, TDAmeritrade and others.
Click to expand...

:/

Great. Encouraging people who can't afford the losses to daytrade. That's exactly what we need.
 
AuthenticM said:
How so ?
Click to expand...
Buying on margin is a risky investment, where an even a temporary and a relatively small dip in price can wipe out a huge chunks of your investment (though the actual risk depends on the specifics of your broker, I couldn't really find details about those guys).
Buying on margin compound the "normal" risk problem since the margin call play into our built-in bias of loss aversion, and investors can often get into a pretty nasty spirals of maintenance payments where you can easily end up losing more than your initial investment.

This shit used to wipe people out during the great depression, luckily, there are some safeguards and regulations around these things these days, but it's still a risky investment avenue.
 
I've already been approved and funded my account. Haven't started doing anything with it though. Have 3 invites if anyone wants one. Skips the line.
 
I got three invites too. Just PM me your email address and I can send them over.

I'll be gone for majority of the day, so expect me to reply by like 6pm MST.
 
Used like 2 of my other email addresses (and my Fiancé's emails) to get up to 45th in the queue. How quickly do they send out new invites though? Want to get in on this today if possible.

Edit: 29th after another couple of email addresses.
 
Status
Not open for further replies.

Similar threads

Nvidia Stock Recovering!!
2
56
2K
Zathalus replied
  • Locked
Tesla sales tank in Europe as stock drops 40% in a month
NSFW  12 13 14 15 16
769
37K
Cyberpunkd replied
  • Locked
Tesla sales crater 76% in Germany, stock down 40% since December 2024
Business  2
51
2K
Puscifer replied
China's Efficient AI Model DeepSeek Sends U.S. Tech Stocks Plummeting
2 3
102
8K
Heimdall_Xtreme replied
Mavericks trade Luka to Lakers
2
60
3K
juliushandle replied
Top Bottom